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ALFRED
P.
WORKING PAPER
SLOAN SCHOOL OF MANAGEMENT
MANAGERIAL AND TECHNOLOGICAL INNOVATIONS AT
SATURN CORPORATION
Richard G. LeFauve
and
Amoldo
C.
Hax
Working Paper No. 3418-92BPS
MASSACHUSETTS
INSTITUTE OF TECHNOLOGY
50 MEMORIAL DRIVE
CAMBRIDGE, MASSACHUSETTS 02139
April 1992
MANAGERIAL AND TECHNOLOGICAL INNOVATIONS AT
SATURN CORPORATION
Richard G. LeFauve
and
Amoldo
Working Paper No. 3418-92BPS
C.
Hax
April 1992
APR
1
6 1992
MANAGERIAL AND TECHNOLOGICAL INNOVATIONS AT SATURN
CORPORATION
Richard G. LeFauve
President, Saturn Corporation
and
Arnoldo C. Hax
Alfred P. Sloan Professor of Management,
Sloan School of Management,
Massachusetts
Institute
April
of
Technology
1992
Harvard Business School Colloquium
be published
It will
on Global Competition and Telecommunications.
Technology, and Competition, S. P. Bradley,
in the book Globalization,
J. A. Hausman, and R. L. Nolan (eds.), forthcoming.
This paper
was presented
at the
The Origins
of
Saturn
Saturn Corporation
realities within
(DAW)
GM
1981,
In
During this
foreign competitors.
to
GM/UAW
employes were
Responding
laid
financial
of
market
nearly 170,000
crisis,
off.
GM
to this challenge,
American automobile production.
began
June
In
to
scrutinize
its
GM's Advanced
of 1982,
Team was asked
to
answer the question, "Can G.M.
a world-class-quality small car
in
the U.S.
Product and Design
build
was experiencing
and an escalating loss
losses, a prolonged U.S. recession,
share
the economic and social
General Motors (GM) and the United Auto Workers
the early '80s.
in
was born from
successfully with the imports?"
They
that
can compete
set up a "small car project"
and they adopted a "clean-sheet"approach, avowing they would not be
restricted
by traditional thinking and industry practices.
applying an unobstructed mind to any and
all
approaches and solutions could be found
like
high-speed machining techniques.
that
to
problems,
risk
new
lost-foam casting and
These were two
were evaluated and adapted as high
Perhaps by
of the
concepts
but possible solutions
the challenge.
Meanwhile, another team was forming.
president of
GM's
vice president
Industrial
and
Relations Staff, and Donald Ephlin,
director of the General
increasingly dissatisfied with
decided
was a
to
Alfred S. Warren, vice
the
labor
Motors Department, were
relations
climate.
bring together a handful of people to figure out
better
way
to
do business.
UAW
They
if
there
This handful soon realized the
enormity of the question and reached out for additional team
members.
By the time they had
finished, they
were an unprecedented
alliance of
GM
and
UAW
people
--
managers, superintendents,
plant
union committeemen, production workers, and skilled tradesmen
along with
UAW
knowledge
of
GM
and
They represented the
staff.
55 General Motors plants and 41
They would become known as The Group
system.
The teams then spent two months
and 60 benchmark companies
plants
they
made more
million
UAW
miles,
and put
threads
49
locals
99
the
GM
.
GM
different
over the world.
all
in
Together
,
than 170 contacts, traveled approximately two
50,000 hours of study.
in
During these fact-finding
common
visiting
of
collective
in
Quality
the successful companies:
a top
is
customer
priority
maintaining customer
for
The customer
satisfaction.
internal
they observed several
visits,
number one, whether the
is
the next group getting your parts (the
is
customer) or the person getting your
final
product (the external customer).
Everyone
failures
Equality
the
in
company has ownership
of the
company's
and successes.
is
Barriers to doing a
Total trust
not just preached.
practiced,
is
good job are eliminated.
a must.
People are the company's most important asset.
People are given authority
With
this
to
conflict
outcomes.
All
job.
background work behind them, the team members
focused on two concepts that were new
was a
do the
resolution
to
General Motors.
process that used consensus
key stakeholders
in
a conflict are given
to
all
The
first
determine
By putting aside hidden
information relevant to the decision.
agendas and focusing on each
that results
a win-win solution for
in
consensus
party's needs, a
all
100 percent
to
its
each participant must commit
that
structure.
that
emerged was the need
Realizing
that
workers
environment that they help create, the Group
integration
Saturn
of
in
implementation.
