The World Class Manufacturing programme at Chrysler, Fiat & Co.

The company-specific production system (XPS) of Chrysler is the World Class Manufacturing (WCM) concept, developed by the Fiat Group in 2006. But, what exactly is the WCM? And, what does Chrysler see as keys to success in WCM?

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A few answers are given these days at the 4th annual Lean Management Journal Conference in Birmingham, UK: in his morning keynote, Mauro Pino—Vice President for vehicle assembly operations and the Head of World Class Manufacturing in the Chrysler Group—explains how Chrysler “achieves manufacturing excellence across the globe”. Pino stresses that “WCM is how we do our business. Period.” The presentation reminds me of the WCM factories I visited in Brazil, Spain and Sweden last year, all of which confirmed that WCM can be a powerful improvement system—if implemented seriously. Let’s take a closer look at the concept of WCM.

The development of World Class Manufacturing

WCM was developed by Fiat and partnering firms in 2005. Hajime Yamashina, Professor Emeritus at Kyoto Universality in Japan, played a key role. (Note that the WCM concept of Fiat is not identical to Richard Schonberger’s famous book from 1986 with the same name). From the outset, all Fiat-group companies took part in the new journey towards operational excellence. Consequently, WCM was launched in Fiat’s automobile and powertrain divisions, in Maserati, in Lancia, in Alfa Romeo, and so on. The Fiat-owned companies CNH (manufacturer of Case agricultural equipment and New Holland tractors) and the truck- and engine manufacturer Iveco also use WCM as their XPS. In fact, today, companies as varied as the Royal Mail, Ariston (manufacturer of white goods), Unilever (consumer goods), Atlas Copco (industrial tools), Barilla (pasta) and 12 different transportation companies reportedly use the WCM concept.

The Chrysler Group joined the WCM when Fiat acquired majority shares in 2009 (as a consequence of the financial crisis driving Chrysler to bankruptcy). Today, Chrysler is known as the Comeback Kid. The incredible transformation is partly credited the WCM as a change programme. A stronghold of choosing WCM as an “off-the-shelf XPS” is that companies that join, get the benefit of a world class benchmark from the other participating companies. Today, 166 manufacturing plants in 16 countries are active partners in the worldwide WCM Association. 30 of these are Chrysler plants, whereas 45 belong to Fiat.

The content of World Class Manufacturing

The WCM system is made up of ten technical- and ten managerial pillars, illustrated as a temple (see below). The ten technical pillars are as follows:

1) Safety (Occupational safety)
2) Cost Deployment (Distribution of Costs)
3) Focused Improvement
4a) Autonomous Maintenance
4b) Workplace Organization
5) Professional maintenance
6) Quality Control
7) Logistics & Customer Service
8) Early equipment Management
9) People Development
10) Environment (and Energy)

And the ten managerial pillars are:
1) Management Commitment
2) Clarity of Objectives
3) Route map to WCM
4) Allocation of Highly Qualified People to Model Areas
5) Commitment of the Organization
6) Competence of Organization towards Improvement
7) Time and Budget
8) Level of Detail
9) Level of Expansion
10) Motivation of Operators

Key characteristics of the World Class Manufacturing concept

The Cost Deployment pillar is of particular interest because it differs from the typical XPS (see this post to learn what is “typical”). Cost Deployment is a seven-step accounting technique for assigning actual costs to each loss and waste that happens in a factory. This way, the prioritization of which loss to attack first can be made with economical reasoning. An additional advantage of Cost Deployment is that all improvement work in the organization is assigned an equivalent saving potential. This motivates further improvements, and is the best argument for convincing remaining skeptics and cynics. To do proper Cost Deployment you need to team up persons from accounting, finance and operations.

