see below

Chrysler

The primary goal of the reengineering effort was to reduce production time. The main reason for Chrysler's lack of competitiveness was the fact that production time took too long to maintain an edge in terms of other car manufacturers. Another problem was the lack of focus on new product development that was part of the company's policy during the years prior to the 1980's. The resultant decline of profits brought decision-makers to the conclusion that a restructuring process was not only necessary, but essential.

The two problems identified above were the focus of the reengineering process, because production time and new product development are the main elements driving competition in the industry. If competition is to be maintained, these two elements need to combine to provide the company with the best products in the shortest time possible. Reengineering was deemed essential to accomplish this, as the company's present structure did not allow for a product-development cycle of less than 60 months; too long to sustain competitiveness. The reengineering effort was successful, as shown by the fact that vehicle development time was reduced by 48% through the implementation of platform teams, and lead-time was reduced from five years to two.

2.) Chrysler's "extended enterprise" approach relates to the role of suppliers in the product development process. Instead of the traditional bidding system, Chrysler adopted a system by which suppliers are involved earlier in the design process, based upon the quality of their relations with the company rather than the cost of their products and services. This also reduced the number and diversity of suppliers it works with per project. While reducing material deficiencies, this also improves efficiency on production lines. Eventually this results in a production cost saving of 20 to 40%.

The extended enterprise strategy was supplemented by the material flow workshop during 1997. This strategy further reduced production time by means of the sequential assembly concept, through which parts are delivered in the sequence in which they are needed for assembly onto the vehicle.

Further savings relate to the time factor. By reducing production time, time-related costs are also dramatically reduced. By producing and delivering their products faster, they also improved their customer relations. This in turn provides extra funds for investment into the current production process, further improving the existing system.

Generally, Chrysler improved its overall company functioning through technological improvement. Not only was vehicle production further accelerated, but other functions within the company also became more efficient and less time consuming. Computer modeling was implemented and shared by the whole design team, greatly enhancing quality in a much shorter timeframe.

While all these changes integrate to bring the company to its high performance level during the 1990s, I believe the component that contributed most to this is the reduction in production time. This is the main problem identified in the beginning. The other improvements support the effects brought about in this way.

3. Chrysler's new approach to supply chain management involves replacing the old, bidding system, based upon price, with the new system based upon performance. Suppliers may then experience the difficulty of a paradigm shift from cost-focus to performance focus. Organizational culture changes needed in order to accommodate the new paradigm would relate to enhancing the quality of product and service rather than focusing on reducing cost as far as possible. In the end the advantage of this is a better final product for Chrysler and finally a better product for satisfied, returning customers. Furthermore, suppliers will also need to focus more clearly on their relationship with their clients in order to establish a long-term connection rather than a short-term supply of physical product at a certain price.

4. In selecting its suppliers under the new system, Chrysler negotiated with those who seemed most open to the idea of a long-term partnership rather than occasional, short-term supply based upon price. Furthermore, the company focused on the key suppliers known for delivering the most efficient, reliable service in these negotiations. This also reduced the number of suppliers and resulted in a reduction of cost, manufacture, and waiting time. Suppliers have also been provided with a regular workshop opportunity to ensure that they are able to work efficiently with Chrysler's new system.