Chrysler has announced it will reduce costs by 25 per cent over the next three years by changing the production process and improving the number shared pars between models.
Chrysler executives continue making significant changes to Chrysler. After the will to reduce the number of models, the carmaker has announced it will change its way of working with suppliers. First, it will reduce the number of parts in order to cut cost. It will also extend its production schedule from one week to thirty days allowing suppliers to plan production in a more efficient way than today. In the meantime, the carmaker asks suppliers located in North America to match prices of companies in low-cost countries such as China and India.
Every year, Chrysler is buying for £20 billion of supplies, mainly in the US. The carmaker believes that it will boost its chance of surviving on the global market if it outsources its parts production to poorer countries. However, the decision to move production abroad is always badly felt by consumers. In the meantime, outsourcing in China or India might become a disadvantage to react quickly to the market. By pressuring its American suppliers, Chrysler tries to get the best of the two worlds: cheap prices, while keeping a good brand image.
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