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SCORE: the innovative ’90s Chrysler cost cutting combination (compared with ordinary penny-pinching)
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Feb 4, 2025
When Chrysler was firing on all cylinders, this is how they cut costs with suppliers!
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0:02
hi this is Dave here with motals and I'm
0:04
here to talk about score and this is
0:07
unusual for a car video because I'm not
0:10
going to actually talk about an
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individual car I'm going to talk about a
0:14
program which made cars better so chrys
0:17
bought AMC in the80s and almost
0:20
immediately things at chrys began to
0:22
change for the better especially as they
0:24
had franois castang as their new head of
0:27
engineering and one example of how
0:29
things got better from buying AMC was
0:31
score now score stands for supplier cost
0:35
reduction effort
0:38
supposedly obviously this is a pretty
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tortured acronym in the8 years of score
0:44
Chrysler reviewed 12,000 ideas and saved
0:48
nearly $4
0:50
billion $4 billion that's enough to make
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and design a completely new car so let's
0:58
look at the neon project as an example
1:01
and the neon was used an excuse as an
1:04
excuse to move procurement forward and
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modernize it and make it more sensible
1:08
the way that Chrysler had been doing
1:10
procurement was basically with the cost
1:13
cutting model lowest bid you get the
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business now with the neon they had a
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very limited budget so one of the things
1:20
that they did was they cut down the
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number of suppliers in half or less and
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they said to these suppliers we're going
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to trust you more and we're going to
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bring you in more and we expect to get
1:30
better results this way so they stopped
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using the low bidder system in terms of
1:36
parts costs and they started to try to
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work with people who could save them
1:40
money and time on development and do a
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better job and make a better car so they
1:45
were taking a more systems approach and
1:47
a more long-term approach this was not
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of course unique to Chrysler and this is
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the way that Toyota operated then and
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now for the most part this is normal for
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Toyota for Chrysler it was a big deal
2:00
and uh it saved them a lot of money even
2:03
though they stopped taking the lowest
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bid for parts so they chose major
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suppliers even before the neon was
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greenlighted before management said okay
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you can make this completely new compact
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car and even though we've been losing
2:17
money on every compact car that we make
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we'll take your word for it that we'll
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make a couple thousand on every one of
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these that you make now one of the
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things that they did is what I tell my
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students is called Contracting they
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signed agreements for part and component
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and system weight cost design needs and
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so on so that there would be mutual
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understanding so there would be a
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demonstrated Mutual suppliers were
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included in the development teams they
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uh the suppliers also helped us set up
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Chrysler's Own Parts plants so one
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example that came through one idea that
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saved money was having the same
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installation method for fixed seats as
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for folding seats uh which incredibly
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saved over a million
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now what happens when a supplier misses
3:03
their target well they sent Chrysler
3:05
Engineers out to work with them and in
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some cases chry will realize that they
3:09
would have to change their targets so
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one example is with the Dodge Dakota
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where they Sav $27 million before
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production started and one example is
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using foam filled trim panel bolsters
3:21
saving $10 per car and 2 lbs of weight
3:25
now they also used existing hooks to
3:27
attach interior panels to the door
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instead of Fasteners and this saved
3:31
$200,000 and removed some visible screws
3:35
so some of these ideas would keep paying
3:37
off and lower parts inventories for
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years afterwards and many cut vehicle
3:42
weight or just made Vehicles better
3:44
there was the example of the second
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generation neon which had traction
3:49
control because the supplier was asked
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Can you had the flexibility to do that
3:54
so Chrysler had a long history of penny
3:57
pinching before the score program
3:59
started and in the long run that penny
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pinching lost them money and it lost
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them customers and it really it often
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increased the warranty costs later on
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and this is something that people within
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Chrysler even back to the 70s had been
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arguing was a bad idea switching to
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trying to cut costs in the long run to
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save money in the long run and to share
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the savings that were brought to them by
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suppliers uh this really saved them a
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great deal of money made them better and
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easier to work with with and resulted in
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better products and of course if a
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supplier really wants to work with a
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company because they think that they'll
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get a fair shake that company will
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probably get their better Engineers
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their better equipment and their better
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thoughts Pennywise pound foolish isn't
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just a cliche it's a reality and
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Chrysler proved that in the 1990s they
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stopped worrying so hard about saving
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pennies and they were able to save real
4:57
dollars while building a better quality
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product
5:00
that customers preferred there are
5:02
definitely lessons there for the future
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and not just for automotive
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companies this is David zatz I am a
5:11
consultant at toolpack Consulting I have
5:13
a PhD and organizational psychology and
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I run the Chrysler oriented site
5:18
motels.com which I encourage you to
5:21
visit but if you are interested and what
5:24
you hear from me you can also go to Tool
5:25
pack.com and learn more about that side
5:30
of my life
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