DaimlerChrysler Corporation's Product Development System Reduces Costs And More
4 August 2000
Development System Reduces Costs, Improves Quality and Time to Market, Supports Innovation
AUBURN HILLS, Mich. - DaimlerChrysler Corporation is implementing a new
product development system that is reducing costs, improving quality, and
getting new products to market faster, while strengthening the corporation's
reputation as developer of affordable innovative automobiles.
Elements of the system, known as the Chrysler Development System (CDS),
are being phased in during the launch of the new Dodge Caravan and Chrysler
Town & Country and Voyager minivans at the Windsor (Ontario) Assembly Plant.
The first products to be fully developed under CDS, from concept to
production, will be launched beginning in 2003.
When fully implemented, the new product development and launch process is
expected to save the company between $1 billion and $1.5 billion per year.
DaimlerChrysler Corporation is the industry's lowest cost developer of new
products. "Our engineering and development costs are about half of the
industry average," says Roger Lundberg, Director of Chrysler's Development
System and Vehicle Engineering Operations, "but we are not the fastest to
market."
"Everyone in the industry is trying to cut costs and time to market. This
system will enable us to do that and improve quality -- at the same time we
continue the kind of product innovation that customers have come to expect
from DaimlerChrysler."
CDS emphasizes systems engineering and up-front planning and design to
reduce or totally avoid the need for costly changes during the later phases of
the product development cycle. With CDS, all product and process planning
will be completed and fully integrated before the expensive and time consuming
tooling phase is begun. CDS redefines the product creation process while
leveraging the integration of technology, organization, and people. CDS was
developed as part of the UAW-DaimlerChrysler Joint Activities Operating
Principles.
"The opportunities for controlling costs and saving money are greater in
the early part of planning and design. Once you get closer to launch, the
cost of making changes and the coordination effort increases by orders of
magnitude," said Robert Dupuis, Senior Manager, Chrysler Development System.
Since the implementation of platform teams in the early 1990s, the
Chrysler group has reduced product development time by 25 percent. The goal
of CDS is to reduce the overall time to market by an additional 25 percent.
"The key result is that we can make our final product decisions closer to the
time we deliver products to the market. That keeps the 'design window' open
longer and increases the opportunities for introducing innovations while
reducing costs," said Dupuis.
Once fully implemented, CDS will reduce product changeover time at
assembly plants by 80 percent, and downtime would be completely eliminated.
Already, DaimlerChrysler is realizing significant savings from the rolling
launch of the new minivan production at the Windsor (Canada) Assembly Plant.
Down time will be reduced by more than 80 percent, and total savings for the
new product launch will total more than $500 million.
CDS fully integrates DaimlerChrysler's product development system into the
platform team organization and culture.
"The platform team structure gives us a competitive advantage," said
Lundberg. "Platform teams bring people together from all functions, including
suppliers, into a collaborative environment -- everyone works together to
achieve a common goal to create the vehicles our customers want."
CDS also creates an environment and process for continuous learning --
working through the platform team Tech Clubs, the teams share lessons learned
on current programs. And CDS meshes well with DaimlerChrysler's extended
enterprise that incorporates the supplier base as key partners in the design,
engineering and production processes. Continued development of electronic
business-to-business communications through the Internet will further help to
shorten lead times by speeding up communications among designers, engineers
and suppliers. "The links with our suppliers are critical," said Lundberg.
All phases of the product development process are being re-engineered,
following CDS principles. For example, the prototype build process has been
redesigned, dramatically increasing the number of prototypes that can be built
and tested -- from four per week to 25 per week. This significantly reduces
the time and resources to build the prototype vehicles -- making them
available for the verification testing much sooner, increasing the consistency
of the vehicle builds, and reducing development costs.
DaimlerChrysler's computer-aided design system, called the CATIA Pipeline,
serves as a critical enabler to CDS implementation. It links all design
engineers with process engineers and suppliers and helps to shorten lead times
by enabling designers to analyze concepts and fine tune designs much faster.
"The economic benefits to the corporation are significant. While it is
difficult to measure, the greatest benefit comes from being first to market
with innovative products, such as the PT Cruiser," said Lundberg. "In
addition, we estimate the CDS operating benefits will exceed $300 million a
year, from savings such as fewer prototypes, reduced change costs, deferred
tooling and facility spending, and reduced warranty due to fewer late changes.
That's in addition to the $500 million in savings per launch from the rolling
launch strategy.
"Through CDS, we are applying the principles of lean manufacturing to the
process of creating new product."