Another key characteristic of the WCM concept, is that change always starts with a model area. The model areas are pilots for the implementation of the principles. For example, the plant typically chooses the worst performing machine as a model machine for the Autonomous Maintenance pillar. Through a dedicated project, using WCM tools and techniques, this model machine is “brought back to basic condition” and made the best performing machine in the plant. The learning points and good practices are thereafter shared with the rest of the plant. This is however a challenging way to implement an XPS; you risk making “islands of excellence” that do little good for the overall performance of the plant. I guess that’s where cost deployment comes in again and ensures that practices are spread.

A third interesting notion in WCM, is the “concept of zero“. A manager in Brazil explained me: “You can’t discuss with zero; once you suggest another target, you’ll get into all kinds of unfruitful discussions”. The target of WCM is zero waste, zero defects, zero breakdowns and zero inventory. The model areas should prove achievement of zero for several weeks before solutions are spread.

For Chrysler, the latest WCM strategy is a strong focus on education. For that purpose Chrysler has built a World Class Manufacturing Academy (WCMA) in Warren, Michigan. The WCMA is a state-of-the-art training centre for all employees in Chrysler, making use of modern technology and the latest knowledge on practical training. Because 70 % of Chrysler’s work force work in fair proximity to the Academy, many plants can afford sending their employees to training in Warren. The idea is that the plants should use Cost Deployment to identify areas of improvements, and then send employees for specific training in needed tools and techniques—not just general training.

WCM is not a static never-changing improvement programme. In 2010, an Energy sub-pillar was introduced in the Environment pillar “to improve the ability to identify and implement measures to reduce waste and achieve greater energy efficiency”. Obviously, a production improvement programme can also contribute to greater good!

The World Class Manufacturing temple at Chrylser, Fiat &co

The World Class Manufacturing pillars at Chrylser

Are you interested in more information on corporate XPSs?

Please see my earlier posts about XPSs in general, the Honeywell Operation System, the Harley Davidson Operating System, or the Toyota Production System. You’re also always welcome to come back to better-operations.com in the future. Thanks!

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Further reading

20 thoughts on “The World Class Manufacturing programme at Chrysler, Fiat & Co.

  1. Hey Thanks for your thoughts.This is very effective strategy which can be used in Business for the Continuous Improvement and to Produce the World Class Manufacturing Product so as to helps to grow the Business and quality of the Product.

  2. Pingback: Chrysler – How cars are made – Interesting facts about Chrysler’s production system | Auto Research 2014

    • This is reaction of a frustrated person who doesn’t understand what happens around him and try to find an excuse for not doing nothing to improve.
      When he has no workplace start to cry about how unfair is life and how he will lose his house and so on.

  3. WCM is GREAT but Royal Mail fake it for the day, make up figures and fake cultural change. North West Midlands is really bad, they dont engage just remove people. Royal Mails removal of the professor is for them to gain complete control without scientific knowledge or any Lean people they are killing the name. I did meet one guy there who explained Hoshin Kanri to me, but he got moved because he was too good and a threat to the establishment of incompetence. Unless Royal mail choose to do it right there will be no change.

    • Dear reader, I appreciate different viewpoints – both the positive and the more critical. However, anonymous comments will be moderated if offensive. I have removed the names and changed some wording in your comment. I encourage others who know more about the WCM work at Royal Mail to add to the discussion.

  4. World class manufacturing is really great if the management team of the company dare to see the truth. I have witnessed several plants in a major truck company trying to get professor Yamashinas approval due to that their manager have pushed them to get this. A lack of focus on the real company key performance indicators instead of WCM pillar scores make people focus on the wrong thing. Trying to take as many short cuts as possible without actually improving anything.
    I believe a system like WCM should check usage of tools but mostly focusing on the logical approach and the result from this. Humble, not mature leaders/management are the real cause behind a not functioning WCM approach according to me.

