Copyright Society of Management Accountants of Canada Nov 1993The global competitiveness of the automotive industry has challenged manufacturing organizations to change old ways of doing business in order to survive. Chrysler's assembly plant, producing the Dodge Caravan and Plymouth Voyager minivans in Windsor, Ontario, is no exception. Nowhere is the impact felt more greatly than on the shop floor at the foundation of the assembly process. The front line of the assembly operation is typically the furthest distance between the product and the customer. Manufacturing performance feedback mechanisms must now be focused on customer requirements and be user - friendly, such that people responsible for building the product understand and conform to these requirements.
In 1991, putting the Windsor assembly plant employee's pride on the line, exposing our strengths and weaknesses, plant management and members of the Canadian Auto Workers Union (CAW) applied for the Canadian Award for Business Excellence in the quality category. Criteria such as employee participation, measurement, quality indicators, business practices, innovation, customer satisfaction, future planning, leadership and safety were all categories which were scrutinized, in detail, at all levels of the organization. The result; we won the award! Before describing how we won the award and what specific steps had to be taken, it is essential to understand the history of the plant. Since it opened in 1928, the Windsor assembly plant built various automotive models before the introduction of the minivan. In 1982, Chrysler spent over $800 million to research, engineer, develop and launch the minivan. In making such a major decision, Chrysler knew that Windsor had the best qualified workforce in the world to launch a new world - class vehicle and, of course, the consumer has supported that decision. In October of 1983, our first minivan rolled off the assembly line.
The nuts and bolts of our operation doesn't make us much different from many other auto manufacturing organizations across the country. What does make us different is the way we do business in our plant. It's important to note that our winning of the award was based on the "plan - do - check - action" methodology:
10 per cent - plan;
40 per cent - do or execution;
40 per cent - check - against the do;
10 per cent - future plans or actions.
It must be understood that the best laid plans, without execution and measurement, are worthless. Quoting Richard Whitely, vice - chairman, Forum Corporation, "Seven out of 10 companies who have tried to execute total quality have failed to make these strategies work." In a survey by Forum Corporation, 95 per cent of respondents noted experiments where:
measurement was inadequate
teams were ineffective
momentum was lost.
A mixture of high technology, along with cultural strengths, a strategic business plan, a daily operational routine, and a quality process, made for a winning team. We were very proud when the board announced that we had made the short list of finalists for the excellence award, but winning was a significant emotional event for all of us at Windsor Assembly. (We actually shut down operations at the plant during the award ceremonies so our people could watch them on TV.) Our preparation for examination, application, and winning the award, helped us understand just how far we had come as an assembly family. But applications and examinations don't win awards...people and processes do. We knew it was time to drive a stake in the ground, benchmark and measure our progress...to strive towards total quality. We are very proud to have won the award but we also know that the long road to total quality is never ending.
A major innovation that helped us win the award was our quality improvement process. As a corporation, we developed a quality policy "To Be The Best." This policy requires that every individual and operating unit fully understand the requirements of their customer, and deliver products and services that satisfy customer requirements at a defect - free level. From this policy, the quality improvement process (QIP), which promotes the defect - free philosophy, was developed. The customer - supplier relationship is what drives this process. Everyone in our plant is encouraged to know who their customers are, both internally (those in the plant who provide product or services) and externally (outside suppliers, vendors or contractors). We are all encouraged to understand our customer requirements and to measure performance against those requirements. Our emphasis on what the customer needs continually drives us to new levels.
We showed our commitment to the quality improvement process by training every management person and over half of our assembly workforce in QIP. Our training continues, with our goal to provide training for every person at our plant. All of this training is done by hourly workers chosen by the CAW, Local 444, and this includes the management people. Part of the QIP training involves what we refer to as the "error - cause - removal" step or ECR. This is a process in itself. It provides a form, which when filled out, allows the worker to voice concerns over specific problems that could not be resolved through normal channels. The problem could involve products, parts, tooling, process or environment.
This process is not bureaucratic...it is not a paper shuffle...it calls for a 24 - hour response to the originator. Anyone can issue an ECR; all are treated as important, and all are responded to. When an ECR is issued, it is assigned to a person who the originator believes can impact the problem. The assignee is then responsible to organize activity towards the resolution of the problem through corrective action teams (CAT). A governing committee meets bi - weekly to review open ECRs and discuss progress. Activity is reported at quality improvement team meetings. This process grew slowly, due to peer pressure, but it is now recognized as a way to get tough things done. The employee who initiates the ECR, realizes that he or she may be part of the corrective action team and can be the only one to close an ECR, so that it can't be swept under the rug. Again, the customer makes the decision.
Another innovation was the formation of the "core team" headed by a member of the CAW. This team is comprised of 24 unionized workers assigned as teams to each division. The core team acts as an interface between workers, engineering, supervisors and suppliers. It serves as an early warning system to channel problems and opportunities regarding tooling, facility changes and new product introduction. We actually get the workers' true perspective and point of view on changes, which helps us in decision - making. This step in itself eliminates waste. Our annual expenditure for the core team is $1.6 million, but the actual dollar savings and the hassle reduction realized as a result of the core team make it a wise investment.
