Published on May 21, 2014

Chrysler plagued by pay glitches

By David Sedgwick, Crain News Service

DETROIT (May 21, 2014) — Chrysler Group L.L.C. says it is working hard to unsnarl a new online invoice system for vendors that caused delays and nonpayments for dozens of suppliers.

The system was so glitchy when it was introduced 15 months ago that it likely contributed to Chrysler’s poor results in a major supplier survey on supplier-auto maker relations.

Chrysler’s troubles began last year when it adopted an online payment system devised by SAP A.G.

Parts suppliers encountered delays when old purchase orders were transferred onto the new system. Those glitches did not affect Chrysler’s vehicle production, a company spokeswoman said.

The software continued to malfunction when Chrysler switched 1,500 indirect suppliers—who provide such services as tooling and advertising—onto it on Jan. 1.

About 50 of those indirect suppliers have not been paid. Others have experienced delays, so Chrysler Vice President Jay Wilton held a town hall meeting on April 28 to clear the air.

The supplier-survey report noted that Chrysler “significantly trails all OEMs in paying invoices on time and according to terms.”

The spokeswoman said the payment system now works pretty well with new invoices, but Chrysler is not ready to declare victory.

In a written statement, Scott Kunselman, Chrysler purchasing chief, acknowledged the new payment system—along with Chrysler’s rising vehicle production—has stressed out suppliers.

He added: “It has been a very challenging year for us and our supplier partners.”

This report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.

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