Chrysler Group Supplier Cost Reduction Program (a)

Abstract

Chrysler's innovative supplier cost reduction (SCORE) program had made over $7 billion in savings for Chrysler during the 1990s, but issues of program management are raised after the 1998 merger with Daimler Benz. Prompted by worsening automotive industry conditions and Chrysler's third-quarter losses in 2000 of over $500 million, the new Daimler-Chrysler management team is considering major changes in the SCORE program for 2001. Excerpt UVA-OM-1064 Rev. Jan. 20, 2017 Chrysler Group Supplier Cost Reduction Program (A) In the fall of 2000, John Tremain, director of strategic operations for the Chrysler Group's procurement and supply office, faced a problem. He administered the company's much-vaunted SCORE (supplier cost reduction) program and was charged with proposing revisions to the program for the upcoming 2001 calendar year. SCORE was a Chrysler program that had been implemented as part of its collaborative extended enterprise concept. Chrysler's extended enterprise and SCORE, which Chrysler had been working to develop during the previous 12 years, had become industry benchmarks for collaborative supplier relationships and supply chain management in the automotive industry. Many observers thought these programs were important contributors to Chrysler's reduced product-development cycle time, Lean R&D budgets, and increased profits per vehicle during much of the 1990s. Although the SCORE program had been an industry benchmark for a number of years, the fall of 2000 brought a series of new challenges: . . .