The next significant intervention is what we refer to as our "working together meetings." These are held daily on a scheduled rotating basis. Each day of the week, a different division has a working together meeting. Attendance includes the senior staff managers, area managers, the core team, engineering, union reps, workers, and most important, the area supervisor. Each meeting starts with a succe story. We had found that too often we would dwell on our mistakes and failures, subsequently spiralling around them. Writing success stories forced us to recognize our successes and to share them with each other. In the beginning, the supervisors were hard pressed to come up with what they perceived as a success story, but through encouragement, they find it easier to see successes in ordinary everyday activity. The meeting continues with a walk - through of the supervisor's area, with the supervisor taking the lead, discussing area needs and requirements in the five categories of; quality, cost/cash, environment, lean systems, and volume. This isn't image folks...it deals with reality, with the supervisor in charge tabling issues on behalf of his people and his process.
Our daily operational format is another innovative process, and we are very regimented in our approach to this process. Daily operational meetings, on both shifts, focusing on people, product, process and cost, consist of reviews of panel alignment, dimensional integrity, body tolerances, paint appearance and general customer satisfaction. These reviews are not held in auditoriums or offices, but on the assembly line. We take a hands - on approach and encourage the workers to make the decisions which drive change and improvement. There are no "stripes" at these reviews. Managers, workers, engineers, suppliers and support staff are all treated equally as important team members. We believe that the visibility of management shows commitment to our goals and provides respect and recognition to workers.
This operational format, although regimented, is dynamic in the sense that as we learn from each other and our trust in each other grows, we can challenge ourselves to achieve new goals. It takes daily commitment, practice and dedication to the process. The process creates vulnerability because our decisions not only affect the plant population, but the families and extended families of our community. We see that as a huge responsibility.
It's important to note that a key enabler in the success of these processes was the change in management's attitude. From the plant manager to the supervisor, change occurred. But this change did not come easily. Being accessible to the workers at our product reviews and working together meetings, put management in the position to be criticized, questioned and challenged on decisions that affected the workers, or the product, or the plant environment. It also diminished personal authority -- for some, power was lost. One of our first changes was relaxing the dress code...although this may seem insignificant, it did make a difference. Our supervisors and managers were viewed by the workers as less "different" without suits and ties!
At one time, a supervisor wearing dress shorts on a hot day was unheard of...not any more! Dress code changes put supervisors in step with the workforce.
We also started referring to ourselves as "family." This might sound hokey, but for us it worked. Our assembly family could now work together towards common goals. Change is also occurring though the restructuring of the salary rankings. Organizational compression, elimination of layers and centralizing responsibilities to shop floor managers is resulting in the deployment of authority to the employees. Our cultural change began when we adopted three operational commandments:
1. maintain and enhance self esteem;
2. listen and respond with empathy;
3. ask for help in solving problems without relieving operational responsibility.
These may be three new commandments to management, but the autoworkers had been bending the company's ear for years trying to get it to listen and to help resolve problems of all sorts. These are union principles. These commandments provided the proper working environment for change to occur. Our people, who feel good about themselves and who are listened to, find it easier to come to work. They are more motivated and more productive.
More and more people now step forward and take leadership roles because they know change can occur. Worker fear was driven out due to participative management mechanics and employee empowerment. Our working together meetings, product reviews, organizational meetings, skip level meetings, recognition programs and our operational commandments, put people first. As workers become more and more confident, greater authority and responsibility are passed on. Managing with facts -- being brutally honest and objective in our business -- becomes the norm. Measurement, data collection and statistical process control (SPC) become less magical and more acceptable. People are less emotional when challenged with facts. Measurable, quantifiable data allows benchmarking and progress tracking. Now, with a participative approach instead of a directional approach, we bring to bear a greater number of people for problem resolution.
Putting our greatest resource, our people, in the lead role dynamically changed the culture and the working environment in our plant. Now, workers step forward to take ownership, offer opinions, views, solutions and solve problems. But let's not kid ourselves. Our employees know that we are competing for our jobs and our family's security in a global market.
We must stress the fact that we do not control global economics, national policy or provincial policy, on a daily basis. But we do control our quality, cost, and environment. Management and the CAW still do not agree on workforce reductions, which makes our cooperative bond very tentative and fragile. Therefore, it's management's responsibility to present to the CAW any future plans, so they may analyze and have a forum to challenge these actions.
One of the steps to our quality improvement process is recognition. This step, as simple as it sounds, is one that we constantly work on. We have established acknowledgements such as a plain old thank you and a hand shake, a letter of recognition, T - shirts, a free lunch, use of a company vehicle, or dinner for two. We also forward our success stories to the corporate quality improvement team for consideration for a silver, gold or chairman's award. Our workers were a little hesitant at first -- accepting recognition sometimes felt like they were "selling out" -- but our consistency and sincerity paid off.
