1st Edition 2005 GlobalSupplier An Extended Enterprise® Magazine for DaimlerChrysler suppliers and associates Big Saver It’s one of DaimlerChrysler’s major objectives: to generate synergies throughout the Group. This strategy got off to an auspicious start in 2001 with the NAG 1 global transmission project – jointly pursued by the Chrysler Group and the Mercedes Car Group. To read about the accomplishments of this pioneering effort in shaping transatlantic collaboration, see pages 4 to 7. 2 Global Contents Global Cover Story 4 Mercedes Car Group/Chrysler Group: NAG 1 Project Big Saver Company 8 GP&S: A Look Back at 2004 A Year of Steady Development Award 10 GP&S: Presentation of the Second “Global Supplier Award” Reaching for the Stars Collaboration 15 GP&S: Central Buying Central Buying – An Additional Global Collaboration Model Process 16 GP&S: ‘Price Breakdown’ Product Cost Management On A New Global Basis Organization 18 Procurement Office in South East Asia: Reorganization GP&S Goes East Project 20 MCG: The New B-Class A Striking Mix of Sportiness and Elegance USA Process 22 Chrysler Group: Process Failure Mode and Effects Analysis (PFMEA) Planning Tool Helps Improve Product Quality Collaboration 23 Chrysler Group: Logistics Building a Strategic Advantage: Initiative … Europe Forum 24 VCD: eSEP Supplier Day Continuous Improvement in Logistics Performance Project 26 MB Vans: Supplier and Prototype Controlling (ET/CS) for NCV3 Taking Overall Responsibility 28 IPS/DC-P: Tool management in Kölleda, Berlin and Hamburg On Your Mark, Get Set, Go! 30 IPS: Global NPM Network (GNN) IT Project Connecting Buyers – IPS and Fuso News 31 MCG: ‘Supplier Management Manual’ online Jump Right In! Global Supplier Feedback Your opinion is important to us! Dear Reader, Every quarter the Global Supplier Magazine provides you with the information on the latest developments in the DaimlerChrysler Global Procurement & Supply (GP&S). To better satisfy your needs and requirements on the magazine, we are very interested in your opinion. We would greatly appreciate if you could take a moment of your time to complete this questionnaire and return it to us via our fax hotline. To show our appreciation for your time and effort we will raffle 30 fancy current model cars among all returns. 5 6 How would you rate the selection of topics in Global Supplier Magazine? 2 8 Which topics should be addressed more comprehensively in the future? Please give us some examples: 13 How would you rate the overall appearance of the “Global Supplier Magazine? exceptional good not so good very poor 14 Which department do you work in? Procurement Research and Development Sales and Marketing Quality Assurance Production Other The quarterly publication schedule is … 15 What other suggestions do you have regarding the Global Supplier Magazine? ▲ Do you use online media as a source of information in your profession? If you are a supplier to DaimlerChrysler, which of the following groups does your company supply? Chrysler Group Commercial Vehicle Division Mercedes Car Group Other exactly right not regular enough too often 9 What is your connection to DaimlerChrysler? I am a … Supplier/system partner Shareholder Customer Employee I have a general interest in automotive engineering Other The length of the individual articles is … exactly right too short too long 7 very good good not so good poor 12 exactly right too much text too many pictures Many thanks. 1 The amount of text and graphics in the individual articles is … Sent by: very frequently frequently rarely almost never 3 How easy is it to understand the articles? 10 The articles are easy to understand The assumed level of detailed knowledge is high The articles are too complex 4 How informative are the articles? The depth of information is exactly right There is often important information missing The articles are too complex When both online and traditional media sources are available to you, which source do you prefer? traditional online 11 Do you use the online version of the Global Supplier? Name Company Yes No Department Post code/City Country Please fax the completed questionnaire to +49 (0) 70 31/90 - 4 51 06. Editorial 3 We’re Acting From a Global Perspective To our Readers, We analyze and evaluate the procurement and supply performance of our suppliers from a global perspective within the framework of Extended Enterprise® and with the aid of a scorecard model. We have identified four important aspects of performance, from which our supplier criteria are derived: quality, systems cost, technology and supply. These performance aspects are supplemented by three behavioral aspects: communication, commitment and integrity. Matching the achievements of our global suppliers with these criteria, GP&S identified nine global suppliers from five different countries on three continents to be our 2004 benchmark suppliers. To celebrate the global benchmark performance of these suppliers, DaimlerChrysler held its second annual Global Supplier Awards Event on January 12th, 2005 in Detroit. The award winning companies were: ■ Anchor Manufacturing Group, United States (raw materials/body-in-white) ■ BEHR, Germany (interior) ■ Brose, Germany (exterior) ■ EMC, United States (general goods and services) ■ Exel, United Kingdom (logistics) ■ Federal-Mogul, United States (powertrain) ■ GROB-WERKE, Germany (manufactured goods and services) ■ ■ NGK, Japan (electrical/electronics) Trelleborg, Sweden (chassis) I’d like to again congratulate these suppliers on their tremendous work. Further details on the Global Supplier Award Event may be found on pages 10 -14. GP&S is expanding its global presence through regional offices. Our new office in Beijing and our recently realigned office in Tokyo and Singapore are responsible for dealing with our local suppliers in the region, as well as supporting our commodity-based Lead Buyers in Stuttgart and Auburn Hills through commodity-specific local teams. To learn more about how our regional procurement offices operate, please see the article titled “GP&S Goes East” in this magazine. Another way that GP&S manages commodities globally while maintaining existing business unit and brand focus is through our Central Buying Initiative. Central Buying is a supplementary model within the Lead Buying framework and places full responsibility and authority for selected commodities in the hands of one Central Buyer, who is supported by brand representatives. Selected commodities – such as leather, latches and seat heaters – are among those already identified for the Central Buying activity. For further understanding of this global collabo- ration model and the impact on suppliers, please refer to the article “Central Buying – An Additional Global Collaboration Model” on page 15. Generating synergies throughout the group is one of the key objectives at DaimlerChrysler and an important aspect of how we do business within GP&S. Our cover story – “The NAG1 Global Transmission Project” – reflects a continuing success story that demonstrates how our business units work collectively toward an objective. Suppliers involved in this project not only found the large order volumes from scaling effects to be attractive, but also appreciated the opportunity to work with another business unit. More on this impressive trans-Atlantic team spirit and the benefits for our participating suppliers may be found in this edition’s cover story. Thomas W. Sidlik Member of the Board of Management Executive Vice President Global Procurement and Supply DaimlerChrysler 4 Global Cover Story Mercedes Car Group/Chrysler Group NAG 1 Project Big Saver Generating synergies throughout the Group, that’s one of the stated objectives at DaimlerChrysler. In light of this, a joint project started in 2001 by the Chrysler Group and the Mercedes Car Group – the NAG 1 global transmission project – is playing an outstanding part in implementing this philosophy. Not only have a large number of significant scaling and degression effects been achieved, but the project has also had a sustained influence on networked collaboration between both business units. A Project With An Unusual Background The NAG 1 project is, in fact, the kind of project that can be considered rather unusual, for it has, as Dr. Jürgen Gleichauf (head of MEP/12, Transmission, Drivetrain, Contract Management and in overall charge of transmissions for all model series) put it, a “really odd background” to it. That’s because the first Mercedes-Benz New Automatic Transmission ( ), which had been produced since 1995, actually ended up going through a relaunch and has turned out to be a ‘Big Saver’ for both DaimlerChrysler and the associated suppliers. The reason: revised planning called for the NAG 1 to be installed as a cloned ( ) NAG 1 in the new Chrysler 300C and Dodge Magnum passenger cars starting in April 2004 and in the successor to the Jeep Grand Cherokee as of July 2004. ▼ ▼ Very often, those projects that chart new territory are the ones that motivate the participants to give nothing less than their very best – and the global NAG 1 project is certainly one of them. When Global Supplier interviewed them last November, all the personnel involved in passenger car transmission design and construction from the Purchasing, Development and Quality Assurance departments at Mercedes-Benz and Chrysler were highly motivated about their project and discussed it with enthusiasm. Make no mistake about it, these people are real pioneers, the true avant-garde in generating Groupbased synergies and in shaping transatlantic collaboration across both business units, and they’ve brought this level of cooperation a significant step forward. 5 ▼ why reinvent the wheel? That’s exactly what the project managers asked themselves, particularly in light of the “considerable synergy effects ( ) that could be generated for the Group by such a classic commonized part concept,” Gerd Hagmayer (head of the Automatic Transmission Team Procurement Mercedes-Benz Passenger Cars) explained. A Continuing Success Story In July 2000, the Exec- ▼ The MCG team with a Chrysler 300C (from left to right): Domenico Mandaglio, MCG Logistics Coordinator; Peter Lex, MCG Development Coordinator; Jürgen Heckele, MCG Procurement Coordinator; Bodo Dornis, MCG Quality Coordinator; and Gerd Hagmayer, head of the Procurement Team at MCG Automatic Transmission Components. So Why Reinvent The Wheel? This project can actually be traced back to 1999, when after the merger, various scenarios were evaluated for developing and manufacturing a ‘global transmission’ that could be installed in DaimlerChrysler vehicles. In this regard, consideration was also given to installing the NAG 1 in the new Chrysler models instead of going through the great effort and expense of developing an entirely new 5-speed automatic transmission. At that time, the NAG 1 was considered by transmission experts to be the undisputed benchmark in the premium segment in terms of technology and costs. Today, it’s still a tough one to beat. So ▼ utive Automotive Committee (EAC) at DaimlerChrysler gave the project the green light. After the necessary resources were approved and released by the Chrysler Group in January 2001 and by the Mercedes Car Group the following June, the project could finally get rolling. To meet anticipated future need for the NAG 1, the Chrysler Group began erecting a new transmission plant, the Indiana Transmission Plant 2 ( ) (‘ITP 2’) in Kokomo, Indiana. This was a scenario that once again required transatlantic team spirit. Working with International Procurement Services (IPS), the developers