The Fifth Dimension: The Supplier
& OEM Interface
Steve Walukas
Vice President
Corporate Quality
DaimlerChrysler Corporation
1
The Fifth Dimension
The Supplier & OEM Interface
¾
¾
¾
¾
DaimlerChrysler Overview
The Chrysler Group Results
The Chrysler Group’s Product Offensive
Internal and External Interface
2
DaimlerChrysler Overview
THE AUTOMOTIVE BUSINESS AND AUTOMOBILE-RELATED SERVICES
ACCOUNT FOR 99% OF DAIMLERCHRYSLER'S REVENUES
3
DaimlerChrysler’s Strategy is
Based on Four Strategic Pillars
Global Presence
Strong Brand Portfolio
Innovation & Technology Leadership
Broad Product Range
4
Extensive Research Capabilities
Permanent staff 1,600 scientists plus
1,000 doctoral/diploma candidates/junior staff
5
Disciplined Product Development Processes
Product
Product Strategy
Strategy
Development
System
Chrysler
Development
System
Customer
Trends IDEATION
Competition
Design
Ideas
PPDC
BUSINESS
CASE
Continuous
Continuous Improvement
Improvement
V1
Mid-Cycle
Freshening
Renewal
Technology Management
Concept Development
Design
Execution
Launch
Technology
Trends
Fuel Prices
Identify
Establish
Program Potential
Vision Alternatives
Program
Transition
Economic
Environment
I
H1
H2
Confirm
Product/
Process
Design
G1
G2
Optimize
Product/
Process
Design
EF
Verify
Product/
Process
Design
D1
D2
Validate
Product/
Process &
Verify
Facilities
C
Validate
Vehicle/
Facilities &
Launch
Ramp-up
B
A
Regulatory
Trends
Product Strategy
Team
Product Executive
Committee
• Regulatory Changes (PEC)
• Quality Improvement
(Monthly Review)
• Cost Reduction
(Bi-weekly Component Teams)
Product Innovation Team
6
Worldwide Manufacturing Locations
7
Global Retail Locations
Market Performance
Center (MPC)
Joint Venture
Independent Distributor
8
The Chrysler Group’s Transformation
By Leveraging our Global Enterprise, The Chrysler Group’s New
Generation of Vehicles Shares the Ultimate in:
• Innovation
• Quality
• Styling
• Environment
• Value
• Safety
9
2004 Calendar Year Product Offensive
Crossfire
Roadster
Town &
Country
PT Cruiser
Convertible
SRT-6
Roadster
300C
Grand
Cherokee
Durango
SRT-6 Coupe
2005
2004
NOV
DEC
JAN
FEB MAR APR MAY JUNE JULY AUG
1st
2nd
3rd
SEP
OCT NOV
DEC JAN
4th
Caravan
Dakota
Wrangler
Unlimited
SRT-10
Magnum
Liberty
Diesel
Liberty
Refresh/
Renegade
10
Product Offensive 2004 – 2007
25
in
New vehicles to market
36
months
11
Chrysler Group: Strategic Transformation
CHRYSLER GROUP HAS SHOWN SIGNIFICANT PROGRESS
REDUCING WARRANTY CONDITIONS AND EXPENSES
Warranty C/1000
Goal: Best in Class
by 2007
1996
1997
1998
1999
2000
2001
2002
Model Years
P:\
P:\SHARED
2003
2004
2005
2006
2007
12
2004 Consumer Reports
PT Cruiser
Toluca Assembly Plant
Chrysler Sebring
Sterling Heights Assembly Plant
RECOMMENDATION
Jeep Liberty
Toledo North Assembly Plant
Dodge Stratus
Sterling Heights Assembly Plant
13
J.D. Power IQS - Results
2004 Chrysler Group Top Quartile Models
Dodge Neon
Dodge Stratus Coupe
Chrysler PT Cruiser
Dodge Ram Pickup HD
Dodge Caravan/Grand Caravan
14
2004 Harbour Report
¾
Command Performance:
Chrysler Group is Most-Improved Automaker in The
Harbour Report 2004
¾
7.8 % improvement
¾
Set new industry benchmark in transmission
productivity
¾
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2004 Focus
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Emphasis on Warranty Improvements
¾
Launch Management
¾
Prevention of Problems
¾
Speed of Problem Resolution
¾
Durability / Reliability / 3/36 Warranty
¾
Improve Internal and External Collaboration
16
The Extended Enterprise Collaboration
Internal
Departments
Shareholders
Design
Engineering
Manufacturing
Procurement & Supply
Sales & Marketing
Finance
NADA
Dealer Councils
Dealer Advertising Associations
Labor
UAW(U.S.A.)
