A change in ownership often means that the way work is performed and an improvement programme is carried out need to change as well, even in larger companies. Mauro Pino, Head of World Class Manufacturing at Chrysler Group, tells Roberto Priolo how the Detroit-based automotive giant ensured a smooth transition to the Fiat approach to lean.
Roberto Priolo: From a lean perspective, what happened at Chrysler after Fiat came into the picture in 2009?
Mauro Pino: One of the keys to our future was the implementation of World Class Manufacturing (WCM), a production system that Fiat developed and successfully implemented. A very important aspect of the contract between Chrysler and Fiat was that the labour unions, the United Auto Workers, the Canadian Auto Workers and the Mexican Unions, were involved from the very beginning and that the application of the World Class Manufacturing system in all North American manufacturing facilities was provided for. This represented a clear path for Chrysler to get out of bankruptcy, and of course helped a lot in terms of leadership engagement.
WCM means change for everybody in the company and is a top-down approach. Leadership needs to be committed if lower levels of the organisation are to be reached. Back in 2009, convincing leadership at Chrysler to take on WCM was not an issue. It was in the contract we signed.
RP: How did you get past the difficulties you encountered when you had to replace the pre-existent lean system with WCM?
MP: As every big company, Chrysler had its own system to manage lean. Introducing WCM represented a huge change, as everything had to be revisited.
The WCM system has 20 pillars, of which 10 are technical and include quality, safety, people development, environment, logistics, and maintenance. The other 10 are, crucially, managerial. These focus on having the correct people in the correct place and the motivation of operators. They are critical when you consider there are more than 49,000 hourly and salaried employees in manufacturing within Chrysler around the world. This was the real big difference from what we had before. The system is based on people, and this changed the perspective of the lower levels of our organisation deeply.
Until then, workers were considered executors of the technical system we put in place to manage lean and change the business. After WCM was introduced, and for the first time, they were seen as a key part – 50% effectively – of that system. They were on our side.
Of all the improvement systems, WCM is the only one that takes the managerial aspects of manufacturing into consideration. Having people on board from the start sped up the application of WCM in Chrysler, which happened more quickly than it did in Fiat.
MP: Most systems tend to try to fix eveything in one shot everywhere in the plant. WCM is different, in that it starts from the consideration that we have a limited amount of resources, be it dollars or people. It uses cost deployment as a compass, a guide.
We analyse and stratify all the losses and waste that we have, geographically and by type, and we attack the worst area for each of these items. If we demonstrate that our system is strong enough to fix the worst area in a site in terms of performance in a certain pillar, we prove that we can expand this application to other areas. People know that there are some areas we might not reach for one or even two years, as we always concentrate on the worst performing areas first.
We do this for each pillar. We apply the methodology there for 100 days, with the aim to achieve zero losses. If we do, the method is validated and we can move forward. The “zero” concept is perhaps the biggest difference between WCM ad other improvement systems. It is key in terms of breakdowns, accidents, quality, defects, losses, etc. We need to achieve zero in these areas, which is the only way to be sure we have eliminated all the root causes. Only when we have recorded ero in a certain area for several weeks can we move to the next one.
RP: What is the difference between the Toyota Production System and WCM?
MP: The Toyota Production System is the foundation of World Class Manufacturing. WCM started with the collaboration between the Japanese and the Europeans, in particular the Swedes and the Italians. This melting pot produced a rigorous, technical framework that is based on working with people. Had we left the Japanese to work on TPS, they would have only concentrated on the technical side of things, while the Europeans wouldn’t have gone past the people side. But we need need both elements, at 50% each, if we are to have a balanced system. That is the difference.
TPS is inside our system for the technical approach and we added 10 managerial pillars because as Europeans we thought the people side was fundamental. I went visiting plants and training facilities in Toyota. It’s a great system that fits very well with the Japanese reality. In America and Europe, perhaps, we need more of the managerial side than they do in Japan.
MP: The Academy has two main goals: the first one is to show how committed the company is to using WCM as a management system; the second one is training our employees in a different, innovative way.