at Chrysler Group went about planning the procurement of essentially the same systems and components for Kokomo as the ones being used to produce the NAG 1 in the Hedelfingen plant section and then made the necessary arrangements with suppliers. In fact, Gerhard Ziegler, in charge of plant procurement at IPS, described this success story as a “truly fortunate turn of events” since in many cases it was possible to combine the production equipment required for the NAG 1 in Kokomo and the similar equipment for the NAG 2 successor „ NAG 1 – A Long-Term Success “The New Automatic Transmission (‘NAG’) is an electronically controlled five-speed transmission with a lockup clutch in the torque converter,” explained Peter Lex, a developer of Mercedes-Benz automatic transmission components and the project development coordinator on the Mercedes-Benz side. “Automatic transmissions are available as special equipment instead of the standard six-speed New Manual Transmission (NMT) in all Mercedes-Benz rear-wheel-drive vehicles such as the C, E, and M-Class, whereas it’s already standard equipment on the S-Class.” Since 1995, the NAG 1, which in the view of many indepen- dent experts sets new standards, has been produced in the Untertürkheim major-assembly plant section located in nearby Hedelfingen. Since that time, it has occupied the ‘pole position’ for many years among transmissions manufactured for the premium-vehicle market segment. So far, over 5 million NAGs have been produced, and not just for use in the drivetrains of Mercedes vehicles. Other highend automobile manufacturers, such as Porsche and Jaguar, have successfully integrated the NAG 1 in their own vehicles. In fact, the demand from such third-party clients for this exceptional unit continues unabated until this day. At the end of 2003, with the market launch of NAG 1’s successor, the NAG 2, the world’s first and only seven-speed automatic transmission, MercedesBenz once again sets new standards in transmission development for the premium segment. And one thing’s now clear: the NAG 2 (sales designation: 7G-TRONIC) has really got what it takes to continue its predecessor’s as yet unfinished success story over the coming years. 6 Global Cover Story ▼ Mercedes Car Group/Chrysler Group NAG 1 Project What does “Cloning” mean? In this context, “cloning” means not only adopting an existing series production transmissions but, to the great possible extent, also adopting the identical production processes and systems as well as the related vertical production integration (level of in-house, non-outsourced production) and proposals for optimization existing at the original developer at the time of adoption. transmission in Hedelfingen. What’s more, because the contracts covering both facilities were awarded at around the same time to a very similar group of suppliers, it was possible to bundle procurement volumes. The resulting benefit was twofold: on the one hand, considerable cost savings; and on the other, “Chrysler was able to get in contact with some new, well-qualified suppliers,” Ziegler added, summing up the major advantages. ▼ already in a good position to achieve a very high level of product maturity in their designs,” stated Kenneth J. Potter, Senior Manager, NAG 1 Product Engineering at Chrysler, confirming the inherent advantages. In fact, he went on, based on this “we were able to readily exchange experiences with the new suppliers and reach a level of confidence in each other that would have otherwise taken years to establish.” Bodo Dornis (project QA coWell-Proven, Reliable Suppliers On Board Since ordinator for European suppliers) concurred, adding that the NAG 1 had been granted a new lease on life, the sup- “building on an already well-established, smoothly runpliers derived similar benefits. “Despite the complex ning supplier-customer relationship is, of course, much logistics chain, we overwhelmingly decided to stick with easier to do than starting over completely and developing the already existing German and European suppliers a new one.” Working closely with the QA managers in because, as it turned out, this was still the most economi- charge of the new American transmission plant, which had been in series production since November 2003, cal way to go,” both Gerd Hagmayer and Jürgen Heckele (procurement coordinator for the project and member detailed processes for quality communications with of the Automatic Transmission Team at Procurement the Hedelfingen transmission plant were worked out to Mercedes-Benz Passenger Cars) made quite clear. This ensure that daily experiences would be continuously updated and always available to each location as referproved to be of great benefit for the entire project. “Due ence. Both Dr. Gleichauf and Gerhard Ziegler stressed to their many years of prior cooperation, optimization efforts and further development work with Quality that both the parts and plant systems suppliers not only Assurance (QA) and Development, these suppliers were found the large order volumes attractive but also the opportunity to enter into business with the Chrysler The Synergy Effects The major factor that really spoke in favor of equipping the new Chrysler models with the NAG 1 was the anticipated scaling effects. Because Chrysler had decided to forgo developing its own new transmission, it was able to save considerable development costs which, in addition, led to a reduced time to market due to NAG 1’s very mature product design stage. Instead of going through all the time-consuming effort of developing a new transmission ‘from scratch,’ the NAG 1 “only” had to be modified by the developers at Chrysler and adapted to fit the installation environment (accommodate the packaging of the peripheral units) in the Chrysler vehicles. Marvin Schiemann confirmed the advantages inherent in going this adaptive route: “In addition to cutting costs at Chrysler, we were able to exchange our expertise and experiences to determine the best practices to follow. This, in turn, helped cut costs at Mercedes-Benz. Both sides were able to use the same development data, which reduced development effort considerably. The results are a reduction in the per-unit price and the investment required for preparing production tools.” And what particularly impresses the project buyers is the high degression effect that has been achieved with the ‘new edition’ of this transmission. In their view, that’s the crowning touch to this extended success story. By “doing business with Chrysler,” the NAG 1 will now be produced far beyond its originally planned lifecy- cle and bring in additional volumes. The more successful the new models from Chrysler are on the market, the greater these additional volumes will be. “This means that we’ll be able to keep our production at a stable, high level until 2012. Can you think of any better situation for both buyers and suppliers?” Jürgen Heckele asked, emphasizing the mutual benefit that these years of continuity will bring. ▼ 7 Indiana Transmission Plant 2 (ITP 2) The ITP 2 was constructed on the grounds of the already existing Chrysler ITP 1 major-assembly plant in Kokomo, Indiana. Currently, it has 482 employees. Although the proven work flows and systems from Hedelfingen were transferred to the ITP 2 on a 1:1 basis, it does have one major difference compared to the Hedelfingen plant section with its different history of growth. Since the ITP 2 could be built out on a tract of open land, it has a more spacious, ground-level layout. Furthermore, the ITP 2 is equipped with the most innovative robot technology, such as automatic systems that conduct ‘sniff tests’ to check the integrity of transmission gaskets and seals. The NAG 1 has been in series production at the ITP 2 since November 2003. The team at Chrysler (front row, from left to right): Dean Celini, John Bowlby, Louis Belli, Marvin Schiemann, Anthony Vetrano, Ken Potter, Terry Heim and Jason Sholy; (back row, from left to right) Syed Ilyas, Mohammad Mubeen, Qudoos Rehman, Koteswarlu Divi and Scott Heitzenrater. Not pictured: Francisco Rodriguez. Kokomo, December 19, 2003: Tom LaSorda, Executive Vice President of Manufacturing, inaugurates transmission production at ITP II. Group. Both agree that “the NAG 1 project certainly opened new doors for some suppliers.” Overall Objective Comes Before Individual Ones A key aspect to this project, one that was at first new and different for personnel on both sides, was the fundamenImpressive Team Spirit: Hands Across the tally larger perspective that shaped its course. While Atlantic There were also other ways in which “our col- keeping their cost targets in mind, project members had laboration yielded great benefits” stressed Marvin Schie- to always be sure to give priority to the larger cost effects mann, supervisor of Automatic Transmission Engineeron the overall Group. Before tackling the NAG 1 project, ing at Chrysler and team leader for the MCM Automatic they had all been pretty much used to evaluating busiTransmission area. Not the least of them was the fact ness objectives and setting targets in terms of their own that the joint effort absolutely required and greatly fosbusiness unit or department. Now, however, they were tered a close working relationship among project person- compelled to work in concert and anticipate the impact nel from Procurement and Development ‘on both sides of their decisions in a far greater context. To facilitate of the pond.’ Facing an unprecedented arrangement, the this, MEP/12 was assigned a kind of lead function. This transatlantic team pulled itself together step-by-step by meant that materials purchasing had to continuously maintaining continuous, close contact among its memensure that the enthusiasm in both of the closely coordibers and regularly exchanging information. “So, today nated development areas at Chrysler and Mercedes-Benz we have excellent personal relationships with each didn’t produce proposals going beyond what was finanother,” Hagmayer emphasized, adding that this was not cially feasible. To be successful, this monitoring required just because “our colleagues at Chrysler are very good at intensive coordination and building trustworthy relationdesigning transmissions.” Kenneth Potter readily agreed ships. The efforts clearly were worth it because “we now with him, stating that “the high degree of team spirit have full faith and trust in each other,” Dr. Gleichauf was very impressive. I mean, despite the great distances, stated, making a final, critical point. the different time zones and the different cultural backgrounds, we never had a problem communicating.” 