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whose one and only charter is innova- tion and the development of innovative features and attributes for our vehi- cles. We have been working very hard to make ourselves more receptive to inno- vations and to have suppliers bring them to us because they believe that we are equipped to bring them to market quickly.”
One of the attributes that Chrysler expects from its suppliers is that they abide by what the automaker calls its foundational principles. These include factors such as transparency, acting with a sense of urgency, commitment to a long-term relationship, acting with integrity and being advocates for Chrysler.
“We would expect all our suppliers to act in accordance with those princi- ples,” affirms Huber. “From the ones that we consider strategic, we expect a heightened level of commitment to those foundational principles. Only through the two-way utilization of that behavior are you going to be able to unlock the inherent inefficiencies that could exist in a relationship between a supplier and a car company.”
With a selected number of suppliers Chrysler has initiated a process called pre-sourcing. Basically, this is a non- competitive bid situation where the OEM starts working with the supplier very early in the development stage of a project and they jointly develop parts and the target pricing for them as the project moves along. According to Huber, this requires a tremendous amount of trust on both sides.
“They have to trust that we will come to a fair, negotiated price because they are going to be investing a lot of their own resources up front on a proj- ect like that. We have to have the same level of trust that we will have full trans- parency in the cost drivers so that we know we’re paying a fair price if we’re not going to competitively bid it. Our most strategic suppliers are ones with which we would like to be able to do more and more pre-sourcing and, in order to do this, we need very, very strong commitment to the founda- tional principles.”
Ford Motor Company’s new pur- chasing head, Hau Thai-Tang, recently announced a targeted reduction of 40 percent in the company’s ranks of sup- pliers and Ford is not the only OEM to be thinking along these lines. Huber, how- ever, refutes the suggestion that Chrysler has such a specific target.
“We have, right now, around 1250 production suppliers at Chrysler. There are efficiencies to be gained by having
fewer suppliers because you are able to manage them more easily. With the same number of internal resources, if we have fewer suppliers to manage, we can visit their plants more fre- quently, have more frequent meetings with their executive team and foster a greater degree of collaboration. Moving forward, we have stated that we would like to reduce the number of suppliers in our supply base but we do not have
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