Each plant sends workers to the academy according to the losses in the plant that they have identified as the most urgent. The workers take a pre-test so that trainers can understand their level of knowledge, and then an exit test, used to certify that the gap has in fact been filled. In the few weeks following the course, they complete kaizens to tackle the losses that were the reason why they went to the academy in the first place.
The WMC Academy is located in Warren, Michigan. We are lucky because most of our 28 manufacturing plants are located in fairly close proximity to the Academy, which means we can cover 70% of our people from one location. It’s not convenient for plants in Illinois, Indiana, Mexico or Toronto to send people to Warren, but for basic classes the devices we use can be transported where the training is needed. It’s an academy on wheels. We are now working to put it online in the near future.
RP: How did Fiat ensure that its lean message was consistent in all of its plants, which operate in different countries and across different cultures? Fiat Industrial alone runs 54 plants worldwide.
MP: The WCM Association is made of companies like CNH, Fiat, Chrysler and Iveco, but also other businesses outside the Fiat organisation, like Royal Mail or Unilever. They don’t produce cars or automotive components, which shows how the WCM system can be applied to any kind of manufacturing process. This is the message that we are trying to communicate.
Take Mopar, for example. It’s a bit of a special company that manages all spare parts for Chrysler. It receives components from all the suppliers and ships them to five continents. It’s a logistics more than automotive company. We apply WCM there as well. It works in any place with a transformation process in place.
There are 170 plants around the world using WCM. Of these, 30 are Chrysler’s and 45 are Fiat’s.
MP: Let me tell you a story. A couple of years ago, I was working at our Toledo, Ohio, plant. The worker appointed to assemble the fenders had 14 different racks of fenders in front of her, each being five feet long. For each car she worked on – one vehicle comes down the line about every 50 seconds – she had to walk 50 to 60 yards to pick the right part. We paid the woman to walk, not work! At the end of the year she was ready for a marathon.
We told her that she was performing non-value added activities and that we wanted to help her. We put a simple system in place: a sequence of fenders according to the orders coming up in the next 10-12 positions on the line. We set up a single pick point. At the end of this improvement, she walked 3-4 feet for each fender. At the end of the day, she was not only more rested, but also had more time to put the fender in a better position with less quality issues as a consequence. She was less likely to have an accident, because she didn’t need to rush back and forth anymore. We achieved a lot of good results in each of the pillars simply by optimising this system.
There is not a border or a country issue in the application of WCM. Measures like this know no frontiers. When people see that we fix their problems, they call us and say they want to be next. The reason we went to tackle the fender issue is because it was the area performing most poorly. We may never get to the point where we go to the best three or four operations we have in a plant.
US, Brasil, CNH, Fiat… it doesn’t matter! It’s an international system. We are leveraging this culture to make sure people believe that things are going to change for the better. This way they become our allies.
RP: Let’s take regulation as an example. Legal issues are indeed very different in every country. How can you deliver a consistent lean programme globally in the face of dramatic differences in how your work can be performed?
MP: This is a very important point for the global application of WCM. Differences in regulation are in place and sometimes they are huge. Think about diesel application in Europe and the US and the percentage of cars sold because regulations differ. Or think about the pollution limits you are allowed to have in California or in the Shanghai area today. For WCM, these differences are only reflected in the KPI (key performance indicator) levels that we set as our goals, but they can’t change the way we deliver improvement. Levels of pollution may be very different in the two places, but the approach to performance is the same.
As part of my job, I also audit plants to determine how well-versed in the WCM methodology they are. It’s great to see that after a 20-hour flight to India and a two-hour drive in Mumbai’s traffic, you can still see the same things you saw in Italy, France, Brasil or the USA as soon as you enter a site with WCM in place.
As well as being a system, WCM is a language, a way to communicate easily between us. And as with all languages, you need to study it.
RP: The lessons and their application are the same, as the language is common, but cultural differences must count for something, at least in the way the WCM principles are perceived.
MP: Absolutely. The difference between communicating the methodology and the way to communicate the methodology is fundamental. This activity must be tailored to match each local culture.
I have worked in the US, Poland, Mexico and Shanghai. In each of these different countries I had to come up with a different way to communicate the same concept. In some countries, workers are more used to being told what to do; in others, they need to be convinced. The difficult thing about this is there is no book to learn from, and no TPS to copy.