chrysler operating system's production management philosophies

In order to develop a strategy for integrating the existing production management philosophies of the Chrysler Operating System and the Mercedes-Benz Production Concept, there are a number of aspects that were taken into consideration. This summary of recommendations includes information on the analysis of the processes, the tools utilised to conduct that analysis, suggestions on how to handle any identified conflicting goals/system elements, synergies between processes, the role of defined guidelines for the integration of the productions systems, how resolution between the approaches was reached, definition of any further courses of action, and the role of corporate culture in the integration process.

Analysis of Production Management Philosophies

Prior to formulating a strategy, both production management philosophies have to be analysed in order to better understand what processes were the most effective within each production system. Since business process integration involves the integration of "multiple processes into a single set of activities," each process must be assessed in terms of its importance and ability to achieve specific goals in order to maintain an agreed upon set of objectives and minimise the amount of change that each organisation must undergo to create a unified production management system.

Specific assessment tools can include matching and analysis mechanisms. The first tool of process matching is defined as "the process of clustering and relating similar activities" by "using various methods each with strengths and weaknesses that can leverage the knowledge stored in a process." In terms of Mercedes-Benz and Chrysler, this would involve matching the system elements, design guidelines, and methods and tools to identify the strengths and weaknesses of each system. Once the matching has been completed in terms of what processes work well together from the systems, further analysis is done to yield how these processes can be implemented into a new production system.

As part of the advanced analysis, the overall state of the auto industry should also be examined as part of research involving external forces, including economic, social, political, and competitive factors by conducting a Porter's Five Forces and SWOT analysis. A number of these external changes are important to understand in terms of ensuring that the new strategy aligns both organisations as well as matches the needs of the external factors. For instance, the new knowledge environment has replaced manufacturing whilst social expectations are changing in terms of valued-added products that meet environmental standards and conform to new economic expectations. All of these factors have, indeed, "undermined the supremacy of the mass production system" that had been the common production management system of the auto industry. Such a linear system no longer works within an environment that expects customisation whilst working on a global scale.

The analysis should also involve benchmarking other industry leaders, such as the Toyota Production System (TPS). The processes utilised within successful competitors can also be assessed in terms of successful implementation into a new production system that will replace two separate process philosophies. For instance, TPS has proved to be a successful production process in that it has helped to "manage equipment, materials, and labor in the most efficient manner while ensuring a healthy and safe work environment."

Additionally, TPS has been founded to deliver other benefits, including "greater product variety, fast response or flexibility, stable production schedules, supply chain integration and demand management," that have yielded consistent quality reports above and beyond American and European automakers. For instance, the Chrysler Operating System had already incorporated many of the TPS capabilities, including just-in-time delivery and buffer minimisation, team organisation and responsibility for quality, error analysis and quality problem-solving. Other aspects that should be measured for use in the new production system is the way that the Chrysler Operating System utilised a "learning through doing" training courses so that workers were empowered to make "process improvements inline" to improve the level of quality whilst raising the flow of production.

Further investigation of all these capabilities as well as each organisation's cultures are essential in reaching a proper assessment about what components of the production process will work with the integrated companies.

Resolution of Conflicting Goals/System Elements

One of the most important aspects to the strategy involves ensuring that conflict between goals and system elements are minimised to facilitate the implementation of the new system. However, there will always be certain aspects or goals that lead to conflict. In order for change to occur, "implementation must be desirable" by all parties involved so that a consensus is reached in resolving any apparent conflict.

A key issue between the two systems was the concern over quality due to the fact the Chrysler's production system relied heavily on outsourcing of many of its activities related to the design and build phases. To compensate for this, Chrysler did benchmark Toyota's production system, which led to its Chrysler Operating System. Additionally, conflict developed at Mercedes-Benz when changes were suggested, including a movement way from the assembly-line processes of mass production to the more specialised autonomous working teams as part of modular production.

Such drastic changes to an organisation do not bode well with employees or management unless there is a precise definition of what it will achieve. This was evident in the lack of a "written, company-specific Rastatt production system" that would have enabled the staff to gain a better understanding of how to incorporate the newly suggested "humancentered production principles of the Uddevalla production system." In contrast, The Chrysler Operating System (COS) was already in place and the company had already experienced a "radical change in the product development process."

