Can Stellantis improve its supplier relations?

From 2009 to 2012, one automaker made major gains on Plante Moran's annual supplier-relations report card.

This particular manufacturer upped its score nearly 90 points during that span in the North American Automotive OEM-Supplier Working Relations Index, with high marks from its supply base for accessibility and swift problem-solving. The company even moved up a spot in the rankings to a tie for fifth place.

That rising automaker was Chrysler, but the strides it made in the closely watched survey a decade ago are well in the rearview mirror these days. The automaker, now called Stellantis after a 2021 merger, is again ensconced at the bottom of the supplier-relations rankings after a steep dive in this year's study.

Stellantis' standing took an additional hit when it altered its purchase order terms and conditions in a way that would've forced its North America suppliers to absorb more costs. The automaker reversed most of the changes after suppliers pushed back.

Against this backdrop, it's clear Stellantis has a long way to go to get its supplier relations on a par with competitors.

The company has made notable progress before and it can do it again, says Dave Andrea, principal in Plante Moran's strategy and automotive and mobility consulting practice, which conducts the annual study. The index measures performance in areas including timely communication, buyer accessibility and effective product development involvement.

"It is in their past that they can move forward," Andrea told sibling publication Automotive News in Detroit.

Chrysler's upward moves years ago came under the leadership of the late Dan Knott, who passed away in April 2012 at age 51 after a battle with cancer. Andrea said Knott thrived in the accessibility component because he was out in the supplier community listening and bringing information back to the company.

Andrea used to attend internal town hall meetings that Chrysler held for suppliers, where Knott would survey the crowd with his purchasing unit. When suppliers raised an issue during the gatherings, he said, Knott would ask the crowd if anyone else was having the same problem and, if so, immediately assign his team members to resolve it.

Sometimes, Andrea said all it takes is for an automaker to solve a problem is to get the right team in the room with suppliers and hear directly from them. Complex issues can then be broken down and solved within weeks, depending on the task.

"Dan was very good at resolving issues quickly and not in an emotional way. He was an engineer," Andrea said. "He would bring Chrysler resources together to quickly solve issues, and that would help the suppliers, but without a doubt it helped Chrysler as well in reducing costs and moving its product lineup forward."

Accessibility and speed in handling issues, Andrea said, are two areas that Stellantis' leadership team could tackle right away in an effort to earn supplier trust.

"Sometimes the changes are long in process, but you could change some programs immediately," Andrea said.

"In terms of closing open issues, I'm not discounting how difficult that is just given all the industry issues on price inflation, chip shortages, volume disputes. But if a supplier can see that issues are being resolved quickly, and are resolved in a fair way, win or lose, at least they're dealt with in a fair way."

Some of this rehab effort will fall on Marlo Vitous, whom Stellantis appointed as its new North American head of purchasing and supply chain, as of Wednesday, June 1. She replaced the retiring Martin Horneck, whom Fiat Chrysler Automobiles hired in 2020.

Stellantis declined a request by Automotive News to make Vitous available for an interview.

Horneck is the second top purchasing executive to leave the company amid its deteriorating supplier relations.

Maxime Picat, 48, who was COO of the automaker's Enlarged Europe region, replaced Michelle Wen as global head of purchasing and supply chain in May.

A spokesperson for one large supplier said that Stellantis is "really good on personal relationships" and that "you can get along with them."

But the official, who spoke on condition of anonymity to protect the supplier's ongoing relationship with Stellantis, said the company needs to speed up its "execution on deals" because it "takes forever."

"They need to move more quickly and definitively with action. Talk alone doesn't cut it," the supplier official said.

"If you keep talking and you're professional with each other and you're not being a jerk, that's great. But if it doesn't amount to anything, it's not solving the problem."