CAW (Canada)
El Sindicato (Mexico)
Management
Government
Agencies
EPA
NHTSA
Dealers
DaimlerChrysler
Financial
Institution
Analyst
Credit, DaimlerChrysler
Bank
External
Organizations
AIAG
VDA/ISO
JAMA
Suppliers
Production Parts
Tooling & Equipment
Service & Parts
17
Importance of Collaboration
¾
We rely on our partners to:
• Provide perfect parts and services
• Efficiently design & produce parts & services
• Proactively look for better standards, methods,
parts, products, and services
• Continuously strive for improvement
• Provide innovative methods and technology
• Delight the customers through passionate
execution of requirements and customer wants
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The Fifth Dimension:
The Supplier OEM Interface
DaimlerChrysler Corporation
Scott R. Garberding
Vice President
Supplier Quality
19
The 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
the performance of our supply base.
20
Primary Root Cause for Critical PRISMs
60
51
50
39
40
30
20
11
10
10
8
3
2
0
Inadequate Process
Control Method
Process Control
Method Not
Followed
Inspection and
Testing
Design Control
Control of
Nonconforming
Product
Handling, Storage,
Packaging and
Presentation
Part Identification
and Traceability
21
Primary Root Cause for Critical PRISMs
60
51
50
40
30
75% of all defects are due to
Process Non-Conformance
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20
11
10
10
8
3
2
0
Inadequate Process
Control Method
Process Control
Method Not
Followed
Inspection and
Testing
Design Control
Control of
Nonconforming
Product
Handling, Storage,
Packaging and
Presentation
Part Identification
and Traceability
22
Global Supplier Quality Initiatives
Quality
Funnel
Restructured
Process
Sign-Off
Layered
Process
Audit
Improve
Process
CDS
Quality
Gates
Best
Practices
Feedback
Forever
Requirements
Revision
Source
Package
Revision
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What is a Layered Process Audit (LPA)?
¾LPA 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.
¾LPA’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.
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How does an LPA Work?
PFMEA
Control
Plan
Work
Instructions
Corrective
Actions
Continuous
Improvement
Inputs
Technical
Memory
Prevention
Actions
Employee
Workshops
Process Audits
Build
Technique
Error
Proofing
Machining
Attributes
•Audits are conducted regularly by all levels of supervision
•Non-conformances are immediately addressed
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LPA - Frequency Plan
Plant Manager
1 X Week
Area Management
2 X Week
Production Supervisor
1 X Shift
• Encourages Management Involvement
• Encourages Operator Feedback
• Establishes Accountability
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LPA Benefits
Reduces
•Build variation based on work standardization
•End-of-line inspection
•Part defects
Improves
•First time through capability
•Morale
Facilitates
•Operator training
•Management/operator interface
Reinforces
•Safety regulations
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LPA Success at Kokomo Transmission Plant
Repair Inventory vs First Time Capability vs LPA
# of LPA Checks /
Week
KTP Now conducting 6700
Process Layered Audit Checks
100
Repair Inventory
FTC
95
90
85
80
75
1800
70
65
0 Process Layered Audits
31-03
34-03
37-03
40-03
43-03
46-03
49-03
52-03
60
21-02
24-02
27-02
30-02
33-02
36-02
39-02
42-02
45-02
48-02
51-02
1-03
4-03
7-03
10-03
13-03
16-03
19-03
22-03
25-03
28-03
18-02
180
First Time Through (%)
5400
55
Weekly
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Supplier Interface – LPA’s will be mandatory
ISO/ TS 16949
¾ DaimlerChrysler Customer Specific Requirements
ƒ New section under Internal Audits
ƒ Effective 7/01/04 for Powertrain & Component
Plants suppliers; 1/1/05 for all remaining suppliers
¾Posted on AIAG, IAOB, and QMS web sites
¾Letter 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,
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Supplier Interface – LPA Compliance Verification
Compliance Form
¾ Summary of training, implementation, and LPA results/ compliance
¾ One form per supplier location to be submitted monthly to SQ Specialist
Layered Process Audit Compliance Report
Supplier Name:
DCX SQ Specialist
Report
Supplier
Code
City
State/
Prov.
Country
Month
Year
Training & Implementation Summary
LPA
Trained
LPA
Implemented
Countermeasure
Comments
Countermeasure
Comments
Staff/ Top Management:
Mid-Level Management:
Line Supervisors:
Audit
Sheets
Developed
LPA System &
Infrastructure
Established
Number/ % of
DCX Lines
utilizing LPA
Monthly Compliance Summary
Line / Operation / Number /
Name / Description
Number of items to be
audited
Number of items audited
LPA
1
LPA
2
LPA
3
LPA
4
LPA
5
LPA
6
LPA
7
LPA
8
LPA
9
DCX
TOTAL
% 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
Yellow
Red
In Compliance
In Progress
Not Started
Submitted By: _______________________
Approved By: _______________________
Date Submitted: _____________________
30
Layered Process Audit
Proven successful internally
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Expanding Collaboration to our Supply base
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Not asking Suppliers to do something we are not
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Training available to all Chrysler suppliers
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Low investment – significant quality return
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The Fifth Dimension:
The Supplier OEM Interface
DaimlerChrysler Corporation
Scott R. Garberding
Vice President
Supplier Quality
32