Chrysler's supply chain relationship transformatio

2022-06-14
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Chrysler's supply chain relationship transformation

in terms of cross enterprise process reorganization, one of the most typical examples may be the supply chain relationship transformation carried out by the American carmaker Chrysler after 1989

Chrysler supply chain relationship transformation is a transformation of the overall value creation process that takes the reform of the external value chain of the enterprise as the core and drives the transformation of the internal supply chain links of the enterprise. Throughout the 1980s, Chrysler's automobile production and profit margin were in a declining situation compared with its main competitors Ford and general motors. At the same time, the Japanese carmakers led by Honda are doing business step by step, constantly encroaching on the local market of the United States and establishing their own manufacturing and sales bases in the United States. Faced with such severe internal and external problems as the promotion of a series of materials free of spraying and instead of electroplating at Chinaplas in Guangzhou in 2015, Chrysler conducted a targeted study on the supply chain relationship of Honda in Japan. It is found that Honda automobile model is an integrated supply chain relationship, which has long-term cooperation with suppliers and owns part of the equity of suppliers; Suppliers participate in the whole process of production, care about the final market effect of automobile, and have the power of innovation. In the Chrysler model, the supplier is only a temporary worker for the boss, bidding one by one according to the project and providing parts as required. Therefore, the desire for innovation is extremely weak

the results of this study eventually led Chrysler's decision-makers to reform its supply chain relationship in 1989. Its core model is called score - supplier cost reduction effort. The main contents of this reform are: reducing the number of suppliers, stabilizing the interests of suppliers, encouraging suppliers to participate more in the whole process of automobile production, and rewarding suppliers' innovative activities and suggestions

Kung Fu pays off! The results of the reform are quite convincing: in 1994, Chrysler formed its own new supply chain relationship: the selection standard of suppliers is no longer bidding one by one, winning at a low price and ignoring past achievements, but has become a history of prior evaluation, reasonable price and considering past cooperation; The interest relationship between the company and suppliers has also changed from the original short-term contract and not caring about the profits of suppliers to long-term contract and focusing on win-win; In terms of division of labor and cooperation, different manufacturers are no longer responsible for design, mold and parts, but one manufacturer is responsible for the whole process of part R & D and production; In addition, the company provides a smooth channel response for suppliers' innovation suggestions, allowing suppliers to participate in the transformation of the whole value chain, etc

The implementation of

score program has also achieved great success. In the first two years of implementation, from 1991 to 1992, the action produced 875 new suggestions to improve production, reducing costs by about US $170 million a year; In 1994, suppliers provided 3786 new suggestions and reduced costs by 504 million US dollars; By the end of 1995, Chrysler had implemented more than 5300 new proposals, saving us $1.7 billion. Before the reform, the average research and development time of a new Chrysler car was 234 weeks, which was shortened to 166 weeks after the reform; Before the reform, the average profit of Chrysler was $250. After the reform, the average profit of a car increased to $2110; Before the reform, Chrysler's asset profit margin was 2 percentage points lower than that of Ford and general motors, and after the reform, the asset profit margin was 4 percentage points higher than that of the last two companies. Chrysler has become the most profitable automobile manufacturing company in the United States. (end)

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