The second concept
organizational
reached
A consensus
stakeholders.
requires that at least 70 percent of the participants are
agreement with the decision, and
is
of
for
will
a
new
support an
99 believed the
technology and resources required a partnership
management people and
UAW
people on
all
of
levels of decision-
making.
A Memorandum
national contract
the
of
was then reached.
Saturn/UAW agreement was
forbidden
fruit
of
GM-UAW
Agreement separate from the
11
Unlike traditional agreements,
pages long
most labor contracts;
it
philosophy and the experimental structure
.
It
did not
list
the
stated simply the Saturn
for
making world-class
cars.
Saturn therefore emerged as a separate company, charged with
creating a whole
new
idea for General Motors
in
the
way
the
automobile business could be run.
The small car
project identified the technology
produce the small car; the Group
UAW
and G.M. management
business objectives.
that
if
to
of
required to
99 revealed a willingness
work together
to
accomplish
of
its
Roger Smith, General Motors' chairman, pledged
a labor agreement could be written that would allow the
integration of the
needed technology, he would create a separate
He
company.
a
also suggested that the marketing people be included so
new approach
Saturn Project
selling cars
to
compete
7,
1985.
agreed that the existing system needed
Saturn would not
effectively.
The
well.
a separate subsidiary known as the Saturn
became
Corporation on January
All
would be considered as
utilize
to
change
to
technology
for
technology's sake but instead blend technology and people
to
optimize the overall business performance.
The Mission
of
Saturn
The mission statement developed by the founding team had two
distinct
o
components:
To market vehicles developed and manufactured
•
United States that are world leaders
in
quality,
customer satisfaction through the integration
in
the
cost and
people,
of
technology and business systems.
,
To transfer knowledge, technology and experience
•
throughout General Motors.
Fundamentally, Saturn wanted
be competitive
in
the small car market by manufacturing world-
class cars engineered and designed
Saturn did not
wanted
to
limit
transfer
prove that Americans could
to
itself
its
to
in
the U.S.
be successful
in
building cars but
managerial and technological innovations
General Motors, and help make a transformation
challenge of immense proportions given
risks,
Most importantly,
drawing ideas from
all
to
at
people
GM.
It
willing
to
was a
to
assume
over the world, and adapting them
to
create a
new approach
to
indicates, the key to that
approach resides
of
Saturn
was complemented by a statement
corporate philosophy, which
its
an appropriate
of Saturn
The mission
Saturn-
in
and business systems.
integration of people, technology,
The Philosophy
As the mission statement also
car making.
the
identifies
stakeholders of
critical
customers, members, suppliers, dealers, and neighbors
and how Saturn intends
to
fulfill
its
responsibilities
toward them.
Saturn's philosophy reads as follows:
concert with the UAW and
General Motors, believe that meeting the needs of
customers, Saturn members, suppliers, dealers and
We, the Saturn Team,
neighbors
•
in
fundamental to fulfilling our mission.
To meet our customer's needs:
Our products and services must be world leaders
in value and satisfaction.
To meet our members' needs:
- We will create a sense of belonging
In an
environment of mutual trust, respect, and dignity.
- We
believe that all people want to be involved in
decisions that affect them.
We will develop the tools, training, and education
needed for each member.
-
is
Creative,
motivated,
who understand
•
that
members
responsible team
change
is
critical
to
success
are Saturn's most important asset.
To meet our suppliers' and dealers' needs:
- We will
create real partnerships with them.
-
We
will
strive
for
openness, fairness,
trust
and
respect.
We want them to feel ownership of Saturn's
mission and philosophy.
To meet the needs of our community neighbors:
-
•
of
We
be a good citizen and protect the
environment.
We will seek to cooperate with government at
-
will
all
levels.
By continuously operating according
we
will
our
fulfill
was worded
by the founding team, and
framework
'
for Saturn's
after
it
a long and serious
became
a fundamental commitment not
to
decisions that could be attractive
in
in
to
the long
pass
is
run.
whether
essential for a firm that believes people
character that
is
be involved
decisions that affect them, and
final
represents
it
it
fits
This provides a sense of coherence and strong
Saturn's philosophy.
As a
fact,
In
the short term but would lead
Constantly the relevant test a decision has
down
The Core Values
The philosophy
be compromised or undermined by
the organization to a very different direction
responsibilities
the guiding
decision making process.
statement sounds simple and straightforward.
in
philosophy,
mission.
