SCORE: Supplier Cost Reduction Effort
Chrysler Corporation established the SCORE program in August of 1989 in an effort to work closely with its suppliers and identify opportunities to reduce costs from the vehicle manufacturing process, SCORE allowed both Chrysler and its suppliers to share in benefits of SCORE-related costsavings. From the time the program was introduced to about 1996, Chrysler entertained more than 12,000 supplier-submitted proposals and saved an estimated $25 billion. For 1996 alone, Chrysler Corporation and its suppliers achieved $1 billion in cost savings through the SCORE program. (SCORE was scrapped after Chrysler was acquired by Daimler-Benz but remnants appeared as the Extended Enterprise program.)
SCORE and the 1997 Dodge Dakota
For Dodge Dakota, suppliers participating in Chrysler's innovative Supplier Cost Reduction Effort (SCORE) program identified $27 million in cost savings, savings which were realized well before the first 1997 Dodge Dakota went into production.
"Because we involve our suppliers early-on during the vehicle design process, we are able to discover opportunities to drive out costs before we manufacture an automobile," said Thomas T Stallkamp, Chrysler's Executive Vice President of Procurement & Supply and General Manager of Minivan Operations. "Through our SCORE program, 1997 Dodge Dakota suppliers submitted a total of 190 proposals which translated into $27 million in savings. Without question, working closely with our suppliers in what we call Chrysler's Extended Enterprise, continues to play a key role in our success story."
Leading the pack with $2.5 million in savings for the design and build of the 1997 Dodge Dakota was Becker Manufacturing, Inc.
Based in Sterling Heights, Becker submitted ten cost-reducing proposals to Chrysler.
One of its solutions involved the process in which Dakota's interior quarter trim panel bolsters are manufactured.
Manufacturing an interior quarter trim panel bolster typically calls for several labor-intensive steps which include filling a decorative cloth or vinyl material with foam before wrapping it around the steel shape of the bolster. Becker eliminated several of these steps by manufacturing bolsters using a simplified one-stage process that included receiving the cloth or vinyl material already pre-filled with the foam material. "Becker's new process removed $10 and 2 pounds from each 1997 Dodge Dakota," said Melissa Zimmerman, Interior Trim and Safety Buyer for Chrysler: "They saved us close to half a million dollars with that particular SCORE proposal."
Another Becker proposal called for the elimination of fastener parts and screws used to attach interior panels to Dakota's door body. Becker eliminated these extra parts and steps by molding pre-existing hooks onto each interior trim panel. Interior door panels are now fastened to the door frame by these pre-existing hooks which are designed to grasp the door's body during the manufacturing process.
"We not only saved $200,000 by approving their suggestion but we also were able to further enhance Dakota's interior design by eliminating the visibility of screws. Eliminating screws allowed us to give Dakota a better fit and finish," said Zimmerman.
Textron Automotive, another Dakota supplier based in Troy, Mich, saved $1.7 million with their SCORE proposal. Textron manufactures an interior panel that is visible just below the rear window of Dakota's cab and above its rear seats. Traditionally, the rear panel is manufactured by securing vinyl or cloth around a piece of foamboard. Realizing the panel's sole purpose was to hide steel that exists above the seats and just under the rear window, Textron suggested simplifying the part and its manufacturing process. By simply injecting polypropylene into a pre-existing mold to produce the rear panel, Textron eliminated numerous steps in the manufacturing process while driving costs out of the system.
"The SCORE program is an excellent example of how Chrysler is committed to working with suppliers as partners in a long-term relationship," said Stallkamp. "Instead of bidding out every single part to the lowest bidder, we have established an honest two-way communication that allows us to work together and build a cost efficient automobile."
Designing the Neon with SCORE in mind.
Those responsible for the 1995 Neon decided early that the only way to achieve their objectives was to "do business as unusual." They tailored the procurement and supply rules specifically to fit the Neon. It was to be one linchpin of the team's self- proclaimed "Dare to be Different" philosophy of vehicle development.
Faced with a modest $1.3 billion investment budget, Robert P. Marcell, the team's general manager, set the operative tone right from the outset in addressing his staff:
"Don't tell me what you need to have," he said. "I'm telling you what we've got. Tell me how much product I con get. There's no way to go back and ask for more money or resources. Our challenge is to get as much product as we con. Everything counts.
