Chrysler: Linking Global Product Engineering with Procurement

Compared with its other downtrodden brethren in Detroit, Chrysler has always had the reputation of having a somewhat kinder, gentler approach to procurement. Granted, they’ve long embraced a philosophy which looks more like GM than Toyota, but Chrysler has beaten its domestic rivals in at least some areas. One of their long-term procurement management philosophies has been to work more closely with their supply base to generate engineering ideas and joint product development initiatives. According to a recent articlefrom the Detroit Free Press, they appear to be continuing down this path, albeit from a global perspective. In the piece, Frank Klegon, Chrysler executive vice president of product development, notes that "Chrysler is busy opening new product development offices in China and eastern Europe [and Mexico] that will help guide the automaker in its efforts to grow its international sales."

Why is Chrysler doing this? According to Klegon, "we look to have three development centers that will look from a global perspective for those opportunities for lower cost sourcing." But if you're thinking that Chrysler is only thinking about sourcing parts and assemblies from these regions, you're wrong because their "next step is to work with partners to develop vehicles that could be produced in those areas of the world and shipped elsewhere." Obviously, making this vision a reality will require not only close linkages between procurement and engineering, but all other aspects of their business as well. One wonders whether Nardelli is up to the challenge (and given his Home Depot experience, whether he really understands proper Spend Management). After all, the last thing we need is a new K-car designed, built-by and sold to the global masses.

Jason Busch

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