  5. It hurt my morale when we seemed to be able to con the auditors into thinking that genuine change was coming to the shop floor. I don’t blame plant level management for this because it is a strategy that has always worked well for them in many programs that preceded WCM. Now I am beginning to see this is becoming a trap for management folks that are foolish enough to think we can get away with it forever. We may genially be required to make WCM real, and we could be in real trouble because of all of the fake data does not support reality. If our advancement through the process stalls because we have not made WCM a part of the culture, we may need to rethink our level of participation on the shop floor and actually really make changes happen for the first time in many years. Wouldn’t that be great?

  6. I work for a large company which has been trying to implement WCM for a few years now. While I think its a good program which can lead to much improvement, overall what I have found through consultations with other plants and viewing audit results, is that knowledge on its implementation and access to correct resources is largely lacking. I myself run a pillar which requires constant co-ordination with other pillars in order to successfully complete my steps but other pillars are largely falling behind. The administrative work behind completing WCM’s boards, charts etc is too time consuming. It may be ok if you have a pillar team as large as an Italian plant but if you have a team of 2 (soon to be 1) you will face issues. For example I have one board which requires 75 A4 sized slides…..multiply this by 18 areas on top of running ISO management systems and it becomes next to impossible to give WCM the time it requires.

    • Thanks for your sharing your experiences from industry.I think you might be pointing to an important challenge in WCM: it aims for process integration, but tends to focus much on pillars and pillar owners. In a system perspective, this strategy becomes very vulnerable: If one pillar-owner does not follow up, it might put the whole WCM program on stake. It also tends to become very complex. 75 A4 sized slides is ridiculous, that kind of information overload does not bring any positive change. Is WCM practically impossible to implement?

  7. I’m interested to know the link between pillar and department. Trying to envision the future, should the pillars disappear in long term after developing the WCM mindset in departments?

    • Dear Marine! A timely question. I would suggest that the long-term goal would be to dissolve the WCM pillar organization, when WCM is “implemented” and ingrained in the culture. On the other hand, will it ever be? What do you other WCM-specialists think?

  8. The situation with WCM at Royal Mail is sad indeed. We have an almost unlimited budget, huge number of people on full time release for this purpose but the very fact that WCM is imposed from above instead of being nurtured and grown from the shop-floor through consultation and a change of culture, has made it into a mockery of what people like Demming, Ohno, Shingo and other pioneers of the Lean Revolution envisioned. Our office has achieved bronze accreditation and we are going for silver next month but culture is not changed and people are really swiched off. There are some positive changes but it is not a collective effort therefore it is doomed to fail. CULTURE needs to be changed before everything else otherwise nothing will be improved past the audit day. Tai Chi Ohno and Royal Mail’s bullying management culture is a very ugly combination.

  9. “Lies, damn lies and statistics” problem lies in the over-emphasis on data. Data can be manufactured or manipulated. This is the inherent flaw in this system. For lean transformation you need highly qualified and sympathetic management as it is driven from the bottom up, not top down. Managers need to give more authority and freedom to the floor staff to take ownership of their work, empowerment to improve at what they are doing and managers should be able to coach and educate their staff in the principles of lean transformation. You can’t expect all this if managers are ignorant themselves and are more worried about their jobs which they aquired through unfair selection and cronyism.

    • First of all, nice west wing comment. Second, so true. At my plant if there is a tour of wcm heads we will try to impress with a 2 week fury of projects. When they leave so does our effort and energy to accomplish real progress constantly even though the floor workers need real change and we can’t make it happen without management, but they are just worried about pushing product out the door.

  10. 75 A4 slides is not LEAN at all and I am quite sure that they do not focus on the important things, added value. FOcus on what is essential and added value, you will end-up with a maximum of 10

  11. Not all plants in Royal Mail are the same as North West Midlands. Im sure that it is an exaggeration that “50 people” are being released to do WCM work. I feel that this Carlost is clearly focused more on what he can slate than what he can do to imporve personally with his given situation. If you feel that the managers are taking ownership then take it back. Or would you rather just sit and moan about it? The reason why WCM is clearly not working in your plant is there is no staff by in, there is no change in culture and you are an example in what is holding the plant back, Lack Conviction.

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