Chrysler Group To Redesign Production Planning Process To Better React To Market Changes

Autoparts Report, May 22, 2002

The Chrysler Group said it is implementing a radical change in its volume production planning process that will implications throughout the company's supply base. The new web-based system, called "Integrated Volume Planning" or IVP, will take into consideration information gathered from the company's five regional field offices much earlier in the decision making process to more accurately determine Chrysler Group's production plan.

The announcement was made at the recent i2 Planet 2002 Conference in Las Vegas. Chrysler Group is working with the technology vendors i2 Technologies and IBM on the development and implementation of IVP.

"The new integrated volume planning process is a part of our ongoing effort to drive the discipline in our 'Disciplined Pizzazz' approach to vehicle development," said Wolfgang Bernhard, Chief Operating Officer, Chrysler Group. "More accurate production plans should lead to lower costs and reduced inventory not only for the Chrysler Group, but throughout the supply base, as well."

In the current planning system, plant production capacity, fleet production orders and sales forecast estimates are sequentially analyzed to determine plant production. Under the new IVP system, Chrysler Group said it will now utilize a web-enabled process that will unite all planning steps into a network, from sales forecasting by market to the development of a final corporate production program.

IVP combines information from the sales field with supply and manufacturing requirements much earlier in the planning process, which then creates a production schedule that better reflects expected market demand, the Chrysler Group said. "More favorable production schedules can now be developed by matching supplier material release forecasts with actual dealer orders, and then determining capacity within the supply chain," said David Hodgson, Vice President of Worldwide Supply, Chrysler Group.

"The improved accuracy and timing with this new web-based infrastructure will significantly reduce order- to-delivery times, inventory banks and buffers, and tooling costs in the supply chain." Karenann Terrell, Director of the e-Connect team at the Chrysler Group, stated that Integrated Volume Planning joins a suite of web tools that are transforming the company's business processes in order to design, produce and deliver great products to its customers. "We are committed to the use of e- tools at the Chrysler Group, because they are critical to the dual objective of enhancing revenue while reducing costs. IVP contributes to realizing that objective in the areas of sales and marketing, manufacturing and supply."

According to DaimlerChrysler, the expected benefits of IVP include: Reduced manual processing of data in a sequential manner with expanded analytical capabilities; More flexibility in reacting to market demand; Increased sales forecast accuracy, with more stability in the production plan; Creation of common, web-driven forecasting tools and processes for all Chrysler Group markets globally; Increased manufacturing efficiency; Lower levels of unused parts inventory in the supply chain; and Increased consistency in fulfilling vehicle orders from dealers.