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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."

Chrysler factories page


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