Related: Automotive Production
"No two launches are alike," states Gary Henson, executive vice president-Manufacturing, DaimlerChrysler. So far as he's concerned, launches are the most challenging part of the business, one that he believes provides a competitive edge for those companies that are able to go from product creation to volume production in the shortest period of time—while, of course, maintaining product quality. "I spend most of my life preparing to do or doing," he comments. Launching or producing. One or the other. (Or nowadays, both simultaneously.)
So he has a situation where there are varying conditions—product, processes, geographies—under which launches are performed. He wants to get into a situation where he can do them quickly, not only to bring product to market faster so that the sales people have something to make money on, but also so that Manufacturing saves money by eliminating the traditional 8- to 12-week shutdown that's characteristic of the traditional launch (i.e., (1) there is build out of the previous model; (2) the people are sent home so a big crew can come in to construct and setup and tryout, and . . . the new tooling for the new product; (3) the people return to the plant and a long, slow ramp-up of production begins). What they are working to achieve is an overlapping set of ramps, with the current product's line going down and the new model's line going up. The ramp up would have a larger angle than that normally attained (say >45º rather than the traditional <45º). Capacity utilization is therefore improved. And face it: losing two to three months of production of a vehicle is extraordinarily costly.
Downtime has another consequence. Sandy Bouckley, director, Advanced Manufacturing Engineering, Minivan Platform, points out, "If people stop working for three months, they will require retraining." Who wouldn't get rusty after three months of not doing something? "So, by minimizing downtime, we are able to keep them focused." They will stay focused on their jobs—and on improving product and process quality. (And it is not like they aren't active on the training front, either. At the Windsor Assembly Plant, for example, there are 110,000 hours of training scheduled for 2000; there are just over 6,100 employees at the facility.)
Working Toward Flex.
Henson says that what they are working on achieving at DCX is flexibility in Manufacturing. If all goes right with regard to pulling this off and if there are a series of new product launches occurring as expected during the next three to four years (i.e., through the 2004 product launches), there is the potential, he projects, of DCX benefiting on the order of $3-billion. And he's not just pulling that number out of the air, either.
Using two examples—Sterling Heights Assembly Plant (SHAP; Sterling Heights, MI) and Windsor Assembly Plant (Windsor; Ontario)— there are some rather significant savings. In terms of SHAP, where they're now building the Sebring and Stratus sedans and the Sebring convertible, they're looking at a $100-million savings as a result of their flexibility initiative. At Windsor, where they're building the Dodge Caravan, Chrysler Town and Country, and Chrysler Voyager—current and 2001 models—they expect to save on the order of $500-million (not only by reducing downtime to two weeks from 10, but by having the ability to pilot a third model on line). So when they figure that this is the type of thing that will be happening at plants throughout the organization, it becomes fairly evident that $3-billion is an achievable figure.
The "Gummiband" conveyor system was something that North American DCX manufacturing people discovered while visiting plants in Germany. It is said to be far more efficient than conventional devices, especially as maintenance requirements are comparatively minimal.
(A Digression on Systems. Although much of what they are doing has to do with improvements in terms of hardware, there is another on-going initiative at DCX that is helping improve the bottom line: it‘s called "Manufacturing Leadership Training." MLT is a program wherein the company's production system—known as the "Joint Activity Operating Principles"—is conveyed to their personnel. Since 1998, there have been 55 three-week MLT sessions at 54 facilities around the world. It is estimated that through improvements in quality and flexibility and minimization [if not elimination] of waste and excess cost, these MLT events have led to an average savings of $500,000 each, or $25 million.
(It may be interesting to note that DCX manufacturing facilities operate with what are known as a set of "Operating Principles," which include the core values and beliefs of how work is to be done, as well as steps down and through the actual processes needed to attain a suitable human infrastructure, balanced schedules, value-added activities, and robust processes. Whether these are being realized is determined by measuring Safety, Quality, Delivery, Cost, and Morale.
(The company formerly known as Chrysler had its way of doing things. The company formerly known as Mercedes-Benz has the Mercedes-Benz Production System. So now that the two are one, are the two companies doing the same things in the same way? No. Although there is a overarching framework, because of differences in things like conditions and cultures, both the Operating Principles and the Mercedes-Benz Production System will continue to be used in the respective facilities.)
