Source : Procurement Leaders

US automotive giant Chrysler has beefed up its minority supplier purchasing programme according to its purchasing chief.

Part of the company’s diversity policy, which was adopted last year, means that a tier-one supplier’s risk of losing business with Chrysler was increased if it doesn’t meet the automaker’s minority purchasing goals.

Dan Knott, senior vice president of purchasing and chairman of the Michigan Minority Supplier Development Council, told Crain’s Detroit Business that suppliers are scored annually on how much they spend with business owned by women and minority groups and on their “minority sourcing performance”.

“Now we’re putting some real teeth into it, and we can influence the tier-one/tier-two behaviour through the tier ones,” said Knott.

A score is taken from this minority sourcing indicator which represents 5% of a suppliers score to Chrysler but if this score is zero it is multiplied to 20% and can influence if a contract is awarded.

Knott emphasised the potential value that the programme could have to Chrysler’s business. “We just have to be smart about how we’re doing it,” he noted.

The programme was introduced by Chrysler last year and has increased spend with minority suppliers at tier one and lower by $915m to a total of $4bn.