Saturn's philosophy
reflection
this
to
the
into
is
want
to
attempting to push
organization.
of Saturn
complement
founding team concluded
principles of Saturn
to
its
Saturn's mission and philosophy, the
task of defining the organizational
by enunciating
its
core values:
Commitment
to
customer enthusiasm
Commitment
to
excel
Teamwork
Trust and respect for the individual
Continuous improvement
The
customer
deceptively simple: put your
have an unrelenting commitment toward excellence,
first,
teamwork and
always
seem
core values
five
trust are the
essence
of our
continuous improvement.
strive for
American auto
complacency during
significant
part of the
of
style,
one has
Sadly,
understand the centrality and significance
within the context of the
management
to
these core values
whose
industry,
1970s and 1980s caused a
loss of competitiveness.
Saturn
one
is
most
of the
and creative responses from U.S. car manufacturers
visible
public confidence
to
regain
and recover competitive advantage.
Saturn's mission, philosophy, and core values represent
The
unalterable foundation.
new employee
and
initial
orientation
and
training
of
its
every
Saturn starts with learning and serious reflection
of
on this philosophical base, which constitutes the focal point of
Saturn's
leadership.
Partnershi p at Saturn
If
culture,
there
it
was born
is
in
is
one word
partnership
start
can summarize the heart
The "clean sheet" approach
facing the American auto industry.
de novo, defining the new values necessary
effectively
and
attracting the best people
management and
DAW
rank-and-file
-
-
new environment
for constructive
to
management
willing
to
We
have
to
compete
both from
challenges and the risks associated with them.
this
to
of Saturn
the conviction that old formulas were not responding to
new challenges
the
.
that
GM
assume
*
the
Central to creating
work was the creation
of
a
UAW
close partnership between
leadership
in
all
managerial decisions of a strategic,
This
operational nature.
and building mutual
confrontational,
The way
and GM, which includes union
was a unique
among
trust
and suspicious
that Saturn
undertaking: sharing decisions
has chosen
presented
indicate the area of
in
is
evident from the figure
the so-called partnership arena,
where union and management
Furthermore,
getting
this
Figure
in
the
illustrate
to
areas
What
traditionally
one another.
of
is
parties.
had been
parties that
partnership approach
of the ellipses
and
tactical
1.
The two overlapping
congruency
is
GM-UAW
that
for the
two
most decisions
fall
leaving small decision areas
roles
have non-overlapping
gap between management and union
interests.
roles
is
narrower as the two groups become more comfortable with
one another, and the area
of partnership includes
the most
all
important issues facing Saturn such as the quality of the product,
the quality of the worklife of the people
about the long-term strategic success
Paramount
to
in
the plant,
of the
leaders to
become more
direction.
base
will
is
the
help the union
business-oriented, and the managers to
understand how employees at
its
business.
the success of this partnership
establishment of an educational process that
and concern
all
levels feel about the business
and
Saturn has used the strategic planning process as a
for this learning vehicle,
bringing union
together and reeducating them.
The
and management people
strategic planning process
becomes a powerful communication and coordination mechanism
where people can address such business questions as defining the
mission of our business, recognizing the industry trends,
'
10
1
1
understanding competitors' moves, recognizing what actions the
firm
has
undertake
to
what roles are required
organization.
to
be played by
we have
management perspectives
into
and
GM
true
and legitimate partners
teamwork
with
-
account
to
integrate dealers
in
consensus management
-
in
we make.
Saturn just
not limited
associated
its
better
to
every decision
in
is
extends
It
much
of the
taken both the employee and the
The partnership process
managers.
members
and a stronger commitment
strategic business plan
implementation since
the
all
the process ends up with a
Finally,
and
establish a strong competitive position,
to
to
*
UAW
and suppliers as
the business venture, and includes
involvement and
individual
as equally strong elements of the
partnership approach.
Teams
Self-Directed
The
to
cell
of the
as a work unit
at
Saturn
organizational structure of Saturn
a group of about fifteen people integrated as a
,
The
team, using consensus decision making.
for the
work
unit to
become a
truly
in
Figure
structuring
resembles a conventional type
advisors: a
critical
First,
UAW
Its
whose behavior
is
normal
is
2.
The team begins
exceptions.
ultimate objective
self-directed team.
evolution follows a four-phase sequence,
illustrated
referred
is
of
itself
in
team
the forming
activity
with
phase, which
two significant
every team counts on the support of two external
and a management advisor representing the two
perspectives of Saturn's work.
