June 30, 2008 - 12:01 am ET
Chrysler LLC is pulling the plug today, June 30, on the Powerway system, which it had been using with its Tier 1 suppliers since 2000.
The automaker used Powerway to communicate with suppliers developing parts for new vehicles. The system is designed to ensure that suppliers meet timing and quality deadlines.
This move affects 6,000 Tier 1 supplier manufacturing sites that develop and supply parts for Chrysler. Suppliers use Powerway in factories to report on stages of part development, such as prototype production, and for part changes ordered by the automaker.
Chrysler and its suppliers are dissatisfied with the cost and efficiency of the Web-based system, said Douglas Crichton, Chrysler's senior manager of Advance Quality Planning. So the automaker, with help from its Tier 1 suppliers, will develop its own system, he said.
Powerway was charging each supplier manufacturing site an annual subscription fee based on the number of Powerway users and a license fee for each production site. Chrysler says it will not charge its suppliers.
Chrysler is ditching the Powerway software despite holding an ownership stake in the company, Powerway Inc., of Indianapolis. Chrysler won't say whether it will divest its stake, which was 38 percent when Chrysler began using the Powerway system in 2000.
Powerway Chairman and CEO Dave Chambliss is disappointed in Chrysler's decision, which he said was a surprise. Chrysler is Powerway's largest customer and heavily influenced the shape of the product, Chambliss said.
"There was no discussion or warning whatsoever that this was going to happen," he said. "I was very disappointed."
Chrysler, General Motors and Ford Motor Co. require suppliers to report quality data at specific times during product development.
Chrysler, GM and Ford all considered using this common Web-based system from Powerway, but only Chrysler and GM used the software. Ford decided the work could be done cheaper with an in-house system. GM ditched the software in 2005 for similar reasons.
Chrysler will launch its in-house advanced quality planning data management tool in the fourth quarter of 2009, Crichton says. "It's more efficient in-house because it links directly with our engineering, cost and procurement systems."