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The Fifth Dimension: The Supplier The Fifth Dimension: The Supplier & OEM Interface& OEM Interface
Steve WalukasSteve Walukas
Vice PresidentVice PresidentCorporate Quality Corporate Quality DaimlerChrysler CorporationDaimlerChrysler Corporation
22
The Fifth DimensionThe Fifth DimensionThe Supplier & OEM InterfaceThe Supplier & OEM Interface
DaimlerChrysler OverviewDaimlerChrysler OverviewThe Chrysler Group ResultsThe Chrysler Group ResultsThe Chrysler Group’s Product OffensiveThe Chrysler Group’s Product OffensiveInternal and External InterfaceInternal and External Interface
33
DaimlerChrysler OverviewDaimlerChrysler OverviewTHE AUTOMOTIVE BUSINESS AND AUTOMOBILE-RELATED SERVICES
ACCOUNT FOR 99% OF DAIMLERCHRYSLER'S REVENUES
44
DaimlerChrysler’s Strategy is DaimlerChrysler’s Strategy is Based on Four Strategic PillarsBased on Four Strategic Pillars
Strong Brand PortfolioGlobal Presence
Innovation & Technology Leadership Broad Product Range
55
Extensive Research CapabilitiesExtensive Research Capabilities
Permanent staff 1,600 scientists plus 1,000 doctoral/diploma candidates/junior staff
66
Disciplined Product Development ProcessesDisciplined Product Development Processes
CustomerTrends
Competition
DesignIdeas
TechnologyTrends
Fuel Prices
EconomicEnvironment
RegulatoryTrends
Product Strategy Team
Product Executive Committee
• Regulatory Changes (PEC)• Quality Improvement
(Monthly Review)• Cost Reduction
(Bi-weekly Component Teams)
PPDC V1 RenewalMid-CycleFresheningIDEATION
ProgramTransition
Product Strategy Chrysler Development System Continuous Improvement
Product Innovation Team
Establish Program Vision
Identify Potential
Alternatives
Confirm Product/ Process Design
Optimize Product/ Process Design
Verify Product/ Process Design
Validate Product/
Process & Verify
Facilities
Validate Vehicle/
Facilities & Launch
Ramp-up
ABCD2D1EFG2G1H2H1I
Execution
Launch
Concept Development Design
Technology ManagementBUSINESSCASE
CustomerTrends
Competition
DesignIdeas
TechnologyTrends
Fuel Prices
EconomicEnvironment
RegulatoryTrends
Product Strategy Team
Product Executive Committee
• Regulatory Changes (PEC)• Quality Improvement
(Monthly Review)• Cost Reduction
(Bi-weekly Component Teams)
PPDC V1 RenewalMid-CycleFresheningIDEATION
ProgramTransition
Product Strategy Chrysler Development System Continuous Improvement
Product Innovation Team
Establish Program Vision
Identify Potential
Alternatives
Confirm Product/ Process Design
Optimize Product/ Process Design
Verify Product/ Process Design
Validate Product/
Process & Verify
Facilities
Validate Vehicle/
Facilities & Launch
Ramp-up
ABCD2D1EFG2G1H2H1I
Execution
Launch
Concept Development Design
Technology ManagementBUSINESSCASE
CustomerTrends
Competition
DesignIdeas
TechnologyTrends
Fuel Prices
EconomicEnvironment
RegulatoryTrends
Product Strategy Team
Product Executive Committee
• Regulatory Changes (PEC)• Quality Improvement
(Monthly Review)• Cost Reduction
(Bi-weekly Component Teams)
PPDC V1 RenewalMid-CycleFresheningIDEATION
ProgramTransitionProgramTransition
Product Strategy Development System Continuous Improvement
Product Innovation Team
Establish Program Vision
Identify Potential
Alternatives
Confirm Product/ Process Design
Optimize Product/ Process Design
Verify Product/ Process Design
Validate Product/
Process & Verify
Facilities
Validate Vehicle/
Facilities & Launch
Ramp-up
ABCD2D1EFG2G1H2H1I
Execution
Launch
Concept Development Design
Technology Management
Establish Program Vision
Identify Potential
Alternatives
Confirm Product/ Process Design
Optimize Product/ Process Design
Verify Product/ Process Design