These advisors are shown
12
13
outside the circles representing the team
team member" assumes the
"charter
assigned
to
Figure
2.
in
Figure
in
Second, a
2.
responsibilities
traditionally
a superior or foreman, depicted at the center of the team
He
members
or she hires the other
team, teaches
of the
them Saturn's mission, philosophy and core values, and provides the
team with the proper
necessary
In
the
skills,
and knowledge
abilities
phases
initial
each member
training for
of
perform the team tasks.
to
DAW
team development, the
development
-
in
Figure
the storming
phase
amount and degree
increasing
represented
in
the second
2,
-
is
phase
of
group interaction.
of
team
characterized by an
This
is
the figure by the lines that surround the team's
members, implying an increasing degree
among them.
and management
member.
advisors interact directly with the charter team
As can be seen
develop the
to
In
the third phase
-
of direct
communication
the norming phase
the charter
-
team member moves outside the center but the advisor continues
interact with the
phase
team through him or
the performing phase
-
-
when
her.
It
only
is
in
the last
the advisor acts with the group
as a whole, which has become completely self-directed.
team member has become an equal team
This
years
to three
some
transition
to
be
is
fully
it
it
is
common
can reaffirm
for
completed.
a team
itself
and
participant.
when two
to
when
the team faces
or three
new members
Also
are
step back to the third phase again
as a self-directed team.
Each team member spends from 250
intensive educational
The charter
a lengthy process, typically taking two
serious changes, such as
added,
until
full
to
training
to
750 hours
program, just
to
in
an
get ready for the
14
job.
more impressive when one
figures are even
These
Most are people who
these are not newcomers to the auto industry.
have worked
from
five
at
GM
or other auto manufacturing plants
twenty
to
educational effort
five
realizes that
anywhere
Moreover, a large proportion
years.
of this
spent on behavioral subjects, emphasizing
is
leadership and team development.
The Organizational Structure
The organizational
from
different
that
Saturn
of
structure
conventional,
the
Saturn
of
organizational
hierarchical
cannot be explained or represented through the
it
organigrams and organizational charts.
as a
so dramatically
is
way
explain the interactions
to
participation
in
among working
We
these circles are nested
into
traditional
Saturn uses circles
Instead,
the businesses of Saturn.
form
will
units
now
and
explain
their
how
the overall structure of the Saturn
organization.
we
First,
start at the
whose tasks need
to
a work
,
circle
all
unit
in
work
unit
module
the charter
-
in
Figure
referred to as the decision
team members
the module, as well as the
of the
UAW
work
units
circle
in
the module.
In
module could contain temporary
necessary
to
-
involves
which are part
and manager advisors.
into
The outside
3.
advisors normally oversee four to six different teams,
represented
units,
be appropriately coordinated, are included
module such as the one shown
the
Several work
level.
of
Those
all
of
them
addition, the decision circle of the
or
permanent resource people
advise the work unit module
in
its
decisions.
For
15
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3
o
15
o
00
Li.
16
example, one such module could be the cooling system
of the car.
decision circle can work on ideas for cost reduction and quality
The
improvements,
for job
content and rotation, etc.
Taking the structure one level higher, the work
become
part of a business
the one portrayed
and assembly
in
Figure
activities
manufacturing complex
distinct
unit within
business units
in
Spring
Hill,
in
this
modules
the Saturn structure, such as
Take, for example, the manufacturing
4.
executed
in
unit
the four million
square foot
There are three
Tennessee.
manufacturing complex: powertrain
-
making casting from central foundry and building fully-dressed
engines and transmissions; body systems
painting complete sets of panels;
operations and building the
overseen by the
circle
The
M anufacturing
makes decisions
MAC
In
final
addition to
MAC,
and vehicle systems
car.
is
assembly
-
These three business
Action Council (MAC),
affecting
organizational circle
stamping, fabricating and
-
decision
manufacturing operation.
the entire
presented
whose
units are
in
Figure
5.
there are two other functionally oriented
high level councils at Saturn: the Technical
Development Action
Council (TDAC), which coordinates advanced engineering and design,
and the Customer Action Council (CAC), which includes two Saturn
dealers and focuses on sales, service, and marketing.
of decision
making there
advising the teams.
In
is
a Saturn manager and a
the case of
MAC,
Finally, the
Strategic Action
of
DAW
all
levels
manager
the Vice President of
Manufacturing and the President of Saturn's
corresponding members
At
UAW
are the
the manufacturing advisor circle.
MAC, TDAC, and CAC come
together at the
Council (SAC) which oversees the organization and
17
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18
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o
O
c
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o
<
c
o
c
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19
As Figure 6 shows,
sets strategic directions.
number
of critical
way which
the councils have a
resource teams assisting them.
from the traditional
different
is
all
staff
They operate
more
Rather
functions.
than becoming centralized entities at the corporate
level,
they are
flexible,
fluid
and involved than the conventional functional
As
their
name
structure.
qualified
implies, the
Resource Teams are a highly
moving from business teams
set of professionals,
a
in
to
business teams, adding capabilities and participating actively
in
the
decision making process, as the businss teams require their support.
