After a Long Absence, Supplier Relationship Management Returns

Spend Matters welcomes back long-time columnist Sherry Gordon.

It was the best of times. It was the worst of times. Chrysler went from being touted as having the best supplier management system in the industry and being written up in a June 1996 issue of the Harvard Business Review, "How Chrysler Created an American Keiretsu" by Jeffrey Dyer to a bankruptcy in 2009 that drove many of its suppliers out of business. Chrysler used supplier partnerships to revive itself in the nineties, then again was in the supplier relationship management doghouse after the merger with Daimler-Benz in 1998. Chrysler's famous, well-regarded SCORE program that rewarded suppliers for cost reduction ideas was dumped and supplier management went back to the traditional confrontational mode.

Now supplier relationship management is back. Chrysler is modifying its supplier scorecard to ensure that its supply base will have the capacity to meet its projected increasing worldwide volumes (that, by the way, haven't materialized just yet) as well as requirements for quality and innovation and also to make sure that supplier relationships are being improved from their recent low point. The scorecard, called EBSC (External Balanced Score Card), is about to launch in its third iteration since 2009. As Chrysler gears up for an anticipated global uptick in sales volumes in 2012, it is trying to ensure that suppliers are on board. According to an article in WardsAuto.com , a new scorecard was supposed to come out last week. The big change on the scorecard is supposedly a warranty measurement that is currently part of the quality metric but will be broken out as a separate measure in order to focus on and drive down warranty costs. The current Chrysler scorecard, in case you'd like to look at, is here in this document.

Chrysler has re-instituted twice-a-year outreach meetings to improve supplier relations. You might think that Chrysler suppliers would be wary of customer-supplier partnerships by now. According to surveys, suppliers have felt ambivalent toward Chrysler in the last three years. You can read my thoughts on the supplier partnership subject in a recent article by Jill Jusko in IndustryWeek, How to Build a Better Supplier Partnership. Chrysler needs its suppliers in order to be successful. Hopefully the work improving supplier relations and performance that Senior Director of Supplier Relations at Chrysler Sig Huber has been doing will be successful and have staying power, even as the global economy goes through more ups and downs.

- Sherry R. Gordon

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