8 Global Company GP&S A Look Back at 2004 DaimlerChrysler’s worldwide purchasing division, Global Procurement & Supply, can look back on both a successful and eventful 2004. In the following article, the Global Supplier discusses the most important activities at GP&S over the past year. A Year of Steady Development Global Procurement Volume of 101.4 Billion Euro In the year 2004, Daimler- Increased Corporate Value Through Procurement Processes In cooperation the supplier portal we provide access to all DaimlerChrysler supplier applications Chrysler purchased goods and services for with our suppliers we are currently concen- via one common framework with a single a total of 101.4 billion euro (2003: 99.7 billion trating on three areas of action for achieving sign-on. In the context of the Global Supply euro). The Mercedes Car Group accounted the best overall results: Global Scale, Global Base, we optimize the distribution of procurement volumes between the various supfor 38% of our total purchasing volume, the Processes and Global Supply Base. With a global procurement volume of 101.4 pliers taking cost-risk aspects into considerChrysler Group 32%, Commercial Vehicles billion euro, we offer our supply base global- ation. For this purpose, we engage in inten26% and Other Activities 4%. In order to scale opportunities. In addition, increasing sive dialogue with existing and potential manage this purchasing volume efficiently and to ensure proximity to the suppliers as volume by bundling purchasing volumes suppliers. In top level meetings we discuss well as to our manufacturing facilities, our worldwide helps us to optimize costs. We individual performance and capabilities procurement is organized on a global scale define and implement strategies for each with our suppliers to agree on measures for with activities all over the world. commodity to set directions and lay the foun- continuous improvement. dation for future procurement actions. A key Intensified Involvement in Asia As part method for managing our global strategies is Extended Enterprise® Strengthens of the expansion of our activities in Asia, Strategic Supplier Relations To the Material Strategy and Innovation Counstrengthen the global aspect of our procurein 2004 we realigned our purchasing offices cil. This global council aligns engineering, in Singapore and Tokyo and opened a new procurement, cost analysis and research and ment activities and maintain business relapurchasing office in Beijing. The purchasing technology across business units to facilitate tions with the world’s best suppliers, we have developed the Extended Enterprise® offices are not only responsible for procureglobal material cost reduction, commonizasupplier program further (more information ment in the respective regions, but also tion and innovation. have the function of improving transparency Under the heading of Global Processes, we in the Global Supplier 1st Quarter 2004. on Asian procurement markets. focus on all of our activities with the aim of You will find more information on Extended Enterprise® in our Supplier Portal standardizing processes worldwide to provide suppliers and divisions with a globally http://daimlerchrysler.covisint.com in the Extended Enterprise® area). integrated, cost-optimized network. With 9 The cooperation with DaimlerChrysler is characterized by a focus on performance and mutual appreciation" said Chikanore Abe, President and CEO of NGK. Receiving his award at the annual Global Supplier Award ceremony, he is pictured between Jeffrey Wakai (l.) and Gunnar Güthenke (r.) from Global Procurement. The trophy was designed by Chris Nelson (photo r., third person from r.). DaimlerChrysler Supplier Awards 2004 We expect global benchmark performance from our suppliers. For calendar year 2004, we awarded our second DaimlerChrysler Global Supplier Award to recognize outstanding supplier performance at this level (see also page 10) . In addition, as a result of our global procurement management, long-term contracts with key suppliers and close collaboration with reliable partners, we have the benefit of a broad spectrum of instruments for limiting the impact of rising raw-material prices on our production costs. Risk Management in Procurement Socially Responsible Behavior In con- A continuously smooth material supply is very important for us. Therefore, we have well-established processes to monitor the financial health of our supply base. In the light of the ongoing global economic challenges for many suppliers, these tools have been enhanced in recent years. These enhancements help to ensure that the continuity of our production processes is guaranteed in our plants and DaimlerChrysler’s financial risks are minimized. The possible remedial measures that can be taken range from more intensive discussion of specific financial parameters with the suppliers’ top management to the joint design of new financing plans. In 2004, many suppliers experienced financial difficulties. Working closely together with our supplier partners, we were able to avoid production losses caused by this situation. A key enabler of our success is our supplier risk management process. nection with our purchasing activities, it is also very important for us to open up opportunities in the world’s markets for minority suppliers and historically disadvantaged groups of people. Thus, for example, Thomas W. Sidlik, Executive Vice President Global Procurement & Supply and Member of the Board of Management, has also been active as Vice Chairman of the National Minority Supplier Development Council. This organization supports the growth of minorityowned businesses in the United States. In addition, the purchasing activities of DaimlerChrysler in North America sourced goods and services worth over $3 billion from minority-owned suppliers in 2004. DaimlerChrysler is also committed to the Black Economic Empowerment initiative in South Africa. With our support, it was possible to establish a joint venture between a German media-services provider and a black-owned South African printing company. In the fourth quarter of 2004, DaimlerChrysler also led a trade delegation to South Africa. Minority-owned automotive suppliers from the United States were introduced to local black business owners and entrepreneurs. This business mission should increase the economic vitality of the South African supply base. DaimlerChrysler, and its global procurement and supply organization, are committed to the valued partners in all areas of the world in which we do business. 10 Global Award GP&S Presentation of the Second “Global Supplier Award” Reaching for the Stars On January 12, 2004, the Global Procurement and Supply department hosted the second annual “Global Supplier Awards Event.” Suppliers with outstanding performance in 2004 from all over the world were presented with a “Global Supplier Award.” For those receiving it, this award is both recognition of their achievement and an incentive for further excellence. 11 Some really great feedback: many suppliers that had attended the presentation of the second Global Supplier Award wrote letters thanking DaimlerChrysler for holding such a successful event. As in the previous year, the award ceremony was held at the historic Detroit Firehouse in downtown Detroit. As if in acknowledgment of the evening’s event, even the winter weather had turned out to be mild – rather unusual for a January day in Detroit. The great significance of the Global Supplier Award was already quite apparent from the list of guests for the event: in addition to top managers from top suppliers, there were also high-level representatives from DaimlerChrysler in attendance. Thomas W. Sidlik, Member of the DaimlerChrysler Board of Management and Executive Vice President of Global Procurement and Supply was the host of the evening’s event. The center of attention at the event was the award trophy, the winning design in a special competition – a symbolic sculpture by Chris Nelson, recent graduate from the Crafts Department at the College for Creative Studies in Detroit. The recipients of the award in each of the nine categories were initially known only to those who would be making the presentations during the course of the evening. Strong Products from Top Suppliers Suppliers with business volume of over 1 million euro with the Chrysler Group and over 1 million euro with the Mercedes Car Group or the Commercial Vehicle Division were eligible for the award. The evaluation period extended over the entire 2004 year. The evaluations not only looked at supplier performance based on the four key criteria of systems cost, quality, supply and technology as measured by the GP&S External Balanced Scorecard, but also other criteria such as supplier communication, commitment, and integrity. The special significance of this award for the eligible suppliers and DaimlerChrysler itself was made very clear by Thomas W. Sidlik before the ceremony: “The winners of our Global Supplier Award stand for the topnotch group of suppliers that we cooperate very successfully with in our global network.” In presenting these awards, Global Procurement & Supply would like to “honor the outstanding services from our suppliers, which have continuously worked to support the implementation of DaimlerChrysler’s strategic vision: global presence, strong brands, a broad range of products and technological leadership.” ▲ „ The guests were all warmly welcomed by Thomas W. Sidlik. The trophy: the winning design by Chris Nelson, a former design student at the ‘College for Creative Studies – Crafts Department’ in Detroit. 12 Global Award GP&S Presentation of the Second “Global Supplier Award” The Best of the Best: 2004 Global Supplier Award Winners ■ ■ ■ ■ ■ ■ ■ Partners in Excellence The very fact that Donations for Firefighters The event, the nine recipients of the award come from five countries on three continents supports this strategic vision. Frederick Pfaff, from Anchor Manufacturing Group (USA), accepted the award in the “Raw Materials/ Body-In-White” category. Colin Carter from BEHR (Germany) received the “Interior” award, while the “Exterior” award went to Brose (Germany), represented by Adolf Rosensprung. The award in the “Powertrain” category was accepted by Robert Miller of Federal-Mogul (USA). Chikanori Abe from NGK Spark Plugs (Japan) accepted the award for “Electrical/Electronics.” The “Chassis” award went to George Caplea from Trelleborg (Sweden). Frank Hauck from EMC (USA) received the award for exceptional performance in “General Goods & Services,” and Christian Grob from GROB-WERKE (Germany) received the award for “Manufacturing Goods and Services”. Finally, Ted Nikolai from Exel (Great Britain) accepted the award for outstanding performance in the “Logistics” category. which took place in conjunction with the “North American International Auto Show 2005,” also featured DaimlerChrysler top managers from Global Procurement and Supply who donated their services as celebrity bartenders. What’s more, a firefighter’s boot stood on the bar to accept donations for the Detroit Firefighter’s Association Fund. Whenever a guest placed money in the boot, a loud ringing resounded throughout the firehouse. During this event over $6,000 was collected for children and families of local firefighters. A Trophy with Great Symbolism The design of the trophy reflected the close cooperation between DaimlerChrysler and its suppliers. As Chris Nelson, designer of the trophy, explained at the event, “the trophy was designed with the aim of depicting the close relationship between DaimlerChrysler and its global suppliers. For this reason, its circular form, as a symbol of unity, is a fundamental aspect of its design.” In designing the trophy, Chris Nelson took special care in selecting the materials. The ‘Jetglass’ featuring the Extended Enterprise® logo and the bronze ring represents our suppliers’ ambitious goals to maintain a constant flow of supply for DaimlerChrysler. The ■ ■ Anchor Manufacturing Group, USA (Raw Materials/Body-in-white) BEHR, Germany (Interior) Brose, Germany (Exterior) EMC, USA (General Goods and Services) Exel, United Kingdom (Logistics) Federal-Mogul, USA (Powertrain) GROB-WERKE, Germany (Manufactured Goods and Services) NGK Spark Plugs, Japan (Electrical/Electronics) Trelleborg, Sweden (Chassis) wood expresses the warmth of human relationships, which symbolizes the very heart of successful cooperation in an extended family of suppliers. The rubber base serves as a transition from the solid form to the upper section on which the trophy itself