Coordination of Supply Chains

1. Coordination of Supply Chains Understanding Supply Chain Relationships

2. Agenda • North American Automotive Industry • Automotive Industry Action Group • Chrysler Corporation • Supply Chain initiatives • U of M Study • Opportunities • Areas for dialog • Future research directions • High impact areas

3. Combined North American Automotive Market Share Chrysler, Ford, General Motors Automotive Mergers European Competition • Improved Quality • Lower Costs Oil Shocks Asian Competition

4. The Auto Industry • Worldwide market is 48 million vehicles • 5,500 vehicles built every hour of everyday • Potential for 60 million vehicles by 2001 • 630 plants in 63 countries producing vehicles • 12 million units, over capacity

5. Excel/Atwood Douglas & Lomason Collins & Aikman Specialty Screw Textileather Canadian Fab A Typical Seating Supply Chain General Motors Chrysler Ford Johnson Controls Hardware Suppliers Soft Trim Suppliers Lear Favesa R. R. Spring Rockford Spring Dudek & Bock Spring Milliken & Company Technotrim

6. Automotive Industry Action Group

7. Automotive Industry Action Group • Automotive trade association - nearly 1400 member companies • Association formed in 1982 • Forum to address automotive industry issues • Focus on improving productivity • Educate and inform

8. Member Company Diversity Software Vendors Computer Hardware Vendors Communication Vendors Training Vendors Registrar Suppliers Construction Companies Packaging Companies Aftermarket Suppliers GM, Ford, Chrysler Heavy Truck Manufacturers European Transplant OEMs Japanese Transplant OEM’s Financial Institutions Transportation Suppliers Production Part Suppliers Non-Production Part Suppliers

9. AIAG Major Initiatives • QS-9000 SUB-TIER DEPLOYMENT • AUTOSTEP • EDI ROLLOUT • AUTOMOTIVE NETWORK EXCHANGE (ANX) • YEAR 2000

10. Legacy: Proprietary, One-To-One Connectivity Chrysler Ford GM Chrysler Telecom Network Ford Telecom Network GM Telecom Network Supplier Supplier Supplier

11. ANX: “Open”, Any-To-Any Connectivity Chrysler Ford GM Chrysler Telecom Network Ford Telecom Network GM Telecom Network ANX Supplier Supplier Supplier

12. The Year 2000 Challenge!

13. Program History • Chrysler, Ford, and GM initiated this effort through the AIAG to provide: • common process to suppliers • independence / confidentially to manufacturers and suppliers • neutral facilities & support services • USA regulatory approval

14. 0.0 1.0 2.0 3.0 4.0 8.0 5.0 6.0 7.0 8.0 2.0 Develop Tools • Awareness Seminar • Self-Assessment • Web-based Tool Kit • Tips and Techniques • Plant-Floor-Equipment Knowledge Database • Evaluation Methodology • Assessor Training • Information Center

15. Company Background: Chrysler • Manufacture of Cars and Trucks • 126,000 employees worldwide • 42 Assembly and Manufacturing locations • 3.1 million units sold in 1997 • 1996 Forbes ‘Company of the Year’ • Close the books forever, November 1998

16. Cost in the Average New Vehicle? 70% Supply Chain 30% Chrysler

17. What it is The Extended Enterprise™ A Chrysler-coordinated, goal-driven process that unifies and extends the business relationships of suppliers and supplier tiers to reduce cycle time, minimize systems cost and achieve perfect quality.

18. The Extended Enterprise Supply Chain Subassembly Supplier Assembly Plant Delighted Customer Raw Material Supplier Component Supplier Dealer Maximized value at minimized cost

19. Quality Cost Cycle-Time Technology Enablers of the Extended Enterprise Supplier Relations Supply Concept Commodity Strategies Supplier Development Supplier Development Cost Management Technology Leverage

20. Partner Information Network Tools • Computer Aided Design (CAD/CAM) • Electronic Data Interchange ( EDI ) • Supplier Partner Information Network ( SPIN ) • Electronic Funds Transfer ( EFT ) • Electronic Mail ( E-MAIL )

21. Electronic Commerce Roadmaps

22. ANX ANX ANX Tier 2 Tier 3 Tier 1 Chrysler EDI 830, 856, 862/866 EDI Transactions EDI Transactions TM Empowering the Extended Enterprise With Continuous Improvement Supply Chain Order-entry Process Empowerment $. C. O. P. E.

23. Extended Enterprise In Action: Dealerships Working together towards process improvement Communication Flow (Supply Chain EDI) Chrysler Great Cars & Trucks (Tier 1) Dana Corp. Axles (Tier 2) Impact Forge Forgings Material Flow (On-Time Delivery) (Tier 3) Mac Steel Northstar Steel Steel Best practice suppliers, who are leading the Supply-Chain EDI Initiative Supply Chain Example

24. Chrysler Communications • Verbal • meetings, townhalls, awards • Written • Supplier Newsletter, PASS report • Video • Chrysler Employee Network feed • Electronic • Electronic Commerce

25. Understanding Supply Chain Relationships • Open business relationships • Communications builds trust • Establish partnerships • Empower • Reward

26. Trust of the OEM Very Great Extent Very Little Extent

27. Communication with OEM Very Great Extent Very Little Extent

28. Extent OEM Shares Savings Very Great Extent Very Little Extent

29. Willingness to Share New Technology Very Great Extent Very Little Extent

30. Good Overall Relationship Very Great Extent Very Little Extent

31. Activity in Supply Chain Management Very Great Extent Very Little Extent

32. Greatest Long Term Benefits of Extended Enterprise™ Percent Selecting This Item Most Important Improved Communications/ Coordination Lower Total System Costs Improved Margins Improved Quality Reduced Cycle Time Better Human Resource Utilization

33. Areas for Dialog • Track and document ‘Role Model’ • Methods for collaboration • How to measure success • Obtaining trust of user and accuracy of information

34. Future Research • Where are the opportunities? • What are the cultural affects? • How can technology help? • Develop a ‘Step-by-Step’ Roadmap • What can the U.S. Government and Universities offer business?

35. High Impact Areas • Examples of • benefits • costs • opportunities • IT infrastructure as all levels of Supply-chain • Open communications up and down the chain

36. John Kay Phone: +248-512-1438 E-mail: jvk@chrysler.com