Additionally, conflict developed from a continued lack of defined guidelines in its productions system Prosys. Conflict came from the fact that there was not a "coherent set of standards" but, instead, were a "loose collection of production process descriptions intended to help workers to understand eleven selected production themes." This, again, reinforces that a clearly defined strategy for developing, implementing, and communicating a production process is essential for success in integrating two distinct systems. In contrast, the Toyota Production System provides a comprehensive and detailed description of what is involved in the production system, including standards, objectives, and roles and responsibilities.

However, another conflict appeared in terms of disagreement about whether the TPS model was as beneficial as many claimed. Some within the Mercedes-Benz organisation believed that this production system, in actual fact, resulted in "reduction of working cycles, job content, and an increase in repetitive work and physical and psychological strain." To resolve these conflicts, recommendations include recognising how the clearly-defined system that Chrysler had in place, which mirrored some of the most successful concepts of Toyota, could be integrated into the existing one at Mercedes-Benz that was too general. As one researcher noted, one recommendation is to create a "detailed integration blueprint, which identifies a (limited) number of business elements to be examined separately" and identify where there is overlap, conflict, or compatibility so that certain areas can be preserved whilst others are realigned. It would be this blueprint that could also alleviate any conflict in terms of disagreement on the benefits of implementing the best practices of TPS. Each of these concerns would be addressed within the blueprint to ensure that there would not be any occurrence of strain, repetitive work, or loss of job content.

Synergies in Production Management Philosophies

Synergies can be transferred throughout the organisation, but there can be external factors that can inhibit the adoption of certain synergies. For instance, labour laws and production capacity can differ significantly between the US and Germany can produce certain transfers of processes to other manufacturing plants. In these cases, the synergies that have been realised can be adapted to align with specific government regulations and still be able to create significant improvements. Identifying these synergies will help the new production process in terms of quality, time-to-market, and the reduction of costs as well as provide a competitive advantage.

In terms of synergies between the two companies, there are a number of areas to be considered, including product development, time-to-market, global strategies, and logistics. In reviewing the best practices of each production system, these could become the main synergies that the new production system could leverage to meld the best of all processes together for improved delivery time, quality, workload, and costs. However, the assessment of best practices within each system can be time-consuming because there are an "infinite number of solutions that need to be evaluated" and there are questions about the depth of assessment and examination. From this, it can be concluded that there is only a certain amount of in-depth evaluation that can be conducted prior to the integration of the processes. At this time, only synergies and best practices that can be implemented quickly with the least amount of effort and cost whilst producing the most visible results for the new organisation have been planned. Perhaps, other assessments can be done at a later date to draw out further synergies and enhancement through best practices. Like the Toyota Production System, all changes did not occur at once but were phased in as needed over a period of years, so DaimlerChrysler will also have to add best practices as the new production system continues to evolve.

Defined Guidelines, Resolution Approaches and Further Courses of Action

Prior to the merger, Mercedes-Benz did appear to have difficulty with defining the necessary guidelines that would help bring consistency to all of its production processes throughout the company's facilities. For instance, individual plants had implemented their own "plant-specific production systems" rather than focusing on any comprehensive standardised systems.

For Mercedes-Benz, the organisation will need to further evolve in its process production system with some experts questioning the firm's ability to "move beyond the predominant German expert-led continuous improvement model to the group-led Kaizen model developed by Toyota as a key element in its widely adopted lean system." In order for Mercedes-Benz Production Concept and the Chrysler Operating System to integrate for improved production throughout all manufacturing locations, there needs to be more work accomplished around the achievement of "autonomous workgroups as they are learning to decentralize decisions and resolve cultural differences in work style." This will require efforts to reach the organisation through its culture to further embed these concepts into the daily operations.

Similarly, Mercedes-Benz might be able to benchmark many best practices from the Chrysler Operating System in terms of setting clearly defined standards that its new partner had incorporated from TPS. This set of defined guidelines for operating procedures include "work instructions, standardised operation sheets, preventative maintenance standards and statistical process control (SPC)." In this way, Mercedes-Benz can benefit from a more organised system that specifically communicates to those working within the production process so that they more clearly understand their role and responsibilities.

