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SCORE: the innovative ’90s Chrysler cost cutting combination (compared with ordinary penny-pinching)
Feb 4, 2025
When Chrysler was firing on all cylinders, this is how they cut costs with suppliers!
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0:02
hi this is Dave here with motals and I'm
0:04
here to talk about score and this is
0:07
unusual for a car video because I'm not
0:10
going to actually talk about an
0:11
individual car I'm going to talk about a
0:14
program which made cars better so chrys
0:17
bought AMC in the80s and almost
0:20
immediately things at chrys began to
0:22
change for the better especially as they
0:24
had franois castang as their new head of
0:27
engineering and one example of how
0:29
things got better from buying AMC was
0:31
score now score stands for supplier cost
0:35
reduction effort
0:38
supposedly obviously this is a pretty
0:40
tortured acronym in the8 years of score
0:44
Chrysler reviewed 12,000 ideas and saved
0:48
nearly $4
0:50
billion $4 billion that's enough to make
0:54
and design a completely new car so let's
0:58
look at the neon project as an example
1:01
and the neon was used an excuse as an
1:04
excuse to move procurement forward and
1:06
modernize it and make it more sensible
1:08
the way that Chrysler had been doing
1:10
procurement was basically with the cost
1:13
cutting model lowest bid you get the
1:16
business now with the neon they had a
1:18
very limited budget so one of the things
1:20
that they did was they cut down the
1:22
number of suppliers in half or less and
1:25
they said to these suppliers we're going
1:27
to trust you more and we're going to
1:29
bring you in more and we expect to get
1:30
better results this way so they stopped
1:34
using the low bidder system in terms of
1:36
parts costs and they started to try to
1:38
work with people who could save them
1:40
money and time on development and do a
1:42
better job and make a better car so they
1:45
were taking a more systems approach and
1:47
a more long-term approach this was not
1:50
of course unique to Chrysler and this is
1:53
the way that Toyota operated then and
1:55
now for the most part this is normal for
1:57
Toyota for Chrysler it was a big deal
2:00
and uh it saved them a lot of money even
2:03
though they stopped taking the lowest
2:05
bid for parts so they chose major
2:08
suppliers even before the neon was
2:10
greenlighted before management said okay
2:12
you can make this completely new compact
2:15
car and even though we've been losing
2:17
money on every compact car that we make
2:19
we'll take your word for it that we'll
2:20
make a couple thousand on every one of
2:22
these that you make now one of the
2:24
things that they did is what I tell my
2:26
students is called Contracting they
2:28
signed agreements for part and component
2:31
and system weight cost design needs and
2:34
so on so that there would be mutual
2:37
understanding so there would be a
2:38
demonstrated Mutual suppliers were
2:40
included in the development teams they
2:43
uh the suppliers also helped us set up
2:45
Chrysler's Own Parts plants so one
2:48
example that came through one idea that
2:50
saved money was having the same
2:52
installation method for fixed seats as
2:55
for folding seats uh which incredibly
2:58
saved over a million
3:01
now what happens when a supplier misses
3:03
their target well they sent Chrysler
3:05
Engineers out to work with them and in
3:07
some cases chry will realize that they
3:09
would have to change their targets so
3:11
one example is with the Dodge Dakota
3:13
where they Sav $27 million before
3:16
production started and one example is
3:19
using foam filled trim panel bolsters
3:21
saving $10 per car and 2 lbs of weight
3:25
now they also used existing hooks to
3:27
attach interior panels to the door
3:29
instead of Fasteners and this saved
3:31
$200,000 and removed some visible screws
3:35
so some of these ideas would keep paying
3:37
off and lower parts inventories for
3:39
years afterwards and many cut vehicle
3:42
weight or just made Vehicles better
3:44
there was the example of the second
3:46
generation neon which had traction
3:49
control because the supplier was asked
3:51
Can you had the flexibility to do that
3:54
so Chrysler had a long history of penny
3:57
pinching before the score program
3:59
started and in the long run that penny
4:01
pinching lost them money and it lost
4:03
them customers and it really it often
4:06
increased the warranty costs later on
4:09
and this is something that people within
4:10
Chrysler even back to the 70s had been
4:13
arguing was a bad idea switching to
4:16
trying to cut costs in the long run to
4:19
save money in the long run and to share
4:21
the savings that were brought to them by
4:23
suppliers uh this really saved them a
4:26
great deal of money made them better and
4:28
easier to work with with and resulted in
4:30
better products and of course if a
4:32
supplier really wants to work with a
4:34
company because they think that they'll
4:36
get a fair shake that company will
4:38
probably get their better Engineers
4:40
their better equipment and their better
4:42
thoughts Pennywise pound foolish isn't
4:46
just a cliche it's a reality and
4:48
Chrysler proved that in the 1990s they
4:51
stopped worrying so hard about saving
4:54
pennies and they were able to save real
4:57
dollars while building a better quality
4:59
product
5:00
that customers preferred there are
5:02
definitely lessons there for the future
5:04
and not just for automotive
5:07
companies this is David zatz I am a
5:11
consultant at toolpack Consulting I have
5:13
a PhD and organizational psychology and
5:16
I run the Chrysler oriented site
5:18
motels.com which I encourage you to
5:21
visit but if you are interested and what
5:24
you hear from me you can also go to Tool
5:25
pack.com and learn more about that side
5:30
of my life
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