Chrysler has announced a plan to reduce its parts spending by 25 percent over the next three years, a new report finds. The plan includes extending its production schedule from one week to 30 days, more parts sharing among vehicles and fewer last minute engineering changes.
Chrysler’s current production schedule gives suppliers about a one-week notice. The new plan will call for a 30-day notice, which should help cut costs by eliminating overtime, unforeseen production spikes and the purchase of excess materials.
Chrysler also plans to share more parts among cars that go unseen to the end user — such as wiring harnesses. Reducing late changes to engineering plans should also help to reduce costs, according to Automotive News.
If the aforementioned changes don’t net a 25 percent price reduction in the next three years, Chrysler says that it will ask suppliers to lower their prices.
Chrysler will also be pressuring suppliers to meet prices from India and China-based suppliers. Chrysler currently spends about $40 billion on parts per year, the vast majority of which are produced in North America. However, Chrysler’s head of purchasing, John Campi, feels that one of Chrysler’s biggest problems is that it is not sourcing enough parts from low-cost overseas suppliers.