The Rewards Svstem
of Saturn
Another remarkable departure from the conventional U.S. auto
share
in
in
the rewards of the overall
order to get the rewards,
The agreement
into
calls for
General Motors
were not met.
if
company performance.
agreed
20 percent
The goals are
to
However,
put something at
of workers'
wages
to
to
risk.
go back
pre-determined performance goals
to
number
be negotiated each year and involve
of cars produced,
and
productivity.
those goals are exceeded, workers can gain above the
100 percent base
industry's
UAW
certain
if
targets such as quality,
Obviously,
UAW
agreement established by Saturn and
industry practiceis the
salary.
The base pay
average base, not
The 20 percent
just
is
the domestic auto
General Motors'.
pay-at-risk concept contributes to creating
climate of teamwork and continuous improvement.
everyone involved on
common
goals, risk
creates a "win-together" environment.
It
a
Through focusing
and rewards compensation
pulls
an already close
20
o
<
21
group even closer together, every team member
is
propelled to be
supportive of each other.
important to emphasize that the targets that
also
is
It
determine superior performance achievement are set
scope
these are Saturn's goals, not individual or group performance
-
objectives.
It
constitutes a total
Saturn
parochialism that often puts groups
with
broadest
at the
in
reward system, preventing
an organization
in
conflict
one another..
Suppliers at Saturn
The same
activities
is
to
reflected
is
partnership that characterizes
of
spirit
in
its
relationships with
suppliers.
establish a long-term partnership with only
input to be acquired.
quality
standards,
The
relationship
just-in-time
is
deliveries,
all
Saturn's
The goal
one supplier per
based on mutual
trust,
high
and continuous
improvement.
In
determining what materials are sourced, Saturn engages
members
of
the organization with different expertise
manufacturing,
engineering, finance,
management, and
Team
UAW
technicians
to
management,
quality
form a Product Development
(PDT).
The team
suppliers.
first
visits
different
They determine how
meet the company's needs on a
their
-
materials
-
own
organizations.
facilities
of
prospective
well these candidates will
timely basis
and how
be able
well they run
to
22
Then, after establishing the necessary lead-time requirements
and narrowing the
the group
of candidates,
list
members determine
by consensus which supplier can best serve the organization.
Upon
agreement with leadership, the supplier candidate recommended by
the
PDT becomes
a Saturn partner.
But the process does not stop there.
important
after the
is
that the
partnership
Saturn
was
PDT
is
continues
formed
-
to
to
work with the supplier
-
ensure continuous improvement.
the industry leader
Electronic Data Interchange (EDI)
What may be even more
in
the development of an
system
to
communicate
with
its
using the Automotive Industry Group standards approved
suppliers,
by the National Bureau of Standards.
Saturn currently uses
EDI
regularly
to
materials flow and just-in-time
payment process.
inventory control, as well as for
Saturn
for
communicate
with
EDI allows
suppliers on planning
schedules, shipping schedules, inventory advice, and payment advice.
Overall, the use of EDI
clerical
in
Saturn has reduced order cycle time,
processing time, postal service expenses, and costs.
It
has
increased accuracy within the organization because most
transactions
are
electronic.
Saturn currently has over 300 direct suppliers
communicate with the auto company through EDI
planning and shipping schedules.
Funds Transfer, a "money" form
suppliers.
because
it
Saturn
is
wants
to
In
addition,
of EDI, to
it
for
material
uses Electronic
pay over
half of
using standardized forms of EDI
communicate
who
electronically with
its
more and more
as
many
23
Saturn's interest
organizations as possible.
standard
being shared with other
is
GM
in
and use
of this
organizations.
Dealers at Saturn
Dealers at Saturn are referred
partnership embraces
who
the retailer,
vital
participant
threatened by a
retailers;
of
the Saturn
spirit
Instead,
network
the Saturn
of
organization, the
-
including
retailer
A
must not be
competitiveness from other Saturn
has proven counterproductive
that
industry.
members
The people-
retailers.
Saturn's direct contact with the end-user.
is
in
all
as
to
in
the automobile
Saturn retailers have their designated market
areas, lending helping hands to other regions as needed.
Sound
like
not for the Saturn philosophy and mission statement,
an ideal?
If
would be.
Framed and hanging on the
reminders of how
to
make
retailers' walls,
it
they are daily
decisions, just as they are at Spring
Hill.