Validate Product/
Process & Verify
Facilities
Validate Vehicle/
Facilities & Launch
Ramp-up
Establish Program Vision
Identify Potential
Alternatives
Confirm Product/ Process Design
Optimize Product/ Process Design
Verify Product/ Process Design
Validate Product/
Process & Verify
Facilities
Validate Vehicle/
Facilities & Launch
Ramp-up
ABCD2D1EFG2G1H2H1I AABBCCD2D2D1D1EFEFG2G2G1G1H2H2H1H1II
Execution
Launch
Concept Development Design
Technology Management
ExecutionExecution
LaunchLaunch
Concept Development DesignConcept Development Design
Technology ManagementTechnology ManagementBUSINESSCASE
77
Worldwide Manufacturing LocationsWorldwide Manufacturing Locations
88
Global Retail LocationsGlobal Retail Locations
Independent DistributorJoint VentureMarket Performance Center (MPC)
99
The Chrysler Group’s TransformationThe Chrysler Group’s Transformation
By Leveraging our Global Enterprise, The Chrysler Group’s New By Leveraging our Global Enterprise, The Chrysler Group’s New Generation of Vehicles Shares the Ultimate in:Generation of Vehicles Shares the Ultimate in:
•• InnovationInnovation
•• QualityQuality
•• StylingStyling
•• EnvironmentEnvironment
•• ValueValue
•• SafetySafety
1010
2004 Calendar Year Product Offensive2004 Calendar Year Product Offensive
SRT-6Roadster
SRT-10
Crossfire RoadsterTown &
CountryPT CruiserConvertible
300C
SRT-6 Coupe
Caravan
Magnum
Dakota
Durango
MAYMAYJANJAN FEBFEB MARMAR APRAPR JUNEJUNE JULYJULY AUGAUG SEPSEP OCTOCT NOVNOV
WranglerUnlimited Liberty
Refresh/Renegade
DECDEC2004
1st 2nd 3rd 4thDECDECNOVNOV JANJAN
2005
Liberty Diesel
GrandCherokee
1111
Product Offensive 2004 Product Offensive 2004 –– 20072007
2525 New vehicles to market
3636 monthsin
P:P:\\SHAREDSHARED 1212
Chrysler Group: Strategic TransformationChrysler Group: Strategic Transformation
CHRYSLER GROUP HAS SHOWN SIGNIFICANT PROGRESS REDUCING WARRANTY CONDITIONS AND EXPENSES
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Warranty C/1000
Model Years
Goal: Best in Classby 2007
1313
2004 Consumer Reports2004 Consumer ReportsRECOMMENDATION
PT CruiserToluca Assembly Plant
Jeep LibertyToledo North Assembly Plant
Dodge StratusSterling Heights Assembly Plant
Chrysler SebringSterling Heights Assembly Plant
1414
J.D. Power IQS J.D. Power IQS -- ResultsResults
2004 Chrysler Group Top Quartile Models
Dodge NeonDodge NeonDodge Stratus CoupeDodge Stratus Coupe
Chrysler PT CruiserChrysler PT Cruiser
Dodge Ram Pickup HDDodge Ram Pickup HD Dodge Caravan/Grand CaravanDodge Caravan/Grand Caravan
1515
2004 2004 HarbourHarbour ReportReport
Command Performance:Command Performance:Chrysler Group is MostChrysler Group is Most--Improved Automaker in The Improved Automaker in The HarbourHarbour Report 2004Report 2004
7.8 % improvement 7.8 % improvement
Set new industry benchmark in transmission Set new industry benchmark in transmission productivityproductivity
1616
2004 Focus2004 Focus
Emphasis on Warranty ImprovementsEmphasis on Warranty Improvements
Launch ManagementLaunch Management
Prevention of ProblemsPrevention of Problems
Speed of Problem ResolutionSpeed of Problem Resolution
Durability / Reliability / 3/36 WarrantyDurability / Reliability / 3/36 Warranty
Improve Internal and External CollaborationImprove Internal and External Collaboration
1717
The Extended Enterprise CollaborationThe Extended Enterprise Collaboration
DaimlerChrysler
Internal Departments
DesignEngineering
ManufacturingProcurement & Supply
Sales & MarketingFinance
Shareholders Dealers
External Organizations
Suppliers
NADADealer Councils
Dealer Advertising Associations
AIAGVDA/ISO
JAMA
Production PartsTooling & Equipment
Service & Parts
LaborUAW(U.S.A.)