The message had immediate impact in marshalling the supply side of the house to work in concert with engineering product work teams to achieve innovative solutions in terms of both cost and quality. Some pleasantly surprising results followed:
- The number of suppliers was halved, from the 500-plus in some earlier product programs to just 250 for Neon, a much more manageable size.
- All major systems and component suppliers were chosen as early as three years before the start of production, actually some six months ahead of corporate program approval for Neon itself. These suppliers accounted for roughly 80 percent of the dollars allocated to support the program.
- A unique consensus agreement between individual suppliers and Neon product work team members was signed up front by both parties to define and ensure all parameters were met for investment, design assumptions, conformity, cost and weight of each component or system.
- Supplier representatives became full-time working members in the Neon product development process, often having full responsibility for large chunks of the car, such as the vehicle interior where United Technologies Automotive took the lead.
- Fasteners used in Neon were commonized reducing their numbers dramatically, to 49 percent fewer than Dodge Shadow or Plymouth Sundance.
- Chrysler built and owns Belvidere's satellite fascia plant, but a supplier, the Davidson division of Textron, provided the plant's interior design, machinery and engineering support.
The Small Car Platform Team also abandoned the traditional industry "low-bidder" pattern on Neon. Instead, it empowered a series of specialized sourcing teams and developed a new set of criteria for the selection process. In addition, commodity strategies were used to find suppliers who could effectively do a more comprehensive job in such areas as interior systems, seating, instrument panel, paint, fascias, underbody stampings, interior trim and climate control systems.
In one instance -- instrument panels, interior trim -- the supplier, United Technologies Automotive, actually co-chairs that sourcing work team.
Internal and external suppliers were accorded equal status. Less than 70 percent of the car is externally sourced, however, while most major components continue to be done in- house by Chrysler or its subsidiaries.
Neon's engine, for example, is built at Chrysler's Trenton, Mich., Engine Plant. Its new 5-speed manual transaxle is from New Venture Gear, a joint venture between Chrysler and General Motors.
Body stampings ore done at a new satellite stamping plant at Belvidere, while underbody stampings come from Chrysler's Twinsburg, Ohio, stamping facility. Side glass is done at Acustor's McGraw Glass Plant in Detroit, while windshields come from Guardian Industries and the rear windows from PPG.
Not all suppliers met Chrysler-prescribed design targets at the outset. Johnson Controls Inc. was chosen to supply seats. But its early submissions fell short on weight and comfort. So, in early January 1991, Chrysler sent 10 of its engineers to Johnson. After five days, they and 10 Johnson counterparts agreed on weight, cost and performance targets and haven't budged since.
Johnson, for instance, designed the rear seats for some Neon models so they would fold down to expand the trunk space. But Chrysler's manufacturing engineers wanted all versions of the seat to install the same way, which meant making the fold-down seat more complex. This design made the seat itself more costly, but Chrysler estimates it will save $1 million in simplified final assembly.
Special supplier days -- real working sessions -- were instituted at various, important junctures in the car's development cycle. Recently, more than 900 supplier personnel and 300 Chrysler people participated in a supplier program held at the Belvidere plant.
"We felt early on that one of our major objectives was to communicate better with suppliers," recalled Bernie Bedard, manager of procurement for the Neon team.
"Basically, we wanted to establish a good working relationship between our launch team and each of theirs," said Bedard. "Not only did we have a lot of top management people there, but mid-level personnel ... the project engineers, plant managers, quality managers. We also held special symposiums for the executives of the top 30 dollar-value suppliers," he continued.
Finally, the team put the machinery equipment suppliers together with the production parts suppliers to improve the communication between them. "It was to everybody's benefit," said Bedard.
Heading into volume production, the Neon's process sign-off team had one final, but important assignment with regard to supplier capability. "The team consisted of representatives from manufacturing, engineering and procurement and they went out and visited our key suppliers to make sure they were ready to launch," said Bedard. "They reviewed virtually everything ... machinery, equipment, personnel, training, quality systems and the processes. Team members had to attest that each supplier was ready to support us with high quality parts."
As part of its strategy to manage, instead of simply controlling costs, the Small Car Platform group set up a materials management work team, the objective being to optimize the relationship between scheduling, material handling and inbound transportation.
