TRAVERSE CITY, MICH. (Aug. 11, 12:30 p.m. ET) — Chrysler Group wants to train its Tier 1 suppliers to use its production system, dubbed World Class Manufacturing.
In a pilot program, five key suppliers will study the system in Chrysler's assembly plants and introduce it in their factories. The system manages aspects of manufacturing, including quality, worker safety and minimal inventory.
“They will see what we are doing,” Massimo Risi, Chrysler's chief of worldwide manufacturing, said last week at the 2011 Management Briefing Seminars in Traverse City. “We will give them a period to stay in our plants. They will stay a month or so, then work with their people.”
After the pilot program has operated for a year or so, Chrysler will expand it to other Tier 1 suppliers, Risi said.
Chrysler's initiative echoes a program that Fiat SpA launched for its suppliers in 2008. Fiat's manufacturing program has been adopted by 200 Fiat suppliers.
Fiat introduced the program to Chrysler in 2009 shortly after purchasing a stake in the U.S. company, Risi said. The program is generating savings. In 2010, Chrysler cut its manufacturing costs 9 percent from 2009.
So far, Chrysler has identified 10,000 projects to improve its manufacturing, and those projects generated $316 million in savings, Risi said.
Chrysler's purchasing chief, Dan Knott, said the program will be voluntary, and that suppliers with effective improvement programs can stick with those systems. Chrysler will not demand price cuts beyond the 2 to 3 percent annual price cuts in Chrysler's existing contracts.
Two or three years from now, 200 to 300 Chrysler suppliers will participate in the program, Knott predicted.