The Goals

DaimlerChrysler’s goals were to simplify and standardize its small-lot material handling systems and to reduce costs by eliminating inventory and delivery waste. DaimlerChrysler faced four fundamental problems: too much space for too few parts at assembly-line workstations, too far to walk from the line to pick up parts or replenish line-side bins, too much corrugated packaging waste, and cumbersome in-plant inventory management.

DaimlerChrysler challenged ORBIS to create and employ a material-handling system in four short months. A team of ORBIS project managers and directors focused their knowledge and expertise on the specific material-handling problems.

ORBIS was a natural choice for DaimlerChrysler, because DaimlerChrysler turned to ORBIS before. As Bret Carlson, ORBIS’ director of Project Management, explained, "We were familiar with DaimlerChrysler’s assembly operations, suppliers and containerization needs. For this project, DaimlerChrysler’s manufacturing engineers gave us specific parameters for the project. We did it, and the results are impressive."

The Results

In its first few months of operation, DaimlerChrysler’s new small-lot containerization program realized sizable cost savings. Consider these examples:

On the engine line in DaimlerChrysler’s Sterling Heights, Mich., assembly plant, the packaging for 96 parts were converted to returnable, small-lot containers, resulting in:

• 68,000 lbs. less corrugated waste each year, worth $31,000 annually
• 15% less in-plant inventory each year, worth $49,000 annually

At its assembly plant in Belvedere, Ill., the 102-part door assembly line netted:

• 270 feet less linear line-side space
• 1,700 square feet more white space
• 60% less line-side inventory, a one-time savings of $194,000
• 27% less parts handling each year

At the Conner Avenue assembly plant in Detroit, the Dodge Viper/Plymouth Prowler line experienced:

• 50,000 lbs. less corrugated waste each year
• 51% less line-side inventory, a one-time savings of $64,000

These results are compelling, and they’re from just three of twelve plants in which ORBIS implemented the program. "As supplier negotiations continue," added Carlson, "DaimlerChrysler anticipates additional savings that will eliminate the use of expendable containers. Other factors, such as worker and material travel, are still being measured for savings."

The Plan

In September 1996, ORBIS’ team analyzed DaimlerChrysler’s material handling practices. The team recommend and implemented an improved system in 12 plants that would:

• Improve work-area ergonomics and reduce workers’ walk-time around the assembly line
• Eliminate corrugated packaging waste
• Protect contents from damage, effectively improving the quality of DaimlerChrysler’s vehicles
• Reduce excess inventory along the line and in storage
• Reduce the number of times a part needs to be handled
• Standardize work among Chrysler’s various assembly plants
• Reduce floor space costs along the assembly line and in storage areas

The ORBIS team’s help increased DaimlerChrysler’s corporate material handling department’s effectiveness, reduced DaimlerChrysler’s material-handling costs and improved the productivity of assembly line workers.

Acceptance

Although DaimlerChrysler’s management embraced ORBIS’ recommendations, it was difficult to persuade people to change an already good system. Line workers did not want redesigned workstations and a new process to learn, and the suppliers did not want to work with a different system for shipping parts.

The line workers and ORBIS engineers worked together closely to design the new system, and once the operators tried it they were sold. Line workers liked having the parts right at their fingertips, where each person can turn right around and install them directly. And suppliers found the containers easy to handle and ship.

The Final Analysis

ORBIS’ successful project included several important elements:

• A company-wide, standard operating procedure for the factory flow data collection process
• A standard procedure for selecting containers
• Extensive line-side display mapping at workstations for the placement of flow racks
• Reporting documents and tools for project schedules, status summaries and cost/benefit analyses DaimlerChrysler now encourages its suppliers to adopt the new material-handling program.