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FCA Tries a Friendlier Approach with Its Suppliers
Fiat Chrysler Automobiles NV is preparing in January to shift its U.S. purchasing priority from price to customer-perceived quality, Automotive News reports.
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Fiat Chrysler Automobiles NV is preparing in January to shift its U.S. purchasing priority from price to customer-perceived quality, Automotive News reports.
The decision eases CEO Sergio Marchionne's declaration a year ago that FCA should share in its suppliers' fat post-recession profits.
Tom Finelli, FCA's vice president of purchasing and supplier quality in North America, told attendees at last week's Management Briefing Seminars in Traverse City, Mich., the new policy will enable the carmaker's purchasing agents to choose a higher quality component even if a cheaper option is available.
Currently, FCA's policy ties its buyers' compensation to individual cost-saving targets, thus making low price a first hurdle for vendors. The new approach will index compensation to team performance.
Finelli says the policy shift came when the company realized its relations with its suppliers were "struggling" at the buyer level. FCA and General Motors ranked last in supplier relations in last May's annual index by Birmingham, Mich.-based Planning Perspectives Inc.
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