Chrysler is due to undergo a major shake-up in its purchasing operations as a result of the pending takeover by private equity house Cerberus Capital Management. Indeed, the changes have already begun.


The company had already replaced purchasing boss Peter Rosenfeld with Simon Boag, a 41-year-old former chief of production planning for the Mercedes Car Group in Germany.


Now, DaimlerChrysler global purchasing chief Thomas Sidlik, an American and Chrysler veteran, is set to retire. Reportedly, veteran Daimler executive Rudiger Grube has already been picked to lead purchasing for Daimler when the function is split off from Chrysler.


A shift in philosophy is expected to follow the personnel changes. Chrysler has already become more aggressive in its purchasing policies, according to some suppliers, and that is beginning to show up in surveys.


To reassure suppliers, Rosenfeld conducted a teleconference with key suppliers just hours after the change late last month. But few suppliers doubt that a new era is coming. The clear push at Chrysler is to sharply increase the amount of purchasing it does in developing countries.


Boag, who once worked with Chrysler CEO Tom LaSorda at General Motors‘ CAMI assembly plant in Ontario, will focus heavily on buying more components from low-cost countries.


That effort is the company’s so-called Project Magellan, on which Rosenfeld has reportedly focused heavily in recent months. The plan calls for Chrysler to shift $US5bn to low-cost supply sources.


Chrysler still enjoys smoother relations with suppliers than General Motors or Ford. But it has lost some ground on the supplier relations front, according to the latest Planning Perspectives supplier satisfaction study.


John Henke, president of Planning Perspectives, who has recently released his annual survey of OEM-Supplier relations in the North American industry told SupplierBusiness last week in Detroit that Chrysler’s relationship with its suppliers was already showing signs of strain.


His results are confirmed by SupplierBusiness’s own survey of supplier relations, which will be released at the upcoming Automotive News Europe congress in Prague on 27 June.


Supplier trust in Chrysler has taken a tumble, according to preliminary results. Even before the sale of Chrysler, LaSorda said he would push suppliers to be more flexible and seek the lowest possible cost at every opportunity. He has directed his purchasing staff to spend much more time looking for low-cost sourcing.


But LaSorda also emphasised that much of the low-cost sourcing could be done in North America – not necessarily in emerging markets.


Edmund Chew
SupplierBusiness.com