"Before, parts came in cardboard boxes and once the parts were used, the cardboard was tossed in a dumpster and some trucker was paid to haul it away," said Bedard. The better idea? Reusable plastic containers that could be shipped back to the supplier when emptied.
"The plant was able to eliminate 95 percent of the waste materials," said Bedard. "Besides the environmental issues, it had an impact on quality with less damage to parts transported in returnable containers instead of cardboard." In addition, eliminating cardboard is expected to save the Belvidere plant hundreds of thousands of dollars over time.
Now that the Neon is rolling off the assembly line at the rate of some 1,000 cars a day, the work of the Small Car Platform's product work teams isn't finished. The next task will be continuous improvement, both from cost and quality standpoints.
It is worth noting that the Neon's major quality issues ended up being design flaws, not construction issues - overly sensitive frameless windows, a noisy exhaust gasket, a poorly designed head gasket, and one supplier piece, a badly designed or executed turn signal assembly.
SCORE and the Dodge Durango
Chrysler Corporation's commitment to establishing and maintaining positive relationships with its suppliers continues to pay big dividends. For Dodge Durango, suppliers participating in Chrysler's innovative Supplier Cost Reduction Effort (SCORE) program identified $74 million in cost savings which were realized well before the first 1998 Dodge Durango went into production.
"The momentum of the SCORE program, both internally at Chrysler and with our suppliers, continues to be phenomenal," said Thomas T. Stallkamp, Chrysler's Executive Vice President of Procurement & Supply and General Manager of Minivan Operations. "Through our SCORE program, 1998 Dodge Durango suppliers submitted a total of 357 proposals, which translated into millions of dollars in savings. We're constantly working with our suppliers as teammates to discover new ways to be more efficient while mutually achieving cost reductions."
Established by the automaker in 1989, SCORE challenges suppliers in Chrysler's Extended Enterprise to continuously seek out and identify opportunities to lower cost in the vehicle manufacturing process.
Cumulatively, Chrysler has achieved $3.7 billion in cost savings through SCORE since its inception (written in 1997).
Suppliers contributing to the $74 million in cost savings for the Dodge Durango include the Becker Group, based in Sterling Heights, Mich., which submitted two SCORE proposals that contributed approximately $6 million to the cost reduction efforts. A full-service supplier in both design and manufacturing, Becker was able to cut production costs by improving their Newark plant efficiency. Becker's first proposal involved reducing part complexity and commonizing parts in order to improve the manufacturing process. The second involved improving the tooling designs and taking advantage of advanced technologies to make the end product more cost efficient.
"By improving both the manufacturing processes, as well as the tooling designs, Becker was able to realize production cost savings and pass a percentage along to Chrysler," said Melissa Zimmerman-Coleman, Buyer, Interior Trim and Safety, Procurement & Supply for Chrysler. "It's an excellent example of the mutual benefits of the SCORE program."
U.S. Steel, a division of the USX Corporation in Pittsburgh, saved almost $470,000 with their SCORE proposal to reduce the surface area of the wheelhouse on the 1998 Dodge Durango.
By utilizing complex computer simulations prior to the start of production, U.S. Steel was able to reduce the surface area of the wheelhouse without compromising the quality of the part. This reduced the amount of raw material necessary to produce the wheelhouse, resulting in lower costs.
"U.S. Steel was able to identify the cost savings on wheelhouse production because of Chryser''s early supplier involvement," said Cosimo Simonetta, Senior Buyer, Procurement & Supply for Chrysler. "Not only did their SCORE proposal result in lower costs, but by reducing the amount of steel used to make the part, it made the vehicle lighter, which improves fuel efficiency."
Through SCORE, suppliers are encouraged to submit proposals designed to reduce costs in a variety of areas including design, manufacturing, logistics, sourcing and administrative transactions. Chrysler continuously monitors and measures SCORE proposals submitted in the following areas: Interior, Exterior, Chassis, Power Train, Electrical and Body-In-White.
All told, Chrysler realized $1.2 billion in cost savings through its SCORE campaign during the 1997 model year. The total represents an increase over 1996’s $1 billion in cost savings through SCORE.
"The SCORE program continues to be unique because cost savings are shared with suppliers," said Stallkamp. "We are pursuing quality, efficiency and affordability without eroding our supplier's profit margins."