DaimlerChrysler Corporation's Lean Production Creates $300 Million in Savings
16 June 2000
DaimlerChrysler Corporation's Lean Production Leads Change In Manufacturing and Creates $300 Million in Cost Savings
AUBURN HILLS, Mich. - Manufacturing efficiencies from ongoing training and
implementation of DaimlerChrysler Corporation's lean production system generated
an estimated $300 million in favorable impact for the company in the last two
years.
As part of the company's continuous improvement activities to reinforce
the philosophy of "leading change" in its manufacturing facilities,
DaimlerChrysler Corp. has conducted 55, three-week Manufacturing Leadership
Training (MLT) sessions at 54 facilities worldwide, since 1998. Each MLT
activity, designed to improve quality and flexibility, while eliminating waste
and excess cost, yielded an estimated average of $500,000 in favorable impact
for the company for each facility, or a total of $25 million -- all part of
the company's $300 million efficiency gains.
"Continuous improvement in manufacturing never stops. We can never get to
a point where we're satisfied or we stop learning, or we'll lose our
competitive edge," said Gary Henson, DaimlerChrysler Executive Vice President
- Manufacturing. "Our challenge in manufacturing is how we continue to
motivate and train all our people to look for opportunities to improve. MLT
helps do that. Change is never easy, but we've got to be willing to find a
way to raise the bar a little more every day."
The Joint Activity Operating Principles (JAOP), as the production system
is referred to, represents both the philosophy, human infrastructure and the
measurement tools the company uses to produce Chrysler, Jeep and Dodge
vehicles at its manufacturing facilities worldwide.
After the Operating Principles were introduced and implemented in 1994,
the company was faced with the challenge of reinforcing and training
continuous improvement within its operations. DaimlerChrysler Corp. created
this training to empower its workforce to not only accept change, but to lead
change. The "leadership" aspect of the company's MLT activities sets
DaimlerChrysler Corp.'s approach apart from other operating system training.
"In our MLT activities, we have to demonstrate the tangible results of
leading change at all levels of our manufacturing operations," said Theodora
(Tedi) Casasanta, DaimlerChrysler, Director of Continuous Improvement Group.
"If I'm an operator and I've been performing a process in a certain way for a
long time, why would I want to change it? We have to show a better, more
efficient, easier way for the operator to do their job. Whether it's
workstation organization, error-proofing a process, visual management or
material handling, we have to look for the right reasons to want to change."
Based on the success of its MLT activities many suppliers are now
participating in similar training activities. In fact, other non-automotive-
related organizations are benchmarking DaimlerChrysler Corp.'s Operating
Principles for best practices they can apply to their own operations.
THE OPERATING PRINCIPLES AT JEFFERSON NORTH ASSEMBLY PLANT
Similar to all of DaimlerChrysler's manufacturing facilities, Jefferson
North Assembly Plant -- home of the Jeep Grand Cherokee -- conducts its
business using the Operating Principles. Rather than merely a way to assemble
vehicles, the Operating Principles represent the way the company does business
and maintains a lean Extended Enterprise system. It begins with core values
and beliefs, the philosophical principles from which decisions are made. From
there, the system analyzes the "how," identifying the enablers and subsystems
needed to execute the work (like human infrastructure, balanced schedules,
value-added activities and robust processes). It then identifies ways to
support those processes, tools for implementation, and standardized
measurements to gauge effectiveness.
The Operating Principles give team members at the facilities the big
picture framework from which to operate, at the same time providing
standardized methods and repeatable processes. The end result can be tracked
and improved by focusing on Safety, Quality, Delivery, Cost and Morale
(S,Q,D,C,M), internal gauges that each team member contributes to. Because
continuous improvement is one of the core beliefs, the process never stops.
All DaimlerChrysler's manufacturing facilities use the Operating
Principles, evidenced in its high-quality products, well-organized
workstations, standardized processes, ability to use visual management,
efficient material handling, flexibility and its commitment to training.
SYNERGIES WITH GERMANY
During the PMI (post-merger integration) process DaimlerChrysler began
working to formalize a common production system, a set of rules and principles
governing manufacturing operations worldwide. A common framework was put into
place as the result of benchmarking production systems of the former Chrysler
Corporation (Chrysler, Dodge and Jeep products) and the former Daimler-Benz
(Mercedes-Benz and smart products).
Although the concepts of these systems are very similar (lean
manufacturing, quality assurances, standardization, repeatable processes,
continuous improvement, just-in-time and sequential parts delivery, pull
system, etc.), the terminology and nomenclature were different.
In order to ensure consistent and accurate communication of terms and
principles, the company began working to develop a common production system.
Under the umbrella of this production system, the Chrysler group
facilities use its "Operating Principles" to govern production, and the
Mercedes-Benz plants use its "Mercedes-Benz Production System" to govern
production. The differences in the two systems relate to specific conditions,
cultures and nuances in producing the different brands.
The framework of this production system was developed by benchmarking 250
best-practice manufacturing examples from individual facilities worldwide. A
team comprised of engineers, human resources representatives, union
representatives, trainers, executives and suppliers completed a worldwide
benchmarking study of operating systems. At different operations worldwide,
the company studied the areas of human infrastructure, standardization,
quality focus, just-in-time delivery and continuous improvement.
DaimlerChrysler Corp. has been working with its North American unions to
develop its Operating Principles, just as the company in Germany is working
with its workers council to develop the Mercedes-Benz Production System.