The union, although wary at first, accepted our honesty and sincerity in recognizing good performance, ingenuity, productivity and savings. Our workers always displayed skill, but their skill was limited by their knowledge and, in a big way, management was impacting their knowledge by limiting what they told them. Workers were asked to do things but never told why. They were not made aware of the "Big Picture." We now share openly through:
daily production letters;
manpower daily planning;
leave of absence planning;
potential job elimination planning.
We also share our corporate and plant goals and objectives. We do this both informally through "town hall" meetings, handouts and discussion, andformally by posting goals and objectives in every supervisor's area throughout the plant. The CAW also shares information openly using such vehicles as:
CAW newspaper;
core team Magic Monitor Newsletter;
CAW posting boards at numerous locations in the plant. To this point, we've described innovations and processes intended to cause cultural change. We've described our daily operational routine, our working together meetings, our cultural change, our employee empowerment, the quality improvement process, error - cause - removal, our goals and objectives, communication and operational commandments. Well, what's the pay - off you ask? Was it worth the effort? Was it worth the risk?
In a single word...yes! Check out the stats in the sidebar (previous page).
Commitment to our process, the willingness to participate in a daily routine, recognizing the need to share goals and objectives with our workers, and believing in our operational commandments, allowed change to occur and provided the environment which drives cultural change. At the same time we are very fragile, and must be patient on our long road to total quality process.
In summary, successful manufacturers in the future will maximize efficiency, eliminate waste, adapt to change and employ measurement strategies tailored to customer requirements. In order to achieve this profile, organizations across the industry are remodelling their internal operating structures. A bureaucratic bashing -- "do what is necessary" movement -- is driving quantum organizational compression. Streamlining, downsizing and rightsizing are all popular buzzwords characterizing the process of purging non - value - added functions from the manufacturing machine. Organizations that were once stratified by level upon level of specialization are now flat. Decisions that were once made in the conference room are now being deployed to the shop floor. Job scopes are expanding, skill and knowledge levels are becoming more diversified in all phases of the production process.
The next step of the transition will be to transform the untapped resources on the shop floor into a dynamic, self - directed work force. This will require major operational role changes for both supervisor and assembly line operator. Historically the assembly supervisor has been the primary link between the customer and the operator on the production line. Performance feedback, audit results, customer opinion surveys and product or process changes have always been networked through the supervisor to the operator on the line. The role of both the supervisor and line operator will not exist as we know them today in world - class manufacturing operations of the future. In lean, competitive assembly operations, first - line operators understand the customer's requirements, have the proper training, materials, machinery and environment necessary to perform the job. They embrace the opportunity to be empowered with responsibility to make decisions normally made by today's supervisor. The concern is, will the assembly line operator be willing and able to make such a change and how best should management facilitate the process? Two important paradigm shifts are necessary. First, assembly operators must accept responsibility and accountability for their performance. Second, operators must initiate self - directed problem solving activity and not be dependent on an immediate supervisor for performance measurement and feedback.
Internal measurement systems must be accessible and user friendly to the operator on the line. Assemblers must understand the data and it must put them in touch with the customer requirements. Decisions to forge forward in this direction will be fruitless unless measurement strategies within organizations can accomplish these two fundamentals. We know we're not quite there yet but we're on the right road. It's interesting to note that from 1928 to 1983 (55 years) the plant built five million units. In the next ten years, we built over 2.6 million minivans. We presently build 1,106 minivans per day. We have a total of 4,100 employees. We have an annual payroll of over $200 million and a total revenue of $3 billion.
We bandle an enormous volume of freight, with 295 inbound trucks per day. It takes 3,400 parts from 627 different suppliers to build a minivan.
We have $15.7 million in stock on band, of which 98 per cent is "just - in - time" delivery and 52 per cent is in returnable containers. We use 350 computers to control 137 robots and over 10 miles of conveyor systems. So much for the smoke stack image -- it's gone. Our unionized employees are represented by four unions, the Canadian Auto Workers, the Canadian Union of Operating Engineers, the Ontario Nurses Union and the United Plant Guard Workers of America.
Look at these statistics!
In quality, our customer satisfaction audits improved by 37.7 per cent over 1991.
Our warranty, measured in conditions per bundred, improved by 30 per cent.
Our expense per unit sold (warranty costs) decreased by 25 per cent. Owner loyalty, defined simply as repeat customers, is at a world class level of 63 per cent.
In volume, we were the best -- we produced 297,135 units during the 1993 model year.
In cost/cash, we reduced scrap by over $2.00 per car. We reduced injury frequency per bundred workers by 18 per cent and our number of grievances were reduced by 18 per cent and our number of grievances were reduced by 55 per cent.
We diverted 32,000,000 pounds of waste from the landfill. We recorded 250 success stories.
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