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New FCA policies try to increase part quality

by David Zatz on

In early 2016, FCA will change from demanding cost saving goals for each buyer to team-based goals. This may have a direct impact on quality, since suppliers whose costs are rising will not have to cut corners to meet FCA demands.

partsBuyers’ compensation is directly affected by their individual cost saving goals, but some buyers may be getting parts that are facing higher raw-material prices, while others are not. Now, teams of buyers can work cooperatively.

This system has successfully been adopted by other companies, with research pointing out the advantages starting in the 1960s. It generally results in smarter decisions by buyers, and higher quality parts being purchased. Individual buyers can opt for better parts in the face of lower-cost, lower-quality alternatives.

transmission controller computer (electronics)

According to Larry Vellequette’s article in Automotive News, FCA is also replacing cost with quality as the first consideration in purchasing, worldwide. The first hurdle now is cost; starting next year, it will be quality, as judged by end users if that’s possible. Once that hurdle is cleared, cost will be a major factor.

How this works in practice remains to be seen; buyers who have been rewarded for cost savings for many years may find it hard to shift gears and put quality first. Research shows that most people do prefer quality to either productivity or cost savings in their work. Recent warranty and repair debacles, along with decades of research into quality, though, show that cost cutting at the expense of quality is often responsible for higher costs in the long run.


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