STLA’s new supply chain chief junks unpopular policy

Last week, Stellantis announced that Maxime Picat (prior head of STLA’s Enlarged Europe organization) had been promoted to head of global purchasing and supply chain management.

The prior head of purchasing, Michelle Wen, had enforced a new policy which demanded that suppliers pass along any of their own cost savings on work done for Stellantis. More damaging, Stellantis demanded the right to unilaterally extend the length of agreements, which would force suppliers to deal with inflation and changing raw material or labor prices for an indefinite period. Other changes were demanded based on Stellantis’ desire to unify their global supplier rules.

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Many suppliers resorted to lawsuits or chose not to work with Stellantis with these policies in effect, because any savings would be given to Stellantis while any increase in costs would be borne by the suppliers. According to the Detroit News, the company ended up having to make individual side deals with various suppliers in order to get key parts.

Stellantis CEO Carlos Tavares has publicly said that he expects suppliers to take a share of the “hit” from moving to BEVs; the automaker wants to cut production expenses by up to half, to make up for the added cost of making battery-electric cars.

FCA US has been rated harshly by suppliers for years, from well before the creation of Stellantis, though supplier ratings of Stellantis in a survey dropped quite a bit from 2020 to 2021. During the predecessor company’s high point in supplier ratings in the 1990s, Chrysler had agreed to share its own cost savings with suppliers, when suppliers found cheaper ways to make the car—even if this meant parts cost went up (e.g. if it was cheaper to build the car or if other parts would not be needed).