Yesterday, the US Treasury Department announced a new plan to keep automotive parts suppliers from failing and causing an industry collapse.
The Supplier Support Program involves the US government guaranteeing payment for parts that participating suppliers ship to participating US automakers, General Motors and Chrysler. The participating suppliers can even get their owed money right away from the government by allowing the government to retain 1%. The government, then, would presumably seek reimbursement from the automakers.
This program recognizes the fact that I blogged about before: the collapse of a few key suppliers could result in the collapse of automakers.
The amount of money that the government is committing to this program is $5 billion. Not exactly chump change.
For years, the automotive industry has treated suppliers like the skinny, freckled kid on the playground. The supply base has been a veritable punching bag.
Does the Supplier Support Program – and the automakers’ declared recognition of the need for a healthy supply chain – mean that finally, FINALLY automotive suppliers will be treated with more respect?
Should we all take another look at our supply bases and reevaluate how important they are to us (albeit never showing that during a procurement negotiation)?
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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