This is the main problem identified in the beginning. The other improvements support the effects brought about in this way.
3. Chrysler's new approach to supply chain management involves replacing the old, bidding system, based upon price, with the new system based upon performance. Suppliers may then experience the difficulty of a paradigm shift from cost-focus to performance focus. Organizational culture changes needed in order to accommodate the new paradigm would relate to enhancing the quality of product and service rather than focusing on reducing cost as far as possible. In the end the advantage of this is a better final product for Chrysler and finally a better product for satisfied, returning customers. Furthermore, suppliers will also need to focus more clearly on their relationship with their clients in order to establish a long-term connection rather than a short-term supply of physical product at a certain price.
4. In selecting its suppliers under the new system, Chrysler negotiated with those who seemed most open to the idea of a long-term partnership rather than occasional, short-term supply based upon price. Furthermore, the company focused on the key suppliers known for delivering the most efficient, reliable service in these negotiations. This also reduced the number of suppliers and resulted...
Suppliers have also been provided with a regular workshop opportunity to ensure that they are able to work efficiently with Chrysler's new system.
5. Two Japanese components implemented by Chrysler have already been mentioned above. Firstly, a streamlined production process is created by the extended enterprise and sequential assembly processes. These have been adapted to the Chrysler company by involving the specific suppliers that have provided them with reliable service, according to specific American standards.
Chrysler has also adopted the Japanese "kaizen" system, which is a process of incremental improvement in all phases of design and production in the company. Technology is used to involve a greater amount of experts in a shorter amount of time. Both supplier and production inefficiencies can then be addressed in this way. Chrysler handled this furthermore by traveling to other countries and adopting practices that seem to work well in companies from across the world.
Finally, Chrysler imitated the Japanese in their use of resident engineers working with suppliers and also side by side with the employees at Chrysler. All the above practices relates to the lean system of production favored by the Japanese, with obvious advantages.
