Chrysler Taking Hard Line on Quality

AUBURN HILLS, MI – Compared with its predecessors, Chrysler Group LLC’s attitude toward product quality is as different as black and white, says Doug Betts.

To illustrate, the auto maker’s quality guru draws a vertical line down the center of a blank paper. And on each side of the line he inscribes an ‘X’ to represent vehicle components or features.

Customer satisfaction increases if the ‘X’ is positioned closer to the left edge of the page. But generally so is cost. The inverse is true for the right.

When Chrysler was owned by Cerberus Capital Management LP, and during the preceding DaimlerChrysler AG regime, “we were trying to find this point right here,” Betts says, jabbing his forefinger just left of the mid-line.

Proposed solutions that were just short of unacceptable “used to be good ideas,” says the auto maker’s senior vice president-quality. “Now, they’re stupid ideas. And people are learning that. People who made their careers on making these kinds of suggestions, they’ve got to find another (way to) work.”

Attribute the attitudinal shift to greater discipline and the watchful eye of CEO Sergio Marchionne, Betts tells Ward’s during an in-depth interview at Chrysler headquarters.

The discipline is derived, in part, from a rejuvenated product-development process that features new parameters for suppliers. Late last month, Chrysler held a summit with 40 key suppliers. The topic: standards.

Historically, Betts says, some Chrysler cars have featured trim pieces that did not properly conceal flashing. “The tooling wasn’t made with the idea that we can’t (show) any flashing,” he adds.

Such miscues do not bode well for perceived quality, which Betts loosely defines as “how a car looks” based on material choices, fit and finish.

So Chrysler told the supplier gathering how it measures perceived quality and provides examples of what was acceptable in the past. Those things are “not going to be acceptable anymore,” he says.

Doug Betts, Chrysler senior vice president-quality.

With some regret, Betts says the public can expect a “shocking” difference between what Chrysler has produced and the vehicles in its pipeline. “Part of that is because of the effort we’re putting in,” he adds. “Part of that is because how bad we were.”

Additional discipline comes courtesy of World-Class Manufacturing, an intricate system of checks and balances borrowed from alliance-partner Fiat Automobiles SpA, which also is led by Marchionne.

Betts says Chrysler has graduated from fixing upstream “design issues,” such as loud or vibration-prone brakes, to resolving downstream complaints. This is significant, he adds, because the former variety affects every unit, while the latter results from occasional slip-ups.

“In the past, we launched a car, and we always got worse,” Betts says. “Then we had to beat the problems back down.”

New issues routinely arose when new vehicles were launched because Chrysler did not have a robust, standardized development process.

“There’s been a tremendous amount of change in terms of our approach to developing a car,” he says, adding Chrysler “significantly” has increased the amount of testing it does, both in the virtual realm and the real-world variety.

“We’re working more on individual mistakes that might happen at the plant, where they put an emblem on crooked or a door doesn’t fit right,” he says. “And again, it might be a mistake an individual on the line makes once a week. So out of 2,500 cars, they might put one emblem on crooked.

“We had to figure that out and error-proof those jobs. You give (assemblers) a tool or some process that (makes it) impossible for them to put it on crooked or it’s impossible for (a flawed vehicle) to get out of the plant if that happens.”

That’s where WCM has proven valuable.

“World-Class Manufacturing is about making the plant run smoothly and easily, so that everybody has a job, (and) the job is easier to do correctly than it is to do incorrectly,” Betts says.

As a result, expect coming Chrysler vehicles to deliver higher quality scores from industry-opinion leaders, he says.

By most industry matrices, the auto maker has much to prove. Chrysler’s stable of brands ranked well below the industry average in J.D. Power and Associates’ 2009 Initial Quality Study. And Consumer Reports magazine ratings – a measure Chrysler is “really focused on,” Betts says – this year described the auto maker’s reliability as “bottom of the class.”

Betts supports his optimism by pointing to warranty claims. They invariably reveal themselves in Consumer Reports’ surveys, but Betts says they are down 50% from 2007, when an emissions problem triggered check-engine lights on numerous diesel-powered trucks.

Because the Consumer Reports’ annual reliability survey considers data for current models, plus the two preceding years, “we drop the blemish out of our record,” Betts says. “Next year should be a significant move for us in Consumer Reports.”

This is important to dealers, as well. “Consumers believe in the magazine,” says Chuck Eddy of Bob and Chuck Eddy Chrysler Dodge Jeep in Youngtown, OH. “It does help (close sales).”

However, the magazine is not tipping its hand.

“We will not be able to tell until we get our survey data in and analyzed, which will not be until late October/early November,” says David A. Champion, auto test center director.

“We compare reliability against the industry average for each model year, so if all vehicles improve, the industry average will improve. To do better, Chrysler needs to improve more than its competitors.”

Betts suggests Chrysler will hold its own in the 2010 J.D. Power Initial Quality Study, which indicates vehicle performance after 90 days of ownership. Last year, Chrysler vehicles showed a 10% gain compared with their 2008 performance, exceeding an industry-wide 8% increase.

But of 37 brands evaluated, Jeep, Chrysler and Dodge ranked 33rd, 31st and 28th, respectively. Dodge, the Chrysler stable’s top-performing marque, recorded 134 problems per 100 vehicles, compared with the industry average of 108.

“Roughly half of the IQS score is based on the design of the vehicle – things that people think are hard to understand,” Betts says. “Last year, we lost points because of our cruise control.”

The feature is activated from a stalk-mounted control on the steering column. That has not changed for ’10 models, “so we’re still carrying that burden,” he says. But the ’11 models will see Chrysler’s cruise-control migrate to the steering wheel.

Cerberus wanted Chrysler to make moves such as this. But they had a problem.

“They didn’t have any money,” Betts says. “To make good perceived quality, you have to spend money. And you have to bet that it will pay you back.”

Marchionne is making that bet. With no reservations.

“As a company that was very focused on cost, certainly before Cerberus and even through Cerberus when we ran out of money, we were trying to find this point right here,” Betts says, pointing back to the spot just left of the mid-line on his paper.

“When we have those discussions and Sergio’s around, he’s not interested in getting anywhere close to this,” he says, adding the CEO believes in satisfying the customer, first and foremost.

Says Betts: “It’s happened several times. People say, ‘Well, we could do this or we could do that.’ And he looks at you (with) this burning stare. So it makes it a lot easier for me.”

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