In early July, Supply Chain Matters called reader attention to two contrasting examples of how supply chain process capabilities matter. One of the examples was that of U.S. automotive manufacturer Chrysler and challenges and setbacks related to the production ramp-up and market release of its new midsized model Jeep Cherokee model. This innovative new model SUV is crucial to the company’s 2013 revenue and profitability plans in a highly competitive automotive segment. The new Cherokee was originally planned to be introduced to dealers in May, then it pushed to June, and then to September.
Two weeks ago, the Wall Street Journal reported some further specifics including one of the prime causes of the delay. The new Cherokee includes the first application of a nine-speed transmission mated to two new engines and three complex 4-wheel drive systems. Apparently there were calibration problems related to the shifting of the transmission which involved applying some software engineering fixes which are now reported as being resolved. Chrysler actually asked some of its workers on temporary layoff to drive the vehicles to ensure that the transmission were shifting properly at different speeds and driving conditions. By our view, that qualifies for an innovative and team-based solution.
Chrysler actually began pre-build in June and about 10,000 new Cherokee’s were produced off the line before required software fixes were determined. The plan now calls for workers to plug hand-held computers into each of the produced vehicles and upload the new software changes, along with incorporating the revised transmission control software into current production.
A spokesperson told the WSJ that Chrysler management will only introduce a vehicle when teams are completely satisfied. The President of the United Auto Workers (UAW) local chapter is also quoted as indicating that that the production team does not desire to release a car and find out six months later that there is a problem.
In our original posting we speculated how dynamic the conversations within the Chrysler S&OP team may have been during this process of high visibility and expectations. Now that we have more of a view as to what could have been occurring behind the scenes, Chrysler has demonstrated something praiseworthy, putting quality and the customer before arbitrarily checking-off a product introduction milestone. They have demonstrated a hierarchy of goal attainment, something very refreshing in today’s business and supply chain climate.
Supply chain process capabilities do matter, and in times of crisis or business challenge, adhering to stated management principles and beliefs, demonstrating cross-functional and cross-organizational teamwork matters even more. Many auto manufacturers have come to learn that with today’s more modern vehicles including far more software and advanced technology elements, marrying mechanical and software engineering and process capabilities in lock step are very important as well as challenging.
We trust Chrysler will successfully complete its product introduction of the Jeep Cherokee, albeit late from the original goal, because of demonstrated teamwork and adhering to the principle of quality comes first.