is set. The base may be regarded as being symbolically similar in function to the critical role tires play in keeping a motor vehicle in solid contact with the road. In appreciation of his design, Chris Nelson received a scholarship from DaimlerChrysler. The College for Creative Studies in Detroit is one of the leading schools of art and design in the USA. Strengthening Our Relationships The representatives from suppliers from all over the world, as well as high-level representatives from DaimlerChrysler enjoyed the evening immensely. All the participants greatly appreciated the ceremony, celebrated the well-earned successes and used the 13 The boss is at your service: managers from Procurement & Supply didn’t miss the chance to take turns tending bar. opportunity to strengthen global supplier relationships. As Thomas W. Sidlik emphasized, “The awards were presented in recognition of all your efforts that have contributed to the creation of exceptional new vehicles. With your continued support we will always be ready to build the next generation of exciting DaimlerChrysler cars and trucks.” The awards were presented by managers from global procurement: Scott Garberding – Vice President, Worldwide Supplier Quality & Product Team C/J/D (Chrysler/Jeep/Dodge); Harald Boelstler – Head of Procurement Mercedes-Benz Passenger Cars/smart (MEP); Stefan Buchner – Head of Procurement Commercial Vehicles (PCV); Dave Hodgson – Vice President, Worldwide Supply C/J/D; Robert Schott – Vice President, Worldwide Procurement & Supplier Commodity Strategy C/J/D; Peter Rosenfeld – Executive Vice President Procurement & Supply C/J/D; Dr. Heinrich Reidelbach – Head of Procurement, NonProduction Materials (IPS). Moving in the Right Direction: The Spirit of Cooperation in the Supplier Network There were certainly more than enough reasons to celebrate, and not just for the award recipients themselves. With the presentation of the Global Supplier Awards, the Extended Enterprise® supplier program has created a motivational framework that honors the outstanding work of its suppliers and also strengthens worldwide cooperation. This makes clear once again how beneficial individual achievements help to strengthen the overall global cooperation and success between DaimlerChrysler and its suppliers. This very spirit of global cooperation and success was the focus of the evening’s celebration and continues to be the fundamental characteristics of DaimlerChrysler’s supplier network. Thomas W. Sidlik had a resounding success: during the evening $6,000 in donations were collected for the families of local firefighters. >> 1925/1926: Our establishment – 1998: Our merger – 2004: Your distinction Driven by the goal of constant improvement, DaimlerChrysler works with the best suppliers so that we can continue to write automobile history together. Those who stand out among the best have again been distinguished with the Global Supplier Award – an award that is just as distinctive as our history. All of our products are marked by their high performance. Therefore, we expect from our partners what our customers expect from us: the best performance among the competition. We recognize and thank those who have contributed to our success. >> The power of performance Global Collaboration 15 GP&S Central Buying Three types of buying authority Responsibility The implementation of Lead Buying for production material in 2002 advanced the global collaboration within GP&S enormously. Since then GP&S has continuously worked on further optimizing the Lead Buying model. As the latest step, the Executive Committee Global Procurement (ECGP) has decided to launch Central Buying as a supplementary collaboration model within the Lead Buying framework. Lead Director Business Unit Director Buying authority P&S MEP PCV Central Buying Lead Buying Business Unit Buying (Autonomy) Central Buying – An Additional Global Collaboration Model Central Buying places full responsibility and authority for selected commodities into the hands of one Central Buyer, who is supported by Brand Representatives from the participating purchasing units. The Business Model Central Buying increases the scope and the authority for the Central Buyer. While the Lead Buyer focuses on the development of the commodity strategy and overall coordination within a commodity, the Central Buyer is in charge of the execution of key purchasing tasks and has the full global decision-making authority within this global team. The key purchasing tasks include the execution of RfQs, negotiations, continuous improvement and change management, unless delegated to the local Brand Representative. Overall, the Central Buyer is responsible for the achievement of the individual Business Unit targets. The Central Buyer is located in one of the three purchasing units MEP, P&S or PCV. Thus, Central Buying is by no means a ‘central purchasing organization’. The Brand Representatives functionally report to the Central Buyer. They are the single point of contact into the Business Units and ensure the seamless cooperation with all Business Unit stakeholders in Engineering, Quality and Supply. The Brand Representatives execute defined local tasks, support the Central Buyer and execute the tasks delegated by the Central Buyer. The Objectives Central Buying will help to even more effectively manage the commodity globally while keeping the existing Business Unit and brand focus. The overall objectives of the global collaboration within GP&S are: • Full global transparency of sourcing decisions and cost optimization challenges • Stringent global supply base management through ‘one face to the supplier’ • Know-how bundling and best practice exchange Commodities P&S MEP PCV Batteries Latches Roller Bearings ... Central Buyer Brand Representative Interface to Business Unit stakeholders (e.g. Engineering, Quality, Supply) The Impact on Suppliers After successful pilots in 2004, Central Buying is now being subsequently implemented in selected commodities as defined by the commodity leaders of P&S, MEP and PCV. Examples are Leather, Latches and Seat Heaters. Affected suppliers are being informed by the Central Buyers regarding changes in the communication relations. In the selected commodities, the Central Buyer becomes the ‘one face of DCX’ for the commodity, who leads negotiations and sourcing decisions in close cooperation with the Brand Representatives. Suppliers can expect that the Central Buying teams have full information about the global business relationship which will drive the ‘Global Performance Based Collaboration’ with our partners. 16 Global Process GP&S ‘Price Breakdown’ Product Cost Management on a New Global Basis DaimlerChrysler has long valued the importance of having detailed knowledge of the cost structures of the most important purchased parts. Now, an interdisciplinary project group comprising members from GP&S and cost planners from the Mercedes Car Group and the Chrysler Group is working on finding methods and tools to make the Group’s cost knowledge available on a global basis. Implementation of the results will be a great leap forward for product cost competency in the company. Acknowledged benchmarking studies show that companies with pronounced product cost competency – OEMs and component supplier companies – are much more successful than companies for whom purchased parts are a ‘black box’. For many years DaimlerChrysler has been intensively analyzing the cost structures and determination factors of the most important purchased parts. The focuses have been on finding and optimizing part concepts in the product evolution process and securing a marketable cost and, consequently, price position. After all, cost expertise is vital to be able to judge the competitiveness of suppliers – regardless of whether this is in the area of innovative capability, production performance or the use of factors. For DaimlerChrysler, cost competency is thus the key to optimization potential along the entire supply chain. The latest challenge for DaimlerChrysler is to aggregate existing specific knowledge in the Mercedes Car Group, Chrysler Group and Commercial Vehicle Division and to make this utilizable throughout the world in order to compare current part prices and functions and to identify differences in the factor costs. Prerequisites for this are synchronization of the costing methods used in the divisions, common definitions of cost elements and compatible information acquisition processes. This is necessary internally between purchasing and cost planning and also at the interface to our business partners. An international, interdisciplinary project team has been working on this since the end of 2003 and is now able to present its first results. On the whole, product cost management will be given a new international foundation across the phases of information acquisition, information storage and analysis. The initial focus will be on the inquiry and contract award processes; in the next stage, cost information will also be systematically determined and used in change management. 17 The Four Key Elements DC-Calc – The Calculation Method The calculation method determines how individual cost elements are aggregated to form a complete part costing. Both the calculation method as well as the cost components used in this have been standardized. Hence, in future, analysts at Mercedes and Chrysler will verify part costing from suppliers in the same way. Integration – Seamless Process Coupling Acquiring and exchanging the cost ately after a contract award decision has been made. In accordance with a performance-based collaboration approach, cost transparency is indispensable for a trusting and also ambitious cooperation. We expect our business partners to continuously measure themselves against the reality of the competition and make an effort to develop and maintain their own product cost competency. DC-Calc information between purchasing and cost planning will be carefully integrated into existing processes and systems. In this way, cost details will be requested from suppliers only ‘at one point’ and online. Even if the IT systems in the inquiry process still differ between the regions – the DaimlerChrysler Supplier Portal is the common interface and PBD – The DaimlerChrysler Price Break- the information is aggregated in the TACO database in the background. down The Price Breakdown is a multiRoll-out The introduction of the new comlayer system that lists all cost elements and mon elements at MCG, CG and CVD is defines them in their composition. With the Expectations for Suppliers GP&S, in underway. Costing of current product prostandardization of this system as of immedi- collaboration with the production planning jects will be changed over successively by ately Auburn Hills and Stuttgart will request and business administration/finance units, the end of 2005. The communication process has formulated a clear business policy. As will also be automated, starting with the the same information from suppliers as a from now the same demands will be made to Chrysler Group (see Global Supplier 4/2004), basis for contract award decisions – for all suppliers throughout the world in regard also by the end of 2005. global suppliers this is a considerable simSuppliers will receive more detailed docuplification in the inquiry process. to the provision of cost details: the price mentation from their contacts in purchasing break-down will be used as a basis in the TACO – Central Database with Analysis contract award process; all production mate- or via the DaimlerChrysler Supplier Portal. rial suppliers