20 May 2008

Chrysler's purchasing chief has been forced into a hasty explanation on the group's internet blog of remarks he made last week about saving money through the supply chain.

 

Chief procurement officer John Campi outlined plans for making a 25 per cent saving through cost reduction across the supply chain at a meeting of the Original Equipment Suppliers Association in Troy, Michigan, last Thursday.

 

But Chrysler now says that some of Campi's audience "misinterpreted" his remarks to mean that Chrysler was looking for cost reductions of 25 per cent from its suppliers.

 

In a note put up on firehouse.biz, the group's blog, late yesterday, Campi blamed the media for the confusion.

 

He told the site: "Not once in any public or private discussion have I ever suggested that suppliers would have to reduce pricing to meet the 25 per cent cost-out challenge without our mutual objective of protecting their profitability iin dollars and percent.

 

"Our drive for cost reduction will only be accomplished with collaboration between Chrysler and our supply base. That simply cannot happen if it is not mutually beneficial."

Campi went on: "First, I want to take cost out of what is incurred by us and our supplier (25 per cent target). Secondly, I want to share equally with the supplier on each step along the way.

 

"Schedule stability should drive significant savings for the supplier – potential estimate of 8 per cent. So, after stable orders can be demonstrated, our supplier would save approximately 8 per cent – giving us 4 per cent and increasing their profits by approximately 4 per cent."