Since the way in which each production team worked in terms of their policies were quite different, this area needed quick resolution so that the company could take advantage of any existing synergies that might be discovered. To do so, the new model would include a set of defined operating principles and best practice methods that would replace the prior work policies that were in conflict with each other. However, with so many principles and best practices, there will need to be a more defined methodology for the organisation to understand how these principles and best practices work together as a cohesive production model rather than appearing as a fragmented list of system components.

Role of Corporate Culture in Successful Process System Integration

Corporate culture is a critical success factor within an organisation, which is imperative to enforcing and embedding any strategic changes within an organisation and it becomes especially important in a time of integration where employees need something substantial to guide them through the process. A culture based on knowledge will facilitate the transfer of knowledge throughout the organisation, better enabling the success of a strategy that is tied to that knowledge base.

A corporate culture, which shares knowledge and accepts change, can ensure that the production processes of the two organisations are tightly integrated. O'Dell and Grayson have recommended five essential actions that should be taken:

The ability to capture learning.
A process improvement orientation.
The ability to work effectively in teams.
A common methodology for improvement and change.
The technology to support cataloguing.

It is the fulfilment of these actions that has enabled the entire auto industry to propel itself forward in terms of achieving enhanced "quality, reliability, and longevity." For example, it was this understanding of culture at Mercedes-Benz that did lead to consensus amongst the organisation to use "innovation, motivation and skills of staff more efficiently." Reaching this agreement by having a strong organisational culture is one of the most effective ways to design and migrate to a new production process.

There are other important issues about corporate culture that are vital to ensuring a successful integration process. As one researcher noted, "Acquiring managers have a tendency to see integration as a process of 'making them the same as us.' However, the correct approach balances the need to preserve the value of what is acquired with the requirement to create synergies." The culture is a vital part of this process because it can provide the basis and encouragement for creating the "willingness and ability of many people across both organisations to interact and work together" to maximise those synergies that exist.

Overall Recommendations

In terms of the aforementioned actions, Mercedes-Benz has been able to accomplish some whilst still needing to progress toward a common methodology with Chrysler to achieve a "new high performance system." Mercedes-Benz should continue its efforts to diversify its team to enable its move to a leaner production process because this allows the company to hire a team that can bring various expertise, knowledge, and capabilities into the processes for further enhancement of the new system.

Within the US organisation, the company has been able to bring together German, American and US-Japanese managers to create a unique culture and operations that incorporates German management practices and Japanese production processes. It is hoped that relying on the knowledge based of this management structure will help resolve the wide variety of work styles between the plant level and centre level organisations. Creating work teams that include members from each organisation will enable new process solutions to be developed that then can be agreed upon as the new standard for the company.

Overall recommendations include consistent and clear communication on the specific guidelines and productions standards that will frame the new production system of the newly integrated company. As part of the integration process, it would be recommended that DaimlerChrysler incorporate extensive training processes that embed the new best practice standards within each facility, incorporating knowledge transfer on the various strategies, including just-in-time and total quality processes. Rather than resorting to the insular perspective that Mercedes-Benz had previously taken, it is recommended that the company look outwards for the best practices that will help propel the company forward as the global auto industry continues to radically evolve. As in all industries competing today within the worldwide marketplace, it seems as though process improvements will be an ongoing strategy within DaimlerChrysler in terms of yielding higher levels of quality and decreased costs.

While a new standardised system can be developed that can be successfully integrated across DaimlerChrysler, there is still an understanding that there may be times where it is still necessary to be flexible enough to adapt the production system to conform to certain human resource management and labour relation standards in various countries where a particular group within a manufacturing plant may have different expectations. This can be benchmarked from the best practices of the Toyota Production System that has proven that it can be adjusted into a hybrid model in order to maintain excellent labour-management relations, which is the key to the success of any production system. So, whilst standardisation is good in terms of improving the technical side of the business in terms of costs, technology, quality, and delivery times, the softer side of the business, including human relations, labour relations, and employee motivation and productivity can be better handled with flexibility and hybridisation of certain processes. Combined, these efforts will provide DaimlerChrysler with a competitive and productive production system.

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