have been informed that they Tools The heart of the new approach is the central database, TACO (‘Transparent Analy- must provide detailed cost information in sis and Cost Optimization’). On the basis of the quotation phase or, at the latest, immedia common vehicle structure with the most expensive purchase parts, in the future, cost The “DC-Calc” Calculation Method information can be stored in such a way Material Costs Raw Material & • Raw Material that expressive comparisons of part costs – Material Overheads • Raw Material Markup and hence, part prices can be made across Purchased Parts & • Purchased Parts production series and business units at the Material Overheads • Purchased Part Markup (Storage & Inventory Interest) • Sub-tier Transportation press of a button. The predecessor of this information basis has served the Mercedes • Base Wage for Direct Labor Manufacturing Overall Direct Labor Costs • Fringe Benefits & Other Costs Costs Car Group and the Commercial Vehicle DiviMachine Costs sion well to date. Especially promising is that competition analyses and best-of-bench Miscellaneous Plant Overhead results will be documented in the same Production Costs structure and used to find ideas. Markups Sales, General & Administrative Overhead (SG&A) • Sales & Administrative Costs • General Costs (e.g. R&D, Patent Fees) Profit on • Raw Material, Manufacturing Costs Scrap on • Raw Material, Purchased Parts, Manufacturing Packaging Costs • Expendable Packaging & Rack Investment amortisation Logistics • Sequencing & Logistics to DCX Plants Amortisation – Tooling & Fixtures Markups, Packaging Costs, Logistics, Amortisation Total Selling Price 18 Global Organization Procurement Office: in South East Asia Reorganization Left: The natural alternative to glass fiber: high-strength fibers from Abaca banana plants. Bottom: The team at the South East Asia Procurement Office at a glance (standing, from left to right): Noshir Desai, Eddy Kok, Sanjeev Ahuja; (sitting from left to right) Alfred Knecht, Yan Ling Xu, Keith Schulz, Rob Adam, Rajeev Sikand. The DaimlerChrysler regional procurement offices in South East Asia were recently reorganized. It’s been a big step forward in fully implementing the Group’s procurement strategy in this region. As a result of the reorganization, both internal and external personnel now have significantly greater leeway and options in shaping collaborative efforts. To find out more, Global Supplier spoke with Alfred Knecht, the head of the Southeast Procurement Office in Singapore. GP&S Goes East Evaluating the banana fiber-processing industry in the Philippines would normally not be part of the procurement work of an automobile manufacturer. It is, in fact, one of the duties of the DaimlerChrysler procurement office in South East Asia – as long as it has to do with Abaca banana fiber. High-strength Abaca fiber, which serves as a natural alternative to glass fiber, was first employed in the fiber-reinforced materials used in the new A-Class. As part of a larger ecological project*, the DaimlerChrysler research department in Ulm, Germany asked the procurement office to search the Southeast Asian market for qualified raw material suppliers to provide DaimlerChrysler’s Tier 1 suppliers with production materials. Commodity-Oriented Organization This example shows that the Southeast Asian procurement office handles quite a diverse assortment of activities. The team consists of about 40 members headed by Alfred Knecht. They are concerned with the standard types of procurement activities for production and non-production materials. They also operate as a service provider for the Group’s internal departments as well as external suppliers. With the recent reorganization, these activities will be far easier to pursue. That’s because the procurement office strategy, which is an integral part of DaimlerChrysler’s global procurement organization, Global Procurement & Supply (GP&S), is now commodities-based. The procurement office is now organized very much like Procurement Mercedes-Benz Passenger Cars — subdivided into Powertrain, electrics/electronics, interior, exterior and chassis. One procurement office staff member is now in charge of one commodity. That same staff member also serves as the contact person for the respective lead buyer as well as the procurement offices in Stuttgart and Auburn Hills. Furthermore, the local country-based organizations in India, Thailand, Indonesia, Malaysia and Vietnam, which are supervised by the Southeast Asian office, have been revamped and are now also organized by commodities. As a result, the same principle now applies for these local offices: one person is responsible for one commodity. All personnel, in turn, form a commodity-specific team that extends across all these countries and coordinates its activities with the respective commodity representative in the Singapore office. * An ecological project for reforesting the Philippine rain forest. This effort is being supported by DaimlerChrysler, the European Nature Heritage Fund, the University of Hohenheim (Stuttgart) and Leyte State University (Philippines). 19 GP&S SEA This commodity-based reorganization means that the procurement office is cross-functional in scope. “In this region, we not only represent Procurement Mercedes-Benz Passenger Cars, but also Chrysler Group procurement, the Commercial Vehicles Division and also handle purchases of non-production material,” Knecht explains. The new arrangement also means that all export and local content issues, which were previously assigned to special teams, are now subordinate to the given commodity. In addition, the new organization supports efforts to bundle large procurement volumes and to create synergies. Sometimes, as a ‘smaller shareholder,’ “it also tacks its own quantities on to other, larger contracts awarded by the Group in order to benefit from the lower, high-volume prices,” Knecht reports. Volume Bundling Now Easier Volume bundling is a major concern of the procurement office. This effort involves coordinating the activities of Business Units across various projects so that large Tier 1 suppliers hoping to get involved in local markets can achieve greater production volumes. The level of interest and dedication that automotive companies desire from their suppliers also depends on the contract volumes that they are offered. That’s why they’ll be glad to hear Alfred Knecht’s announcement that the individual business units at DaimlerChrysler intend to increase their activities in the Southeast Asian area and expand their business over the mid-term. Knecht emphasizes that this will also benefit suppliers “that are competitive in this region.” After all, the procurement office does have a special interest in bundling as many commodity-specific volumes as possible with one supplier. A good example is wiring harnesses: “Since we now negotiate on a cross-functional basis for the entire region, we select wiring harness manufacturers that are in a position to supply parts across-the-board for all vehicle models in all countries. That makes it worth- DaimlerChrysler South East Asia Pte. Ltd. 3 Temasek Ave. #27-01 Centennial Tower Singapore 039190 Contact [email protected] Telefon: +65 6849 8673 Fax: +65 6849 8498 while for the suppliers concerned.” In addition, suppliers have “far easier access to the larger business dealings with DaimlerChrysler since our reorganization. That’s been working out really well.” In light of these recent developments, Knecht urges suppliers “not to enter the Southeast Asian market in a half-hearted way and not be dependent on individual automobile manufacturers.” In his view, the suppliers that would be well advised to enter this market are those that are open to the opportunities in this region and are willing to make the investments required to participate in growth. GP&S SEA Alfred Knecht General Manager The New Organization of the Procurement Office in South East Asia GP&S SEA Singapore Jane Tan Secretary GP&S SEA NPM GP&S SEA Quality GP&S SEA Region Powertrain/Int./W221, W211 DC India Noshir Desai Senior Manager Piyush Arora EE/W203, W204/Philipp. NPM GP&S SEA Quality DC Indonesia Julia Ehmer Assistant Manager Sabine Grutschnig Assistant Manager N.N. Budi Prasetyo* Exterior/UAE NPM DC Malaysia Ratnaker Surapaneni Manager Sim Eng Siang Assistant Manager Veerappan Annamalai* Chassis/CV/Australia NPM DC Thailand N.N. Manager N.N. Gerhard Müller Exports/W169 Singapore MB Vietnam Xu, Yan Ling Executive N.N. * provisional 20 Global Project MCG The New B-Class A Striking Mix of Sportiness and Elegance The B-Class, the new ‘Compact Sports Tourer’ from Mercedes-Benz, was presented to the public for the first time at the 75th Geneva Motor Show in March 2005. Even before its debut, the concept behind the B-Class attracted a lot of attention and was well covered by an intrigued automotive press. At the end of 2004, the B-Class project managers met with Global Supplier and discussed the three outstanding characteristics of this new sports tourer – its design, dimensions and dynamism. This summer, the B-Class will be available at Mercedes-Benz dealers. It will appeal to motorists who fully appreciate and want to enjoy the many benefits derived from wellproven, integrated vehicle design: the versatility of a van, the roominess of a station wagon and the dynamic driving pleasure of a sporty sedan all packed into a vehicle with surprisingly compact exterior dimensions. “In recent years, Mercedes-Benz has positioned itself in many vehicle segments. Because of this, we readily drew on the advantages of existing vehicle types, distilled them into a distinctive, evocative design, and then cast these features into a new, exciting, versatile whole. This successful mix makes the new B-Class a unique product that’s just nowhere else to be found,” Dr. Bernd Hense, the B-Class project manager, stated with justifiable pride. The New Family of Sports Tourers With the new B-Class, Mercedes-Benz is also creating a completely new family of vehicles. What’s more, by the end of the year, there will be an addition to this family, the new, full-size R-Class or ‘Grand Sports Tourer.’ Dr. Marion Friese at B-Class product management, points out that “by having two vehicles in the new sports tourer segment at the same time, we’re once again keeping a step ahead of our competitors.” There’s nothing else currently on the market that can compare to the B-Class. The new Compact Sports Tourer is both a prestigious and multifaceted car for family, leisure and work. It combines an exciting, striking design with a great number of inherent values. There are 6 four-cylinder engines to choose from, among them 2 CDI direct injection units, one of which boasts up to 300 Nm of torque – very respectable for its size. The sporty, spacious interior impresses with its high-quality, tasteful ‘look and feel’ as well as its high level of practicality. An Emphasis on Roominess Helmut Sperlich, a project manager at B-Class Development, emphasized the innovative aspects of the interior design. Due to a layout largely based on the A-Class ‘sandwich concept,’ in which the engine and the transmission are arranged partly in front of and partly beneath the passenger cell, the Compact Sports Tourer – despite its compact exterior dimensions – offers the same interior roominess of larger sedans and station wagons. Because of the variable seating system, this interior space can be readily configured to meet the ever-changing daily needs of owners. “Without even moving the seats, the B-Class already has a trunk capacity of 550 liters. Then, if you go ahead and remove all the seats except the driver’s, 21 you now have a setup that has a volume of 2245 liters and can accommodate loads of up to 2.95 meters in length. That gives you an incredible amount of van-like transport flexibility. For instance, you can take awkward loads such as fully-assembled bicycles and surfboards right along with you and still have enough space for your luggage,” Sperlich stated, pointing out the advantages. A Distinctive Profile Although the new B-Class does borrow some aspects of its design from other Mercedes-Benz model series, it still is a completely new vehicle in its own right. As with other new product projects, from the fall of 2001 the B-Class product development was handled by its own The project team for the new B-Class and Compact Sports Tourer (left side of vehicle, from left to right): Oskar Herr, Gunter Baumgarten, Martin Lorenz, Philipp Lewinsky, Alf Uhlemann and Ferdinand Ebbers; (right side of vehicle, from left to right) Dr. Marion Friese, Helmut Sperlich, Bernd Heinisch, Jan Michaelsen, Lothar Treeger and Dr. Bernd Hense. specially created project team. In addition, the B-Class is being produced at the Rastatt plant in a new assembly hall built especially for it. The Rastatt plant and its suppliers were able to hire significantly more personnel. Of course, this project is also taking advantage of proven locations and methods: the industrial park (‘I-Park’) on the grounds of the Rastatt plant is being fully utilized in order to achieve faster coordination with the on-site suppliers and shorter lead times for their ‘just-in sequence’ deliveries. The Ramp-Up Remains a Critical Phase All in all, a well-integrated, finely tuned process with suppliers has ensured the success of the project thus far. In fact, the project managers gave the first production test, completed at the end of November “very good grades,” which shows “that our supply partners have really done their homework,” Hense reports. To keep things moving along in this manner, Jan Michaelsen, project manager for B-Class Materials urged “suppliers to not let up and to take the pending ramp-up very seriously. The process must continue with the same strict attention to detail right up to the very end.” Even after the world premier of the B-Class and its market launch in Germany, followed by its worldwide launch in the 4th quarter of 2005, Hense still expects all supply partners to pay particular attention to ensuring part quality, guaranteeing agreedon production levels and beyond this, to continue in helping to optimize costs. 22 USA Process Chrysler Group Process Failure Mode and Effects Analysis (PFMEA) Throughout Chrysler Group, a powerful Advanced Quality Planning Tool is used to systematically identify, rank and eliminate potential failures due to deviations from intended production processes. Known as the Process Failure Mode and Effects Analysis (PFMEA), the tool also prioritizes improvement activities and documents lessons learned for future programs. Planning Tool Helps Improve Product Quality PFMEA is used to ensure products and processes are robust. The tool supports the ten quality mandates issued by Tom LaSorda, Chief Operating Officer Chrysler Group, which are a set of shared quality guidelines. The mandates establish clear, concise quality targets based on historical and competitive data to meet and surpass consumer expectations. The data-driven analysis is a living document, and when developed while a design is still fluid, quality improvements are the most cost effective. How it Works PFMEA’s are created to record and structure the process of analyzing a manufacturing process and its risks and identifying the corrective actions required to reduce the probability that a nonconforming part will ultimately leave the manufacturing facility. For the tool to be utilized to its maximum effectiveness, a crossfunctional team must be involved. Team members must consist of a facilitator who is well versed in the mechanics of creating a PFMEA as well as individuals who have the knowledge that is required to execute the process. This team must consist of both customer and supplier personnel and include a core team of responsible individuals from Quality, Engineering and Manufacturing disciplines. Having the right personnel involved is a major factor in the successful execution of a PFMEA. While it’s impossible to predict all of the potential failures, experience has proven that key potential failure identification is improved by taking a systematic approach early on in the production process and by including past failures. The PFMEA is to be updated to incorporate new lessons learned and failure modes as they are identified. Next Steps The Chrysler Group has Early Analysis Improves Quality According to the Chrysler Development System (CDS), the PFMEA’s are to be completed by Gate EF – Product and Process Complete. In any event, PFMEA’s should be performed as soon as the Process Flow Charts and Work Instructions are drafted and an initial risk analysis is performed for each step. Waiting until the production equipment and tooling is designed and delivered to the manufacturing facility misses the opportunity to implement improvements while the design of the equipment or tooling is still being developed. recently developed a new course targeted to address the PFMEA initiative. Coaching sessions are offered in which the Supplier Quality Specialist and Suppliers can jointly participate. For more information on PFMEA or related coaching, suppliers may contact their Supplier Quality Specialist. Global Collaboration 23 Chrysler Group Logistics Strategic Advantage: Integrating Mopar, Manufacturing Assembly Network A Chrysler Group initiative addresses the sharing of best practices related to transportation and logistics and integrates those practices across Mopar aftermarket parts and Chrysler Group’s Manufacturing Assembly Network. The integrated transportation strategy improves efficiency of the total transportation supply chain and eliminates process redundancies. Parts suppliers benefit from uniform transportationrelated procedures and requirements common to both production and aftermarket. Common Supplier Base Regional Integrated Logistic Center (RILC) network operations. Standardizing to Integrated Logistic Centers By standardizing the parts distrib- ution network using the ILC model, the company integrates parts shipping across transportation providers and multiple modes Before the Mopar/Manufacturing Assembly of transportation, improving discipline and Network transportation integration initiative, efficiency. Parts and materials suppliers operate under one set of finite transportation first implemented in 2003, Mopar operated an independent, in-bound transportation net- requirements, and as a result, benefit from work, moving aftermarket parts within a tighter delivery window times for both afterMopar-specific infrastructure to dealer loca- market and production parts. The integrated network improves Mopar tions. In essence, Mopar’s transportation supplier compliance, leverages best-in-class network operated in parallel to the regional logistics centers which support Chrysler’s providers of processes and expertise and creates a flexible supply chain structure easmanufacturing process. This parallel transportation network affected ily migrated to other DCX operating compamany parts suppliers that provided parts and nies. Also key is that the integrated network materials to both Mopar and manufacturing allows for reduced inventory of aftermarket assembly, necessitating that suppliers oper- parts. ate under the requirements of two distinct In addition, the role of regional integrated transportation networks. logistic centers could be expanded to handle Consistent with the company’s goal to inMopar’s dynamic market demand, which is crease value through a streamlined, competi- affected by seasonal, policy and sales considtive integrated transportation and logistical erations. As Harry Annan, manager of Mopar network, Chrysler Group took the opportuLogistics for the Chrysler Group, notes: nity to create a unique converged network “Removing the redundant transportation netwith strategic benefits to existing Mopar and works lets our production and aftermarket parts suppliers — along with our transporta- National Mopar PDC Mopar PDC Common DaimlerChrysler & Mopar Supplier tion providers — work more efficiently. What we have experienced since implementation is proof that expanding the ILC network is consistent with making logistics a core competency.” As integration continues to be optimized, cost savings have been dramatic. Savings stem from consolidation of physical facilities; transportation synergies within Mopar inbound, ILC inbound, and ILC expedites; fill rate improvement and cost savings from inventory reduction. In all, an integrated approach to logistics is a source of competitive advantage and a crucial strategic imperative to the success of DaimlerChrysler. Transportation Integration: Benefits to the Supply Chain • Improved logistics efficiency • Uniform set of finite transportation requirements • Tighter delivery window times for aftermarket, production parts suppliers 24 Europe Forum VCD eSEP Supplier Day Continuous Improvement in Logistics Performance The production strategy and planning/supply area (TPC/TS) within the Commercial Vehicle Division (CVD) held an informational event entitled Supply Performance Excellence. This Extended Enterprise® gathering was held for suppliers in October 2004 and was attended by nearly 200 representatives from the supply industry, CVD plant logistics managers and the Purchasing, Quality and Development departments. This meeting marked the beginning of the rollout of the supplier evaluation process for logistics and the related “eSupplier Evaluation Process” (eSEP) web application in the Supplier Portal. The objective of the eSEP application is to continuously improve the logistics performance of supply partners and process quality between DaimlerChrysler and its suppliers. The participants of the ‘Supply Performance Measurement CVD’ Supplier Day paid close attention to the speakers’ presentations in the packed “Reithalle” in Ludwigsburg. A Key Strategic Direction Dr. Gerald Weber, head of Truck Product Creation (TPC), opened the event, informing the participants about the strategic direction of the Commercial Vehicle Division (CVD), the operations of the new 4P Organization* in the global network and about collaboration with suppliers. Thomas Mlynek, in charge of TPC/TS, was also part of the program. He emphasized the opportunities suppliers will gain with the new system. “The eSEP web application allows immediate and independent access of specific data. In this way, you can get a clear picture of your performance rating. If necessary, you can then initiate appropriate cor* The “4P Organization” encompasses the following four functional areas: product planning, product development, procurement and production strategy and planning. rective measures to optimize your efforts.” Stefan Ten Hoevel, in charge of supplier development and evaluation at CVD purchasing, explained the overall interplay between the EBSC (External Balanced Scorecard) and the supplier evaluation process for logistics. This interplay is a value driver intended to provide a comprehensive evaluation of suppliers. Methods Bring Benefits Initial experiences at the Düsseldorf plant show that the computer-based evaluation has yielded significant improvements in logistics performance. For example, the share of suppliers with the outstanding ratings