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For automotive suppliers, hope springs eternal

Many Tier 2 and Tier 3 (moldmakers and some custom plastics processors) may at last be getting what they’ve asked for all these years: engineers in the driver’s seat of mold and molded parts purchasing. For a couple of decades now, many mold manufacturers and molding companies that supply OEMs and Tier 1 suppliers have groused about having to deal with the so-called “purchasing agents” that couldn’t figure out why the OEM wanted to buy gray-green fuzzy stuff that grows on bread.

The kingdom of “Procurement”, or Purchasing Departments, was one that was often difficult to navigate for many mold manufacturers. Rarely, if ever, did a mold manufacture deal with the new product engineer, or even a tooling engineer. Procurement personnel at automotive OEMs or Tier 1 suppliers often were assigned a tooling engineer with who they worked when it came to buying highly technical items such as molds. However, when it came to awarding the P.O., that was the decision of the purchasing agent. 

Protocol often demanded that the mold supplier work strictly with the purchasing agent. Going around that person to get directly to the tooling engineer or the new product design engineer was a strict no-no. Doing so could get you black-listed as a vendor to that company.

Rotating procurement personnel was in many cases standard procedure. Moving them from purchasing MRO (maintenance, repair, operations) supplies to purchasing metal stampings to purchasing office supplies and then to molds, was a way to keep things on the up-and-up. Management didn’t want the purchasing agent to get too cozy with the vendor and be tempted by “favors” from the vendor in exchange for a purchase order. (I know, don’t write me nasty responses. All of that behavior has been negated by strict rules regarding gifts, etc.)

A recent editorial in IHS SupplierBusiness, notes that a change is taking place among automotive OEMs in which “[o]ne-by-one, engineering executives have moved into the top procurement jobs and . . . are focusing more on integration of parts procurement with product development and smooth launches, than slashing piece prices.”

I’m sure there are a number of mold and/or molded parts suppliers that might not totally agree with that observation, but if this is true, that change will be a welcome one. SupplierBusiness points out that the latest move to install engineers in procurement positions came when Ford Motor Co. announced last week “the retirement of Tony Brown, Ford’s global purchasing boss since 2002 . . . [and] replaced by Hau Thai-Tang, who had been the company’s engineering chief.”
SupplierBusiness’s editorial noted that “Thai-Tang is representative of the new group of purchasing leaders at the Detroit Three [who] are career engineering and product-development executives, not professional parts-buying titans who have spent their entire working lives in the purchasing organizations of their companies.”
General Motors also has a new top purchasing executive, Grace Lieblein, who once was the chief engineer on the GMC Acadia and Buick Enclave crossovers, before moving to the top job at GM Mexico in January 2009, said SupplierBusiness, then on to Brazil. She was praised for her success in integrating purchasing and logistics with product development globally, and particularly in Brazil. “It was Lieblein who called in retired GM engineers to work with suppliers to make sure nothing went astray as the crucial full-sized pickups (Chevrolet Silverado and GMS Sierra) went into production,” said the editorial.
Chrysler tapped Scott Kunselman, once head of engineering at that OEM, to succeed the late Dan Knott, who some automotive industry “watchers” credit with being the first product development engineer to create a “strong sense of supplier partnership” when he was named head of purchasing in 2009. Kunselman’s approach is much the same, with teams of Chrysler engineers “working closely with 10 suppliers to improve their productivity.”
It seems from the various surveys compiled by the Original Equipment Suppliers Association and Planning Perspectives Inc., that over the past few years OEMs and the Tier 1s that work with molders and mold manufacturers, are beginning to learn the benefit of a good working relationship – not adversarial as they’ve been in the past. These OEMs and Tier 1 suppliers have learned that you’re only as good as your suppliers, and the suppliers are only as good as the engineers who work with them.

Purchasing agents might be able to get a good deal on office supplies such as paper and ink cartridges, and be a hero for saving money. But going for the lowest price for a mold that makes critical parts for vehicles is the way to become the goat.

Putting engineers and product development people in positions of procuring highly technical components is a smart move, and one that should pay off for everyone involved.

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