Saturn has developed a state-of-the-art business system to
integrate
its
retail
Each Saturn
network.
retailer
IBM AS/400 system coupled with ongoing
for
is
satellite
equipped with
communication
2-way data and 1-way video information exchanges.
integration
instant
between Saturn and
access
to
vehicles
order change and status.
in
It
The
product problems, as
nightly
to
dealers allows each
retailer
the production pipeline for purposes of
also allows for the rapid location of
service parts since Saturn has
24 hours a day.
its
The
its
finger on
each dealer's inventory
integration also facilitates early detection of
all
vehicle
Saturn for analysis.
repair
information
is
transmitted
24
A
significant
process was the
event
recall of
demonstrate
to
1800 Saturn cars
Texaco cooling
with a defective
pump changes was observed
early
this
detection
had been shipped
that
A sudden increase
liquid.
within three
days
of
its
in
water
initial
occurrence through information transmitted by the dealer network.
In
two weeks
calamity
when
the
in
the cars had been recalled, averting a major
all
field.
the warranty claim had
retail
retailer
The
outlet.
reduce
to
defect would have been detected
this
begun
materialize.
to
technology has also benefitted operations within
Information
the
Normally
sophistication of the systems has allowed the
personnel costs through the elimination of
their
The
the need to order vehicles and service parts.
integration of the
system within the dealership also reduces the handling
of the
same
data by multiple people.
Technological
The
Initiatives
at
central challenge facing
integrate people
and technology
With increasing consumer
competitors
ever
if
Saturn
in
the
field,
in
industry today
the ability to
a fast-to-market environment.
demands and a
companies have
greater
to
react
number
of
more quickly than
they are to survive.
Very often the missing ingredient
success
is
is
people.
Many
corporations
in
fail
a company's equation for
on
this level
implement high technology without a structure
workforce keep pace.
advanced piece
of
The investment
equipment
in
in
the world
to
because they
help the
the most technologically
is
wasted
if
it
is
not easy
25
to
use and employees struggle with the machinery rather than
concentrate on doing quality work.
same
At the
getting
the
to
companies
Saturn
An
Saturn
marketplace
lack the
built
is
time, technology
systems
to
no enemy.
But while
some
integrate people
is
It
vital
to
traditional
and technology,
around them.
equilateral
describe
to
fast.
is
People-Technology-Systems triangle
its
mindset toward technology.
is
used by
The Systems
form the base of the triangle, supporting People and Technology
equally.
same
Within this structure people and technology can grow at the
rate.
Systems
This mutual growth
is
the foundation of the continuous
improvement process and the cornerstone
and technology philosophy.
If
of the
company's people
people and technology needs can be
interrelated
and kept growing simultaneously, Saturn can be
successful
in
a fast-to-market world.
Saturn has
innovations
in
made
a number of important technological
American car building such as the
panel, and the use of the skillet system
was
also the
first
method
of
plastic
external
assembly.
U.S. automobile manufacturer to build both
Saturn
26
same
automatic and manual transmissions on the
operation
flexible
the manufacturing
in
industry.
All
accomplishments have been obtained by securing the
involvement of the team members related
to
new
strong voice
the design of their work environment.
people
first,
and
these
of
total
these tasks
design stage of
in
an unusually
line,
in
the
technologies, and making sure they have a
people drive technology.
lets
Saturn puts
The balance
is
accomplished through business systems.
Business Svstems Development
As
it
happened
at
Saturn
with any other important activity
at
Saturn,
business systems were also developed from a clean-sheet approach
based upon the following guiding
principles:
functional applications would
corporate
process on a single
platform
•
database structure would be
•
data entities would be defined
relational
in
a central repository,
and
rigorous standards would be established regarding data
•
presentation and data modelling.
These
integration
inefficiency
principles enabled Saturn to achieve a level of
unheard
of
of
most
in
interfaces
that
GM
eliminating
between systems and
accurate real-time data for
Electronic Data
industries,
all
critical
the
resulting
in
business needs.
Systems (EDS), the data processing company
acquired from Ross Perot, provides most of the expertise
and equipment
that allows
Saturn
to
integrate
its
business systems.
27
Due
many
the
to
differences
Saturn
in
new
including
-
new
staff,
business processes, new technology, new car, and new culture
had a unique opportunity
To ensure
approach.
terms
cost,
of
Action Council
provide a complete
to
and operations
integration,
(BSAC) was created,
the Strategic Action Council.