of A or AB has increased to 70%. Günter Kurth, the logistics manager at the Düsseldorf plant, confirmed that transparency and comparability of results had been greatly increased. Also improved is timely and continuous communication, as 25 During the breaks there was a lot of networking about the contents of the ‘Supplier Evaluation Process – Logistics’ and its great potential. The organizers of the Supplier Day, Thomas Mlynek (right front) and Thomas Jung (left front), along with the keynote speaker Dr. Gerald Weber (front center), who is in charge of Truck Product Creation (4P). well as provision of information on the applicable requirements, objectives and rating levels. He added that costs due to errors had been reduced, supply reliability increased and, as a result, the overall process quality improved. Rudolf Nawrotzky, head of Central Logistics Services at Dynamit Nobel Kunststoff GmbH, expects the eSEP application to produce “cost reductions for both partners through a transparent, permanent controlling of logistics performance.” Nawrotzky is the project manager in charge of introducing eSEP at his company, which, along with five other suppliers, took part in the successful pilot program. Feedback from attendees, coupled with supplier evaluations for logistics and its related eSEP web application, has been overwhelmingly positive. “We were able to set yet another milestone in the cooperation between suppliers and DaimlerChrysler,” stated Thomas Jung, in charge of supplier management and evaluation for logistics at TPC/TS. Rollout, Training Underway In November 2004, the first 90 suppliers were trained and qualified in applying the eSEP web tool. At the DaimlerChrysler training center in Esslingen-Mettingen, a total of 140 participants received intensive “live” training in small groups. During these sessions, suppliers reviewed the objectives, potentials and methodologies of the supplier evaluation process for logistics. They were also introduced to specific features and functions of the eSEP application in a practice session. There, participants discussed in detail examples based on actual problems arising in day-to-day activities, analyzed them and then processed them online. Since late 2004, the data from the supplier evaluation process for logistics has been available online through eSEP to both internal users and participating suppliers. In a dynamic program of instruction, the contents and the functionalities of the eSEP web application were easily communicated to the participants, who could use the practical examples to readily apply the system in their work. Participants also received certificates of attendance. Further Information The eSEP application is accessed through the DaimlerChrysler Supplier Portal at http://daimlerchrysler.covisint.com. If you have any questions, please feel free to contact the following people: Thomas Jung, [email protected], and Karl Knodel, [email protected]. 26 Europe Project MB Vans Supplier and Prototype Controlling (ET/CS) for NCV3 Taking Overall Responsibility The Supplier and Prototype Controlling department (ET/CS) was established in 2001 within the Mercedes-Benz Van business division. ET/CS is a section of the Development Controlling and Support area at Van Development (ET). Described here are the tasks and responsibilities of the department, led by Markus Berben and Wolfgang Weber, who are in charge of procuring the major assemblies for all model series. Also reviewed here is the key role supplier cooperation plays in these efforts, using the Sprinter successor vehicle NCV3 as an example. Prior to the NCV3 project, cost overruns and quality problems had arisen in manufacturing prototype vehicles. The new supplier and prototype controlling system, initiated by Markus Berben and Wolfgang Weber, was established to control these issues. The project now has seventeen staff members. Both Berben and Weber came from Procurement Commercial Vehicles (PCV), bringing with them the knowledge and experience necessary to accurately ascertain market prices. From the start, their task was to ensure that the prototype parts for the NCV3, as well subsequent projects, were manufactured with the highest quality and supplied at fair market prices. Parts for Assembly and Body-in-White The prices for prototype assembly parts had already been set, since production planning was conducted similarly to that for series production. Thus, the development suppliers – most of which end up being the seriesproduction suppliers – could be selected in a timely manner. During this early stage, supplier and prototype controlling worked closely together with the core team for the Made a concerted effort (from left to right): Jörg Ruffert (EDAG), Rainer Schwager (EDAG), Markus Berben (ET/CS) and Wolfgang Weber (ET/CS). NCV3 project. In partnership with PCV, the prices were then negotiated and the suppliers selected. “Just as we had originally planned, we were able to achieve considerable cost savings for the parts to be used in assembling the prototypes,” Berben reported, stressing the importance of this step. Experience shows that the prototype body-inwhite assembly undergoes many changes and, in contrast to series production parts, is largely developed by Van Development. The suppliers for series production were selected later in the process. However, this was not the case for the prototype parts for the bodyin-white. The suppliers of these early-stage parts had to be locked in even before the drawing/geometry deadline 1 (“ZE1”) set for the start of April 2003. The supplier and prototype controlling process was conducted in close coordination with Development, just like for series production. The examination “pulled out all the stops,” from the market analysis on down to the design competition, which according to Wolfgang Weber “was something completely new in the world of prototype design.” 27 A quantum leap: because the initial tool designs were so close to the final ones used in series production, the bodyin-white parts were already at production quality. A Quantum Leap in Parts Quality In the fast-placed world of prototype construction, quality control is an absolute “must.” That’s why, as Berben stated, “we were not only concerned about the business aspects of creating the prototype parts but were also responsible for tool management and, along with our colleagues in prototype construction, for the quality of these parts.” Fortunately, they knew that they could have full confidence in the abilities of their supplier, EDAG Engineering + Design AG, which was responsible for supplying the side-wall and the rear-hinged-door assemblies. Reiner Schwager, who works in Sales, Prototype Construction (body-in-white) at EDAG pointed out that “as far as product development, and model and prototype construction are concerned, we’ve been extremely familiar with the technical specifications and quality requirements at DaimlerChrysler for many years now.” To ensure the quality of the tools and the parts, the team from ET/CS continuously monitored almost every process step at the prototype supplier, starting at tool development and production and ending with final acceptance of the prototype units. This intensive “special support” was well received by the staff at EDAG. Schwager emphasized the extent and quality of the support, recalling that “there were always coordination meetings taking place in which we and the customer kept an eye on the needs of series production coming up later on down the road. Because DC wants the tools for prototype production to be very close to the final designs eventually used in series production, we’re able to generate high levels of synergy when it comes to designing the actual production tools.” That’s exactly how it worked out. “The bodyin-white parts were already at production quality. Now that was really a quantum leap forward,” Weber pointed out. At the same time, it was also possible to move up a majority of the change requests so that most of them could already be handled during the prototype phase. More Intensive Cooperation with Suppliers The responsibilities at supplier and prototype controlling (ET/CS) also included the subsequent ordering process. This involved placing orders with suppliers at previously negotiated prices. In placing these orders, ET/CS created optimal lot sizes in order to reduce the set-up times in production. This new department had also been responsible for the logistics flows “right down into the storerooms at the factories,” Berben added. Each week, an on-site inspection was conducted to ensure that the parts were arriving at the right time in the right quality in the right quantities at the right location. Any problems that arose were resolved immediately with the full, active support of suppliers: “Companies like EDAG have really done everything conceivable to help us in this effort,” Berben emphasized. The NCV3 project makes it quite clear to suppliers that owning overall responsibility over the whole process chain for prototype development and handling “has intensified and improved our collaboration,” Schwager reported. He also confirms that “the administrative and technical support provided by ET/CS has led to quick response and processing times.” 28 Global Project IPS/DC-P Tool management in Kölleda, Berlin and Hamburg On Your Mark, Get Set, Go! What is tool management? Tool management means outsourcing the supply of all machining tools for production systems, assembly tools, measuring and testing equipment to an external tool manager. This arrangement also includes the various adjunct services necessary to ensure the reliability of process flows, on a single assembly line or even in an entire factory. The service provider is paid based on the amount of properly completed components and/or assemblies. The objective of this approach is to continuously increase availability (greater reliability, less downtime) and productivity. A Short Introduction The tool management approach got started back in 2002 at the engine plant in Kölleda owned by MDC Power GmbH. Efforts continued in 2004 at the DC engine plant in Berlin and at the steering and axle production at the DC plant in Hamburg. Working in cooperation with the related specialized departments and plant buyers, IPS/DC-P has introduced external tool management at three production locations. Another global location has also expressed great interest in this approach. Tool Management in Berlin Reiner Wendt and Reiner On your mark, get set, go! The outsourced service concept has already started operation at three locations. Jardot from Central Contracts, International Procurement Services Material Germany, (IPS/DC-P), explain what it’s all about. In Berlin, tool management covers the supply of all the production tools used to manufacture the new six-cylinder, common-rail diesel engine as well as the camshafts for four additional engines. The approach also covers allied services such as procurement/order handling, logistics, warehousing, preliminary settings/adjustments, tool optimization, CIP performance and process optimization as well as product-related consultation and troubleshooting. This support is handled by an on-site tool manager. Key to the success of this program was the demanding process for selecting suitable suppliers. Their offers were first subjected to a cost/benefit analysis based on a comprehensive technical specification. Offers had to meet the L@rs criteria. The actual contract negotiations began only after this preliminary weeding out process was completed. The challenge facing all those concerned with implementing this model involves working closely with the tool management provider to quickly install the requisite processes and to define the necessary interfaces. According to Rainer Wolf, who is in charge of tool management in Berlin, these phases were very successfully completed by both sides. 