Chrysler Group intends for its Tier One suppliers to allocate 10 percent of their purchasing budget for minority vendors, which are typically small businesses with limited cash flow and small R&D budgets. Minority-owned businesses are those that often depend heavily on one or two clients as well as those that banks are sometimes unwilling to grant loans to.
With Chrysler’s initiative, the company will name 100 reliable suppliers that will be spread through the company’s six purchasing sectors – powertrain, chemical, Mopar, metals, electric and indirect purchasing.
Chrysler will request each supplier to create a detailed plan to do business with the minority vendors, the company’s senior director of purchasing Sigmund Huber disclosed. He explained that the suppliers who can produce a plan will be allowed to make a bid on the company’s contracts in the future.
As for those non-complying suppliers, Huber said, "they better have a plan in place." The company’s minority purchasing program is attempting to bring back the momentum lost during the recession.
Huber also shared that Chrysler’s own minority purchasing dropped a little while the Tier One suppliers experienced a “dramatic” falloff. In addition, he stated that the manufacturers were “struggling” to survive.
Under the company’s program, a minority supplier is one wherein majority of the owners of the business is a Hispanic, black or Native American individual or group. Women-owned businesses, which will receive Chrysler’s allotment of 3 percent of its purchasing, belong to a separate category.