BSAC
systems, since every decision
is
group, which include
all
Thus EDS
key decisions.
technology but a
Saturn's
ideal for Saturn
the Business
-
reporting to the
ensures consistency
agreed
to
by the
EDS
is
guarantees
-
of
Saturn
in
members
EDS
in
System
EDS member
of the
The
the functional areas of Saturn.
partnership between Saturn and
all
new systems
new system was
that every
EDS
-
involvement
in
not just a provider of information
resource team.
critical
EDS manager has used
the slogan "from art to part" to
describe the integrated nature of Saturn's systems, meaning that
every element of the car
inform
first
is
designed on computers which
purchasing, manufacturing and
be done
all
other departments what to
proceed with an orderly production schedule.
to
suppliers and dealers are integrated
electronically to
process
The
following
list
of
applications provide a
more detailed
account of the business systems Saturn has implemented
of
their
and physical transactions previously described.
financial
each
Also
its
to
support
managerial functions:
Human Resources
-
Member
Roster
-
identifies
and maintains
demographic people related data and
people information
for
all
is
all
the sole source of
Saturn systems.
28
Education Tracking
and
history for
all
-
tracks and
employees
maintains training plans
Saturn (including those
at
not yet hired but identified as a need).
Represented Applicant Tracking
up
and other openings.
floor
to
match
Product En gineering
•
open
for
a tracking system set
received
track the applications
to
-
the plant
positions.
-
unmatched
GM
in
and elimination
100 percent
of
resulting
level
redundant data.
design
is
done
CAD/CAM/CAE.
using
Saturn's
with
of integration
a significant cost savings,
in
of Saturn's in-house product
electronically
line
fill
This system supports searches
Business systems have achieved a
In
to
appropriate, the Saturn
support a computer
vision
initial
office
literate
and EDI are the foundation
to
be paperless where
environment
workforce
for
inter-
-
is
tailored
electronic
to
mail
and intra-corporate
communications.
Manufacturing
The
-
total
manufacturing planning process
integrated
solution
with
is
an
Product Engineering,
Material
Systems and Dealer Order Processing.
•
The systems maintain document information on current
and future processes and integrate with the
•
The systems
relate
them
identify tool
to
CAD
system.
gauges and machinery and
the process
in
which they are used.
29
Materials
Management
-
Every part
is
ordered every day and delivered using pre-
planned routes and scheduled dock times.
Electronic Data Interchange (EDI)
is
used
to
communicate
weekly planning quantities and daily shipping schedules.
•
Material
is
paid for based on units produced and these
produced counts serve as a basis
for
replenishment
scheduling.
Ser vice & Marketing
Sales.
Vehicle
•
Distribution
An
-
-
system where monthly allotments are
allocation
agreed upon by both the Dealer and Manufacturing.
•
An order management system where Dealer orders are
computer-generated based upon individual
retailer
sales
and seasonality.
Service Parts
-
The system
service parts
Management
Service
integrated with
is
releasing
Product Engineering
for
and integrated with Materials
for part scheduling.
-
Service applications designed around a National Vehicle
History
to
support the following
activities:
Dealer Service Operations
Product
Warranty
Engineering/Manufacturing
Administration
Saturn Assistance Centers.
30
Retailer
(Dealerl
-
The Saturn
with
Retailer
Saturn and
its
System was developed
retailers
partnership
in
provide the following
to
applications:
Sales
-
Integrated Finance & Insurance, Vehicle
Inventory and
Parts
Prospecting
Locator,
-
and
Invoicing
Inventory,
Replenishment
Service
Vehicle History,
National
-
Service Merchandising
Integration,
Business
Diagnostics
& Invoicing
Automated Delivery Reporting, Financial
-
& Purchase Order
Reporting, AR/AP, Payroll
Communications
-
Satellite
Technology
for
data
and video, integrated with Saturn Corporate Systems.
Financial
-
Use
of Electronic
Funds Transfer (EFT)
On-line time reporting
is
the standard.
system supports the entire
workforce.
Only one disbursement
activities:
direct,
activity
freight,
indirect,
The
financial
with
dealers and suppliers.
database
Corporate Communications
EDS
installed
between
its
is
handles
all
purchasing
services,
integrated to
etc.
communicate
-
full
motion teleconferencing equipment
Michigan and Tennessee
facilities
in
order
expedite communications and eliminate travel time and
dollars.
to
3
EDS
site-wide
and
production
needs and
edit
satellite
video
for the
Tennessee
distribution,
that
site
video
conference audio/visual
capabilities,
receive capability.
Results
Earlv
We
Saturn
recognize
initiative.
reached
144
media center
installed a
provide
will
1
full
its
However
1992.