29 The tool management system increases availability and productivity. Clear Advantages For Reiner Wendt, buyer of machining tools at IPS/DC-P, the advantages of this arrangement are quite obvious, noting that “the suppliers that are now managing our machining tools at these three locations also have the necessary competencies in tool planning and production as well as the technical expertise. In fact, some of them even have their own highly specialized research-and-development departments as well as a network of diversely skilled application technicians who, if necessary, can bring all the expertise from their company quickly to bear on location. So, it’s the combination of a wide range of practical experience and a flexible, economical range of services that makes this alternative so attractive to us.” The suppliers are paid every month for the components and assemblies that are completed correctly. The high level of personal responsibility inherent in this arrangement keeps the tool managers motivated not only to continuously improve their procurement activities and management of scrap and waste but also to keep a sharp eye on the costs of the overall process. Lessons Learned Expectations placed by the specialized departments at DC on the suppliers with respect to performance and economy are being fulfilled. For Reiner Jardot, a team leader at IPS/DC-P, there’s no doubt that the outsourced service concept is a workable one and can be successfully applied even under tough economic conditions. Negotiations with suppliers did result in costs being cut by 40%. For this approach to generate such success, it is important that the specific requirements for each location be fully and accurately described in the set of governing specifications at the outset. Also required is close, constructive cooperation of all concerned after the service is implemented. 30 Europe Project IPS Global NPM Network (GNN) IT Project Connecting Buyers (back row, from left): Mr. Maisenbacher, Mr. Endo, Mr. Ochi, Frau Vermelin, Ms. Kadota, Ms. Shimada, Ms. Ishikawa, Mr. Sato, Mr. Kawase, Mr. Kato; (front row, from left) Ms. Fujimoto (interpeter), Mr. Toyoda, Mr. Nishizaki, Mr. Ishii. A Complete Success For Suppliers and DaimlerCrysler The close information Connecting Buyers IPS and Fuso In a joint effort, DaimlerChrysler AG and Mitsubishi Fuso Truck & Bus Corporation (MFTBC) have laid the groundwork for greater integration of their purchasing activities. To achieve this, International Procurement Services (IPS) and Purchasing at MFTBC worked closely together to examine the existing purchasing processes and reconfigure them as necessary. In addition, they examined the current contract documents covering IT services and renegotiated them where appropriate. In recent joint workshops the benefits of the global framework agreement at IPS were compared with the local terms and conditions in force at MFTBC to optimize a new approach. Frédérique Vermelin, the team leader at IPS in charge of the IT framework agreement, sees this success story as yet another important step in the expansion of the Global NPM Network (GNN), the globally integrated purchasing organization for non-production material. Since the consolidation of MFTBC into the * See also Global Supplier, 2nd Quarter 2004, pp. 4 -7, “Connecting Buyers” – IPS Opens Horizons DaimlerChrysler Group, the close cooperation within GP&S has been progressing quickly. For non-production materials and services, the GNN offers the ideal platform for global cooperation. Specifically, this involves sharing experiences and market knowledge, harmonizing processes and, most importantly, rapidly achieving measurable results. At the suggestion of the MFTBC purchasing department, during a period of over one week in November 2004, MFTBC and IPS entered into joint renegotiations with suppliers. These discussions not only led to greater understanding of regionally specific workflows and processes, but they also resulted in agreement on specific joint measures, steps and procedures. exchange on the performance of individual suppliers opened up opportunities for already existing DaimlerChrysler suppliers to expand their business on a global basis and also start serving MFTBC and other GNN locations. At the same time, IPS will gain direct access to information on the experiences (strength/weakness profiles) that MFTBC has had in dealing with its supply partners. All in all, Frédérique Vermelin and Kenta Nishizak, the purchasing representative from MFTBC, viewed the project as a com- plete success in many respects. They both agree that “the outstanding and dedicated cooperation between the buyers at IPS and Mitsubishi Fuso has initiated a productive exchange of our purchasing processes, negotiating methods and purchasing tools. We will certainly be continuing this information exchange together in the future.” Three Areas of Negotiation Working closely together with a global perspective, the IT and Purchasing areas at MFTBC and DC were able to prepare, plan, and make specific supplier-related decisions for MFTBC. The following were areas of concern: 1. CAD engineering services 2. Active network components (routers, switches, etc) 3. IT consulting services Other Success Factors Beyond this, other factors contributing to the success of this important milestone toward the expansion of closer working relationships within the global NPM purchasing organization include solid preparation, whole-hearted support of management in all related areas, openness for cooperation, motivation to work together and mutual respect for cultural differences. Europe News 31 MCG ‘Supplier Management Manual’ online Jump Right In! This February, an indispensable resource for all suppliers to the Mercedes Car Group (MCG) went online: the new ‘Supplier Management Manual’ is now available at the DaimlerChrysler Supplier Portal. This manual provides thorough, comprehensive and continuously updated information on the quality standards and various processes in place at MCG. Take the time to get to know the new format for yourself. You’ll be glad you did. Knowing the requirements for products and processes at MCG is an absolute “must” for those who are actively involved in developing products and enhancing their reliability. The information clearly applies to our valued suppliers. Suppliers that work with us know that these requirements are being further developed and modified as necessary. Until recently, these revisions were communicated via brochures or CD-ROMs. With past methods, it wasn’t always easy to get the latest information and keep track of the “big picture.” Now, with this online manual, these limitations are a thing of the past. and product reliability. Now, with ready access to the same information, everyone will find it easy to be “on the same page.” The result of this multifaceted effort is a web-based manual that is an outstanding resource and guide in all phases of product development and reliability. As such, it is truly an indispensable tool in coordinating collaboration between MCG and its suppliers. Always Up-To-Date In addition to being user-friendly, the online manual consistently presents and describes both content and areas of responsibility. In particular, it An Outstanding Authoritative Refeatures a dialog function (available at Liesource A cross-functional team made up [email protected]) of experts from the Quality, Procurement, through which users can submit their quesLogistics and Development put this manual tions to a central contact person. Users will together and will continuously expand it as either get a direct response or be referred to necessary. The objective is to provide both another point of contact within the departour employees and our suppliers with a ment concerned. transparent, coherent and authoritative Numerous links allow users to simply click resource on the quality-related methods and to access further and more in-depth informaprocesses critical to product development tion. Users can also be sure that the information presented in the online manual is con- The user-friendly online manual consistently presents and describes both content and areas of responsibility; it also features a helpful dialog function. tinuously checked and updated so that they will always have the latest, most reliable information. Available Online Since February No doubt you’ll want to take a look at this manual right away. It’s easy to do. Since February, this manual has been available “24 -7” in a restricted-access section of the DaimlerChrysler supplier portal. MCG suppliers can access the web-based manual in the Internet at http://daimlerchrysler.covisint.com. If you are a supplier that is not yet registered with the supplier portal, you can register online with your supplier number at this same location. So, go ahead and jump right in! You’re going to like what you see. Together in Success Global Supplier An Extended Enterprise® Magazine for DaimlerChrysler suppliers and associates 1st Edition 2005, No. 21 1st Edition 2005 GlobalSupplier An Extended Enterprise® Magazine for DaimlerChrysler suppliers and associates Published by DaimlerChrysler Responsible for Content: Claudia Dautermann, OSB/COM, Hauspostcode G 356, DaimlerChrysler, 71059 Sindelfingen, Germany Phone +49 (70 31) 90-8 87 04, Fax +49 (70 31) 90-4 51 06 [email protected] Your contacts around the world South Africa: DaimlerChrysler South Africa (Pty) Ltd., Anna Ahlschlager, PO Box 671, East London 5201, South Africa Phone +27 (43) 7 06-28 84, Fax +27 (43) 7 06-26 11, [email protected] U.S.A.: DaimlerChrysler Corporation, Tammy Van Den Brouck, OSB/COM CIMS 484-06-15, Auburn Hills MI USA, 48326-2527, Phone +1 (248) 5 76-32 59, Fax +1 (248) 5 76-21 93, [email protected] Big Saver It’s one of DaimlerChrysler’s major objectives: to generate synergies throughout the Group. This strategy got off to an auspicious start in 2001 with the NAG 1 global transmission project – jointly pursued by the Chrysler Group and the Mercedes Car Group. To read about the accomplishments of this pioneering effort in shaping transatlantic collaboration, see pages 4 to 7. Global Supplier is published on a regular basis and is available free of charge. You can subscribe to it through the DaimlerChrysler Supplier Portal. To subscribe, go to http://daimlerchrysler.covisint.com. At the bottom of the page, go to the “Global Supplier Magazine” section and click “To the online subscription”. Brazil: DaimlerChrysler do Brasil Ltda., Magdalena Thaler Cuevas, Av. Alfred Jurzykowski, 562, Cep. 09680-900, São Bernardo do Campo – SP, Pool-ID InteracaoPremio@WK-AMERICA2 Editor: Hans-Jürgen Mülln Editorial direction: Christiane Morys Layout: Désirée von Seld (Art Direction) Editorial office and design: CD Communication GmbH, Hanauer Landstraße 135-137, 60314 Frankfurt am Main, www.cdcommunication.de Editorial staff: Thomas Bürsner, Claudia Dautermann, Michaela Eberle, Andrea Geyer, Ursula Grösser, Alexander Horn, Sabine Jarzina, Simone Kloppenburg, Ulrich Kugler, Tina Lösch, Andrew Ogawa, Julie Rogier, Silke Rommel, Monica Schmickler, Joachim Setzer, Tammy Van Den Brouck Photo credits: DaimlerChrysler, Studio für professionelle Fotografie K. D. Busch (Stuttgart) Printing: Reichert GmbH, Druck + Kommunikation, 70806 Kornwestheim
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