FCA To Focus More on Supplier Quality Than Cost Moving Forward
New Policy To Change Incentives For Purchasing Managers
Despite its recent debuts of stylish, high-performance flagship vehicles, Fiat Chrysler Automobiles (FCA) has had a tough time shaking its long-held reputation for mediocre product quality. According to a report from Automotive News, the company has taken a closer look at its policy regarding parts procurement, and its incentive structure for purchasing managers. Under the old policy, purchasing managers were given a bonus when they negotiated lower prices from suppliers and would sometimes have their compensation cut if they did not meet those cost-cutting goals. Under the new structure, purchasing managers will be working in teams and collaborating to find the best balance of cost and quality when looking for components. The new policy also removes the individual penalty for not meeting cost targets, provided one of the other members of the team finds a component and supplier that meets the cost and quality goals.
FCA’s vice president for purchasing and supplier quality, Tom Finelli, said that relationships with suppliers were positive at the leadership level but were poor at the buyer level. In a change of overall strategy and emphasis earlier this year, FCA is now more intently focused on quality over cost. Additionally, the yardstick for quality is now based more on consumer perception of the component, rather than manufacturing expediency. In a recent automotive supplier survey, FCA ranked last among six major automakers for being slow to pay and failing to help vendors cut costs.
Source: Automotive News