Saturn
By end
talk
to
1991 the plant
of
about success
in
in
it
to
is
yet
openend
have approximately 250 by the end
not too early to
is
the
Tennessee had not
capacity and although Saturn has currently
the plan
retailers,
premature
is
it
of
examine the accomplishments
of
terms of customer satisfaction and dealers' performance.
in
Figure 7
shows
the Dealer Satisfaction Index (DSI)
1991 as
in
reported by J.D. Power and Associates based on their Dealer Attitude
As can be seen
Study.
ahead
in
the figure, Saturn
Lexus and
is
entrants
the luxury car market.
in
The
of
result of J.D.
Infiniti,
two
of the
is
only surpassed by
most successful recent
Power and Associates Sales
Satisfaction
Index (SSI) positions Saturn well ahead of the industry
behind Lexus, Cadillac,
nameplates
dollars
in
Infiniti,
the luxury car
Lincoln,
segment
more than a Saturn (see Figure
in
and Mercedes-Benz
that cost tens of
8).
When
Saturn
is
its
competitors, Saturn's SSI score
of
illustrated
in
satisfaction
Figure
with the
9.
by
far
superior to
The SSI measures owners'
all
overall
sales and delivery experience.
-
place
the top
thousands
against the top five basic small performers, which are
is
sixth
of
ranked
direct
them, as
32
Figure 7:
1991 DSI Top Performers (By Nameplate)
1991 DSI
I
TOP PERFORMERS (BY NAMEPLATE)
3137
ayngejgJJ—^
Saturn
c
Intiniti
Range Rover
Honda
Mercades-Senz
ToYOta
Audi
Acura
Saao
Buickcs
Chryster/Plymouin
Ford
Isuzu
Lincoln/Mercury
^
SuDaru
Industry Averaga
Sourcm:
Source:
/»J
J.D.
Power and Assodatti Ofier MitUiX Study]
"The Power Report", February 1992.
33
Figure 8:
Satisfaction Elite:
Top Makes
Satisfaction Elite:
1991 SSI
in
Top Makes
In
1991 SSJ
^IStar*
Mak<
133
Jaguar
^^
^^°
^^^^^VVv^^^xvv^^^^^^^^^
^^°
Industry f-^rsa^-^a^.nr^-^^-'^^^g^r^^.s'^^
20
40
io
ao
Too
120
Soirm:
Source:
"The Power Report Special Saturn Issue"
vio
160
mi JDPiA SSI
!
34
Figure 9:
Top Five Basic Small Performers
Top Five Basic Small Performers
20
40
60
In
in
1991 SSI (By Model)
1991 SSI (By Model)
M
too
120
5b«#e».' 1991
Source:
"The Power Report Special Saturn Issue'
140
JDfSA SS)
35
These
customer satisfaction
Powers and Associates
led J.D.
Lexus and
"Saturn,
that
have
results
to
as stated
in
Finally the
to
these efforts could determine
whether or not every other manufacturer
well,"
The degree
the automative marketplace.
which new-car buyers respond
state
are raising traditional standards of
Infiniti
in
to
will
be forced
to
change as
"The Power Report Special Saturn Issue".
1991
Estimated
New
Vehicle Profit Performance by
Franchise, also reported by J.D. Powers and Associates, has Saturn
third
The
Infiniti.
All
Saturn
its
new
total
in
of
top ten performers are listed
these indicators
seem
to
in
Figure 10.
show an impressive debut
area of customer satisfaction, the central
the
in
vehicle gross profit per dealership after Lexus and
strategic
criteria
for
for
positioning.
Lessons Learned
We
have
tried
to
communicate the basic
an attempt
principles that guide
regain competitiveness
the Saturn organization
in
one
and contested segments
of the
most
What have we learned from
industry.
summarized
philosophy
of the
in
is
.
that people
them.
this
effort?
of the
It
in
automobile
can be
these fundamental lessons:
Involvement
1.
affecting
critical
to
The cornerstone
want
to
of Saturn's leadership
be involved
Involvement translates
into
in
the decisions
a better understanding
businesses and generates a powerful learning process
throughout the organization.
36
Figure 10:
1991
Estimated
Franchise
New
Vehicle Profit Performance by
37
Commitment
2.
.
Involvement also leads
ownership and a personal sense
a sense of
duty and responsibility to
Implementation occurs much faster,
the decisions work.
logical
of
to
in
make
a more
way.
Quality over quantity
3.
change
is
industry.
The strongest and unbending
the pursuit of the highest quality standards
Saturn
is
creating a culture
has a quality stamp on
These appear
expected
.
to
be
of
to
where everything
/
the auto
that
is
done
it.
be simple lessons.
tremendous proportions.
o
in
2 J
I
J o
Their impact, however,
is
MIT
3
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LIBRARIES
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