Fiat-Chrysler has relieved its buying staff of cost savings goals, a move the company believes will improve supplier relations and overall quality, Automotive News reports.
Currently, FCA buyers are given cost savings goals that may affect their compensation if not met. This creates tension between the buyer and supplier, as the buyer is less likely to be open to pricing negotiations or to sympathize with spikes in raw material prices, for example.
Current VP of purchasing and supplier quality, Tom Finelli, says getting rid of the savings goals will allow buyers to choose higher quality parts and will improve the company’s supplier relations. The company will still take into account costs, however it will split workers up into teams who can work together to meet a joint goal.
The decision comes as Fiat Chrysler replaces cost with quality as the most important aspect of its parts buying operation, AN says. The automaker used to take into account cost first and foremost when taking supplier bids for a part, however now quality will be the first consideration.