Lost Supplier Trust, Lost Profits

This is an excerpt of the original article. It was written for the May-June 2014 edition of Supply Chain Management Review. The full article is available to current subscribers.

May-June 2014

Getting the most from Sales and Operations Planning is a combination of people, processes, and technology. The Red Wing Shoe Company details the steps it took to improve S&OP processes, slash its S&OP planning efforts by 50 percent, and align manufacturing with sales—all while growing its business.

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By any measure, Chrysler is on a roll. Sales are strong with double-digit improvements over previous years. Following the merger with Fiat, the automaker is making money, contributing substantially to Fiat’s overall profits, and enabling the improvement and expansion of Chrysler’s manufacturing plants in the United States. Talented Chrysler personnel are working well under the leadership of Sergio Marchionne, chairman and CEO of the new Fiat Chrysler Automobiles N.V. Together they have developed a comprehensive plan for Chrysler’s long-term success.

Marchionne has publicly stated that Chrysler’s future success now comes down to the execution of their well-developed plans. Chrysler’s history, however, suggests that Chrysler’s plans should not be considered complete. Conspicuously absent is any mention of Chrysler’s suppliers and how they will be viewed going forward.

That could be a mistake. With Chrysler suppliers providing goods and services valued at approximately 70 percent of revenue, the time may be right for the automaker’s leadership to review Chrysler’s 20 year checkered history of supplier working relations. If they do, they will find strong evidence that the more trusting the supplier working relations, the greater the suppliers’ contribution to Chrysler’s profitability.

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