CAW (Canada)El Sindicato (Mexico)
Management
Financial Institution
AnalystCredit, DaimlerChrysler
Bank
GovernmentAgencies
EPANHTSA
1818
Importance of CollaborationImportance of Collaboration
We rely on our partners to:We rely on our partners to:•• Provide perfect parts and servicesProvide perfect parts and services•• Efficiently design & produce parts & servicesEfficiently design & produce parts & services•• Proactively look for better standards, methods, Proactively look for better standards, methods,
parts, products, and servicesparts, products, and services•• Continuously strive for improvementContinuously strive for improvement•• Provide innovative methods and technologyProvide innovative methods and technology•• Delight the customers through passionate Delight the customers through passionate
execution of requirements and customer wantsexecution of requirements and customer wants
1919
The Fifth Dimension:The Fifth Dimension:The Supplier OEM InterfaceThe Supplier OEM Interface
DaimlerChrysler CorporationDaimlerChrysler CorporationScott R. Scott R. GarberdingGarberdingVice PresidentVice PresidentSupplier QualitySupplier Quality
2020
The Suppliers’ role is key within Chrysler GroupThe Suppliers’ role is key within Chrysler Group
• 1,300 Top Parent Suppliers
• 64,000 purchased production components
• $26 Billion annual buy
Our performance directly relates to Our performance directly relates to
the performance of our supply base. the performance of our supply base.
2121
Primary Root Cause for Critical Primary Root Cause for Critical PRISMsPRISMs
51
39
11 108
3 2
0
10
20
30
40
50
60
Inadequate ProcessControl Method
Process ControlMethod Not
Followed
Inspection andTesting
Design Control Control ofNonconforming
Product
Handling, Storage,Packaging andPresentation
Part Identificationand Traceability
2222
Primary Root Cause for Critical PRISMs
51
39
11 108
3 2
0
10
20
30
40
50
60
Inadequate ProcessControl Method
Process ControlMethod Not
Followed
Inspection andTesting
Design Control Control ofNonconforming
Product
Handling, Storage,Packaging andPresentation
Part Identificationand Traceability
75% of all defects are due to Process Non-Conformance
2323
Global Supplier Quality InitiativesGlobal Supplier Quality Initiatives
LayeredProcess
Audit
CDS QualityGates
Best PracticesFeedback
Source PackageRevision
RestructuredProcessSign-Off
QualityFunnel
ImproveProcess
Forever Requirements
Revision
2424
What is a Layered Process Audit (LPA)?What is a Layered Process Audit (LPA)?
LPA’s assure that defined methods and work instructions are utilized, problem solving solutions are held in place, and all process issues are identified and quickly correctly.
LPA is an ongoing system of process checks that verify proper methods, settings, operator craftsmanship, error proofing devices and other inputs are in place to ensure a defect free product.
2525
How does an LPA Work?How does an LPA Work?
