By: David Sedgwick
July 29, 2013
As light-vehicle production in North America approaches a record this summer, automakers are exerting more influence over suppliers to eliminate production bottlenecks.
"We've had a couple dozen folks who have raised their hands and said that they were willing to take part in this," Scott Kunselman, Chrysler's purchasing chief, told Automotive News last week.
Automakers are walking a tightrope: They seek good relations with suppliers to ensure the best possible technology and prices. But they want to exert more control to ensure a reliable flow of parts at a time when suppliers are preparing for a wave of product launches.
This year automakers have scheduled 23 product launches in North America, according to IHS Automotive. That means suppliers must install new tooling, produce new parts and open new assembly lines.
The troubled launch of the Lincoln MKZ this year, partially because of parts problems, underlined the hazards of flawed procedures.
The need for smooth launches is one reason GM chose Grace Lieblein, the former chief of GM do Brasil, to run GM's global purchasing operation. In 2011 and 2012 Lieblein oversaw nine production launches in Brazil.
"We make sure to learn lessons from each launch and apply them to the next launch," Lieblein said in an interview last week. "Sometimes [the risk] is not at the Tier 1 level but at the Tier 2 or Tier 3 level."
GM has taken a number of steps to ensure smooth launches. The company has hired 100 employees — including some retired GM engineers — to beef up the engineering teams that visit suppliers' factories.
It also issued a new "terms and conditions" contract on July 15 that requires a supplier to provide, on request, "its most current income statements, balance sheets, cash-flow statements and supporting data and schedules."
Like GM, Toyota Motor Corp. is closely monitoring suppliers involved in its launches, which this year include the redesigned RAV4, Corolla and Tundra.
Toyota, an industry leader in lean manufacturing, traditionally dispatches engineering teams to supplier factories to monitor their progress, says Bob Young, North American purchasing chief.
Those teams pay special attention to the company's watch list of suppliers that must run their factories around the clock to meet production quotas. As many as 40 suppliers were on that list, but it's down to 25 now, Young says.
The company also is trying to monitor lower-tier suppliers that might pose a bottleneck threat, but that can be difficult to manage, Young says.
So Toyota may introduce an online census next year for North American suppliers.
"An online system has been deployed in Japan, and we are studying whether to employ it in North America," Young says. "To date, we've only [identified suppliers] down to the Tier 3 level. It gets challenging when you go below that."
Beefed-up audit teams
Like its peers, Chrysler is trying to spot potential problems among suppliers before they occur.
Previously, Chrysler's purchasing operation devoted much of its engineering resources to clean up suppliers' quality problems, Kunselman says.
Now Chrysler has beefed up its audit teams that inspect supplier factories before problems occur. The company plans to visit its suppliers' factories at least once a year.
"We've visited more than 2,500 locations since September," Kunselman says. "We insist on meeting their quality people, and we measure it on our scorecards."
And now Chrysler has started teaching its lean production system, called World Class Manufacturing, to key suppliers that produce sequenced components such as instrument panels, door panels, seats and front fascias.
These suppliers are considered key because they must provide components to an assembly plant within 90 minutes of the factory's order.
The first supplier to adopt Chrysler's manufacturing system was Dakkota Integrated Systems, which makes instrument panels for Chrysler's Windsor minivan plant.
In an April interview, Dan Hillock, Dakkota's director of operations, said he runs his factory as if it were a department within Chrysler's minivan plant.
"Every time Windsor goes on break, we go on break," says Dan Hillock, Dakkota's director of operations. "Every time they have lunch, we have lunch. And every time they go home early, we go home early."
A complete version of this story is available at www.autonews.com.