Flexibility is not just about launching new products. Flexibility allows companies to have the wherewithal to better respond to market desires. For example, not all products being produced are going to be as successful as the PT Cruiser; at the Toluca Assembly Plant where the Cruisers are built, the challenge has been to add capacity beyond what had been initially planned. But what happens when the popularity for a vehicle doesn't grow or if it fades over time? What then? Frank Faga, director, Advanced Manufacturing Engineering, Large Car Platform, observes, "You have a set plant capacity. But the market doesn't want that number. So we want to be able to put in a new model to fill that gap." In other words, figure that the plant capacity is 10. The market will buy 6. So the ideal would be able to bring in a popular model that would add 4. This is one of the capabilities that they want to achieve through having more flexible facilities. They don't want to under-utilize existing bricks and mortar. They want to optimize the use of what they have. It's more efficient that way. And the point of flexibility is gaining efficiency.
And in one important regard, flexible facilities are only one small aspect of what they are working on at DCX. Certainly, the fact that they are now using such things as skillet conveyors that provide the adjustability wherein there is the ability to accommodate various vehicles and a low-maintenance conveyor system that's used in Germany ("Gummiband"—yes, an industrial-strength rubber band, in effect) that lends itself to reconfiguration are important. As is providing for "white space"—areas where additional stations can be added in the future as requirements change. Anticipation is important.
But one of the key things that they've done is to settle on a standardized build process. The ramifications of this would be hard to overstate, so far as the DCX Manufacturing people are concerned. What this means is that although cars, trucks and minivans will all look different, there is a common approach when it comes to putting parts to-gether. If there are parts A, B, C, D, then there is an agreement that all platforms will se-quence those parts in the same manner, whether that's A, B, C, D or D, C, B, A or some other permutation. Because they are settling on that, this makes developing the processes more straightforward. This provides not only the ability to standardize on equipment, but it helps with regard to learning from what has been done elsewhere (e.g., "We've had trouble with the B-C; this is an area you should be concerned with on the next program.").
"The challenge," explains Frank J. Ewasyshyn, senior vice president of Advanced Manufacturing Engineering and General Manager of Minivan Operations, "is how do we get our heads around doing things faster?" Ewasyshyn points out that a key to faster acceleration in launch is that there is a team effort among designers, engineers and manufacturing personnel: even the company that is vaunted for its platform teams must stay focused on working cross functionally. (And it should be noted that with regard to design, which the Chrysler products have been widely lauded for during the past few years, Ewasyshyn insists, "We"—by which he means Manufacturing—"cannot limit the Design Office," as they work toward faster launches and flexibility, implying that some other auto manufacturers that are known for their launch speed and efficiency are not putting out vehicles with as advanced designs as those of DCX: not only are the designs from those other, unnamed companies more pedestrian, they are easier to build.)
Although they are focused on speed, and although their pockets are a whole lot deeper than they were when the former Chrysler Corp. was climbing out of a financial abyss, there is still a sensitivity with regard to spending: "We don't want to throw everything away in five years," Ewasyshyn says. Flexibility means reusability.
In order to get fast while achieving flexibility, it is likely that there is a bigger investment up front so that the benefits will be realized for a longer period of time. Bouckley explains that a flexible plant may cost 150% of what a traditional plant (i.e., one with a required shutdown for model change) would cost. But with the flexibility comes a vehicle loss avoidance of 100%. When the vehicle in question is a hot-selling model, loss avoidance is financially critical. Then, five years after that initial investment, when it is time to do a new model, the required manufacturing investment would be 50% of what it would otherwise be, and the loss avoidance capability is even greater.
Bouckley says that DCX Manufacturing people are now recognizing and acting on two realities that have traditionally been the concerns of other people within the organization:
- Consumers are increasingly interested in niche vehicles, not endless quantities of what the people up and down the street are driving
- 2. When plants supplying popular products go down for several weeks to change to a successor product from the successful one, the profits of the corporation takes a hit due to the lack of availability of the product.
"We have to look at the business in a new way," Bouckley states, then adds, "DaimlerChrysler sent me to get an MBA; I think they want me to look at the bigger picture."