The Big 3: Driving Manufacturing Suppliers to Desperate Measures

I'm not going to flog a dying horse -- or wash a beat up pinto -- when it's not absolutely necessary, but I think it's critical to call attention to the lengths to which suppliers are going in an attempt to get what they think is right from the Big 3 (soon to be "Focused 2", in my view at the moment). According to an article over on Spend Matters affiliate blog Metal Miner, Chrysler is the latest to face a plant shutdown thanks to suppliers' actions -- or inactions. According the post, Chrysler supplier, "Transcast Precision Inc who makes aluminum die cast parts (specifically brackets for engines and transmissions) shut down the auto-maker's line due to part shortages," thanks to a dispute. "Specifically, the supplier, Transcast Precision Inc who had purchased the assets of the now defunct Vannatter Group," Lisa writes, had "asked for a 2.5x price increase along with a request that Chrysler purchase all current finished goods inventory. Besides a refusal, Chrysler asked the supplier to move both the tooling and parts to its own plants. When Chrysler went to collect both, it said it was 'taken by surprise' to learn both had been moved and were no longer at Transcast Precision's plant. Apparently the parts were moved to six other locations."

In this case, I agree with Lisa that Chrysler was probably in the right in its legal attempt to seize the tooling, among other initiatives to rapidly get its parts supply back in gear for issues specific to this supplier incident (read the rest if you're interested in the specifics). But what is more interesting to me -- and more universal outside of automotive -- is how much more likely both unintentional (e.g., operational/financial supply risk driven) and intentional (e.g., situations like this) parts shortages are likely to occur in the not so distant future. Twenty years ago -- and heck, even more recently -- plant shutdowns were largely the result of union action. But today, it's both angry and down and out suppliers taking matters into their own hands. Not only is this further proof that companies need to expand their definition of supply risk management -- it's also evidence of the need to focus on true supplier relationship management in the first place to avoid getting into these types of parts pickles.

Jason Busch

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