Chrysler Improves Ordering Process After 2006 Crisis
By Eric Mayne WardsAuto.com, Feb 4, 2007 12:24 PM

LAS VEGAS – Chrysler Group vows never to repeat the mistakes of 2006 when inventories swelled and dealers were inundated with poorly equipped vehicles that could be sold only with significant incentives.

“We won’t be in the situation that we had in ’06 ever again,” promises President and CEO Tom LaSorda.

Inventories are under control, including the auto maker’s shadow stockpile known internally as the “sales bank.”

Since the December ouster of marketing chief Joe Eberhardt, LaSorda has taken personal control of those operations – a job he intends to give up within the next two months. But he reveals during a roundtable discussion with journalists at the National Automobile Dealers Assn. convention here that “the biggest issue” he took on was the auto maker’s dealer order protocol.

“We changed the entire volume planning group and what they do and how it’s structured,” he says.

The aim of this overhaul is to avoid alienating dealers.

Mix adjusted to supply more Jeep Patriots.

“We built too much,” LaSorda admits. “We pushed too much inventory. They didn’t like it.

“Bottom line: they pushed back,” he says. “And we said we’re going to fix it. And we are, and we have. The relationships are building.”

Now he personally receives weekly reports on “any orders that come in that can’t be filled for any particular reason.”

And how does he resolve such roadblocks?

“Just like I did in manufacturing – find a way to break it,” says LaSorda, who built his career on a reputation for hard-nosed assessments and no-nonsense solutions to production bottlenecks.

Currently, he is dealing with two headaches involving a pair of new Jeep products: the Patriot cross/utility vehicle and the Wrangler Unlimited midsize SUV. In both cases, demand from dealers is outstripping supply.

“It’s a nice problem to have,” he admits. But to generate more Patriot production, Chrysler has adjusted the mix at its plant in Belvidere, IL.

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The site also is home to two other new products: the Dodge Caliber small car and Jeep Compass CUV. “So we’re having to swing mix in the plant towards Patriot,” LaSorda says.

The answer to Wrangler production requires a solution that is not entirely in Chrysler’s control, he notes.

“I can’t get enough parts. It’s way above our production plan. So when you get into that situation, you’re trying to ask suppliers to give us parts.”

For the first time, Chrysler also acknowledges the Jeep Liberty SUV will see a new treatment this year. It arrives in the fall, LaSorda says without offering detail.

The auto maker is launching eight new products this year, including the Dodge Avenger midsize car; Chrysler Sebring convertible; Chrysler Town & Country and Dodge Grand Caravan minivans; a high-performance (SRT) variant of the Dodge Caliber and a hybrid version of the Dodge Durango fullsize SUV.

In addition, LaSorda promises an announcement regarding a mild-hybrid program within the next two weeks.

Meanwhile, he defers questions about Chrysler’s pending restructuring announcement, set for Feb. 14.

“We’re going to do what we need to do, in all areas of the business,” LaSorda says. “It’ll be widespread.”

The initiative was sparked, in part, by the auto maker’s $1.5 billion third-quarter loss in 2006.

emayne@wardsauto.com