The return of SCORE?
Back in the 1990s - in the heady days of favorable reviews, high profits, rising quality, and increased retention and new-customer captures - Chrysler used to run a program called SCORE, along with its Extended Enterprise system. The basic idea behind these programs was that Chrysler would lean on particular, carefully chosen suppliers more for engineering and design work, and expect these suppliers to come up with ideas for saving money; in return Chrysler would share the cost savings and give those suppliers a favored status. The idea saved Chrysler literally billions of dollars while allowing things like a practically free traction control system on the 2000 Neon (when traction control was still very new).
Such frills were slashed by the Daimler overseers, in their infinite wisdom. They preferred to simply pay suppliers less, year after year. Oddly, this did not result in increased profits or reduced costs. Perhaps they never read the articles on Allpar which explained the difference between saving money on parts, and saving money on overall systems. Spending an extra dime on a unit in order to cut a quarter off assembly and warranty costs is a cost savings, but the Daimler people would put it down as tomfoolery.
Some have wondered about Chrysler’s relationships with its suppliers now that the cord has largely been cut. Like everything else, there are two sides. The good side is that Daimler is on the sidelines. The bad side is that Steve Feinberg put Bob Nardelli in charge, and Nardelli brought over the team that expanded and then started to destroy Home Depot with cheap, poor quality Chinese parts. (Not that China can’t make things well; it’s just that, like any factories, they’ll make whatever you ask them to make. Ask for cheap and you’ll get cheap. Ask for good and you’ll get good. That might be one reason why Apple scored so far above HP, Dell, and Acer recent surveys, though they all use components or whole systems from China.)
Some news is starting to trickle out. The ex-Home Depot purchasing maven, Campi, said that Chrysler plans to select up to ten key suppliers for a new “Supplier Choice” program. These companies would be exempt from competitive bidding but would work with Chrysler to set a market price for the contract, and would be involved in vehicle development.
This sounds something like SCORE but without the same method of sharing cost savings.
The first company to join the program, incidentally, is Denso, which is partly owned by Toyota - Denso is essentially Toyota’s version of Delphi. Except, of course, that it makes money.
Campi also said that the company would finally stop its insane (he didn’t use that word!) required annual cost reductions. These were started by Daimler on the assumption that, no matter what raw materials cost, parts suppliers can cut prices by 5% - 15% every year, year after year, without fail. Because, of course, steel is just like computer memory.
We might be seeing some progress.
