Chrysler Cars

Making a difference at Chrysler

The current method, adapted from Japanese manufacturers and since imitated by others, is to assemble representatives from each of the key functions into platform teams. (A platform is a basic chassis from which several vehicles may be made.) Team members from the different functions work simultaneously and communicate frequently to assure, for instance, that the shape of a particular body part will accommodate adjacent components. In addition, a manufacturing representative may suggest that a minor change in the design of a component will facilitate more error-free assembly, or a supplier may suggest that a change will not only increase the reliability of a component but also save cost. Under the old, chimney-style way of producing vehicles, most of these suggestions would have virtually no chance of being adopted. With platform teams, most of them become reality. The result is a reduction of the time it takes to bring a new vehicle to market from about five years to less than half that in many instances. Commensurate savings are achieved in costs, and defects average about one per vehicle currently.

These changes have, fortuitously, enhanced the impact that the economics function has on decisionmaking at Chrysler by pushing decisionmaking down to the lowest appropriate level. Although no system is perfect, the effect on the economics function has been to increase the demand for economic analysis throughout the company.

WHAT WE DO

Forecasts

The economics function provides many services to various parts of the corporation. We provide the usual array of economic forecasts and analysis for economies throughout the world, with an emphasis on the United States. More importantly, we also have the responsibility for forecasting sales of new vehicles for the countries in which we do business. More than 90 percent of Chrysler’s sales occurs in North America, although that percentage continues to drop as we expand more rapidly overseas than domestically. As a result, our forecasts of the North American market are more detailed and are made more frequently (monthly) than are our forecasts of overseas markets (twice a year or more often if needed). The short-term (two-year) forecasts are the starting point for the scheduling of production at plants, and the longer-term (five- and ten-year) forecasts form the basis of the product and business plans. Because our forecasts of the industry include a breakdown to seventeen segments and include estimates of the country of origin of sales, we are forced to understand the details of the market in ways similar to those who work in sales and marketing, product planning, design, and pricing.

Analysis