Build Technique
ErrorProofing
MachiningAttributes
Process Audits
TechnicalMemory
PFMEA Control Plan
WorkInstructions
CorrectiveActions
PreventionActions
EmployeeWorkshops
Continuous
Improvem
entInputs
•Audits are conducted regularly by all levels of supervision•Non-conformances are immediately addressed
2626
LPA LPA -- Frequency PlanFrequency Plan
1 X WeekPlant Manager
2 X WeekArea Management
1 X ShiftProduction Supervisor
• Encourages Management Involvement • Encourages Operator Feedback• Establishes Accountability
2727
LPA BenefitsLPA Benefits
•Build variation based on work standardization•End-of-line inspection•Part defects
Reduces
•First time through capability•MoraleImproves
Facilitates•Operator training•Management/operator interface
•Safety regulationsReinforces
2828
LPA Success at Kokomo Transmission PlantLPA Success at Kokomo Transmission Plant
Repair Inventory vs First Time Capability vs LPA
18-0
221
-02
24-0
227
-02
30-0
233
-02
36-0
239
-02
42-0
245
-02
48-0
251
-02
1-03
4-03
7-03
10-0
313
-03
16-0
319
-03
22-0
325
-03
28-0
331
-03
34-0
337
-03
40-0
343
-03
46-0
349
-03
52-0
3
Weekly
# of
LPA
Che
cks
/ W
eek
556065707580859095100 First Tim
e Through (%)
KTP Now conducting 6700 Process Layered Audit Checks
0 Process Layered Audits
1800
180
5400Repair InventoryFTC
2929
Supplier Interface Supplier Interface –– LPA’sLPA’s will be mandatorywill be mandatory
ISO/ TS 16949
DaimlerChrysler Customer Specific Requirements
New section under Internal Audits
Effective 7/01/04 for Powertrain & Component
Plants suppliers; 1/1/05 for all remaining suppliers
Posted on AIAG, IAOB, and QMS web sites
Letter mailed to all suppliers DaimlerChrysler Corporation Peter M. Rosenfeld Executive Vice President Procurement & Supply August 6, 2004 A Layered Process Audit ("LPA") is a quality improvement business system involving multiple layers of management. It consists of regularly scheduled reviews of all elements in a manufacturing/ assembly process to ensure that: equipment is being properly maintained; error proofing is working, and; proper craftsmanship and/or build techniques, from standardized work instructions, are being followed. Utilization of LPA will result in more disciplined processes and improve overall quality. Most Chrysler Group Powertrain facilities are already using LPA. I am writing to you because I am asking that all supplier manufacturing facilities providing parts to one or more of Chrysler Group's Powertrain plants deploy LPA. Within the next few weeks, your plant and quality managers will be receiving correspondence which will provide additional information about LPA training. The course work will be conducted at the DaimlerChrysler Technology Center during the next Supplier Training Week scheduled for May 10 through 14. This training will fulfill your company's training requirements and, more importantly, will assist you in immediately implementing this procedure within your facility. At the same time, the Chrysler Group will be moving to make LPA a mandate for suppliers to its powertrain plants in the third quarter of 2004. The Chrysler Group is in the process of finalizing implementation of LPA in all of its powertrain plants. It has proved to be a valuable tool to improve first-time through capability which ensures quality to the customer. The Layered Process Audit is a system to ensure that we build the best quality product together. I appreciate your company's, and your personal, support on this matter. Sincerely,
3030
Supplier Interface Supplier Interface –– LPA Compliance VerificationLPA Compliance Verification
Compliance Form
Summary of training, implementation, and LPA results/ compliance
One form per supplier location to be submitted monthly to SQ Specialist
Layered Process Audit Compliance Report
Supplier Name: Report
DCX SQ Specialist Supplier Code City State/
Prov. Country Month Year
Training & Implementation Summary
LPA Trained
LPA Implemented Countermeasure Comments
Staff/ Top Management:
Mid-Level Management:
Line Supervisors:
Audit Sheets Developed
LPA System & Infrastructure Established
Number/ % of DCX Lines
utilizing LPA Countermeasure Comments
Monthly Compliance Summary
Line / Operation / Number /
Name / Description LPA
1 LPA
2 LPA
3 LPA
4 LPA
5 LPA
6 LPA
7 LPA
8 LPA
9 DCX
TOTALNumber of items to be audited
Number of items audited
% of audits accomplished
No. of items in compliance
%of items in compliance
Frequency: Top Management (1/ week)
Mid-Level Management
Line Supervisors (1/ shift)
Error Proofing (1/day)
Green In Compliance Yellow In Progress Red Not Started
Submitted By: _______________________ Approved By: _______________________ Date Submitted: _____________________
3131
Layered Process AuditLayered Process Audit
Proven successful internally Proven successful internally
Expanding Collaboration to our Supply baseExpanding Collaboration to our Supply base
Not asking Suppliers to do something we are notNot asking Suppliers to do something we are not
Training available to all Chrysler suppliersTraining available to all Chrysler suppliers
Low investment Low investment –– significant quality returnsignificant quality return
3232
The Fifth Dimension:The Fifth Dimension:The Supplier OEM InterfaceThe Supplier OEM Interface
DaimlerChrysler CorporationDaimlerChrysler CorporationScott R. Scott R. GarberdingGarberdingVice PresidentVice PresidentSupplier QualitySupplier Quality