Fiat’s World Class Manufacturing Key to Chrysler Turnaround

Special Coverage

CAR Management Briefing Seminars

TRAVERSE CITY, MI – Even though its finances were unraveling before being forced into reorganization last year, the former Chrysler LLC was not a manufacturing basket case.

While it once ranked dead last by the Harbour Report in productivity, in 2008 it tied Toyota Motor Engineering & Mfg. North America Inc. for the No.1 spot.

Four Chrysler assembly plants ranked in the Harbour Report’s top-10 most efficient plants that year, and the auto maker’s Global Engine Mfg. Alliance facility was the top-rated engine plant.

Even so, Fiat Automobile SpA’s World Class Manufacturing system is changing nearly everything about the way Chrysler Group LLC builds vehicles, Scott Garberding, senior vice president-manufacturing/World Class Manufacturing tells attendees at the Car Management Briefing Seminars.

“Everywhere you look around Chrysler, there is so much happening and it’s all laying the groundwork for an exciting revival,” he says. However, nowhere at Chrysler do the winds of change blow stronger than in manufacturing.

Implementing the WCM production system was a key piece of Sergio Marchionne’s turnaround strategy after he assumed the CEO job at Fiat in 2004, Garberding says.

“It is a holistic production system that takes the best of other systems (such as the Toyota Production System) and is linked to clear targets and regular audits of every aspect of the work.

Implementing the system at Fiat changed every facet of the way the auto maker built cars, and between 2006 and 2009 saved an estimated €730 million ($966 million).”

Chrysler’s Scott Garberding

“Fiat knows its people are involved, because they are making an average of 10 proposals for improvements, per employee, per year. And absenteeism has declined 14%,” Garberding adds.

Chrysler worked hard during the same period on a number of manufacturing issues, including man-hours per vehicle, a key measure of the Harbour Report, and it made progress. But its progress did not match that of Fiat’s.

The main difference is Chrysler did not have the people systems in place to make it work. And it did not commit the resources to effectively implement a system such as WCM.

The beginning of the Fiat-Chrysler alliance in June 2009 gave Chrysler the opportunity to learn from its new partner’s experience. And that started a whirlwind of activity.

On the surface, WCM looks much like any other manufacturing system that promotes teamwork and is aimed at eliminating waste, Garberding tells Ward’s in an interview.

But he says WCM has had a major effect in the way Chrysler workers are now involved in helping to design the manufacturing processes up-front.

“WCM demands levels of rigor and logic that were not traditional for us at Chrysler. It is impossible for us to execute at these new levels without engaging our hourly workforce in planning, execution and problem solving. WCM gives us a formal method for doing that,” he says.

Chrysler is investing a lot of effort into training, too. But instead of broad-based training programs like it used to emphasize, it has moved to a much more focused philosophy, one that emphasizes much smaller, team-oriented efforts than before, Garberding says.

That switch already is paying off big, he insists. To date, the auto maker is on track to reduce plant injuries 30%, chop operating costs 8%, and improve productivity 10% and first-time quality 15%.

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