VANCE, Alabama, USA - Back in 1999, when Mercedes-Benz's new US-made M class scored near the bottom of its segment on J.D. Power and Associates' Initial Quality Study, Bill Taylor went to war.
As CEO of the US manufacturing subsidiary, Mercedes-Benz US International, Taylor marshaled his plant managers to root out problems and step up worker training. He implemented quality assurance plans and oversaw changes in various components that had bugged some customers.
Taylor's strategy seemed to be working. The M class finished second in its category in J.D. Power's 2004 rankings, just behind the Lexus RX330. It had 96 problems per 100 vehicles.
The momentum didn't last. In the most recent study, the M class fell in rank - Mercedes wouldn't say how many positions - to finish with 136 problems per 100 vehicles, well below the industry average of 118. Again, the RX330 finished first in its category.
Today, Taylor is facing his toughest challenge yet. In April, Mercedes-Benz launched the 2006 M class in the US as a unibody SUV instead of a rugged truck. Sales of the car started in western Europe this month.
Taylor and his team now must not only regain their lost standing but do so with a new vehicle architecture built with radically changed plant technology.
"This is what you have to do now to stay fresh," observes market researcher Dave Power, founder of J.D. Power. "There's a lot of competition in the SUV market, and it's going to take some very significant investments for companies to stay competitive."
Taylor and his team are putting the focus on where quality is often the most elusive: out in the supply chain.
Supplier issues loom larger for the M class than other vehicles. On the model that ended late last year, suppliers were responsible for 83 percent of its content value. The new model requires more automated welding inside the Mercedes plant. But suppliers are still responsible for 74 percent of the value.
"In an operation like ours, the suppliers will make you or break you," Taylor says. "We had to make sure we were all moving toward the same targets."
In the two years before the launch of the second-generation M class, Taylor spent more than half of his own time inside supplier plants. He parceled out suppliers among his top managers, including finance and human resource executives. There were weekly reviews of plans, procedures, timetables and results at parts plants in North America and Europe.
The campaign began on paper. Instead of simply combing through factories looking for improvements, the Mercedes team asked suppliers to outline their plans for quality improvements in detail. Taylor requested from each supplier a multiyear business plan that quantified how the supplier intended to meet Mercedes' doubling of vehicle production. Also, the supplier had to tell what new investments were necessary, what worker training would be required, how it would prepare for the launch and how it would run the operation after launch.
For the larger partsmakers, Taylor met with both the supplier's plant manager responsible for the Mercedes program as well as that manager's boss. Those meetings also were spent going over multiyear business plans. In some cases, he says, the plans were sent back for revisions several times.
"We asked them how they were going to grade their performance," Taylor says. "And the important thing for us was making sure they graded it on the same criteria we used. We wanted them to focus on specific issues of the operations, not just issues of their own choosing.
"In the end, we want to be able to measure what we're all doing. And to do that, we all need to be able to look at the same points and data."
Material tracking was one area of concern. The redesigned M class, as well as the R-class sport wagon that will be built next to it in Vance later this year, are much more complex vehicles than the previous M class.
The vehicles have content that didn't appear in the previous generation, including center consoles, grab handles, integrated trailer hitches and electronic transmission systems. And they also come with more trim variations than the original model.
This new complexity is apparent at the Delphi Corp. plant in Cottondale, Alabama, just down the road from the Mercedes assembly line. Delphi held the contract to supply the original M class with a complete cockpit. It was made from components shipped from 60 suppliers.
That original contract had Delphi delivering three different cockpits to Mercedes. By the end of this year, the new program will have Delphi producing 15 cockpit variations. The grab handles that are part of the cockpit by themselves come in 20 variations.
To keep it all straight, Delphi installed a plantwide system designed to eliminate mistakes.
As Delphi assembly workers reach into multitiered racks of parts that contain numerous part variations, they are guided by small lights that indicate which one is correct. An invisible electronic barrier falls over all of the wrong parts; reach into the wrong bin, and an alarm sounds. Until the correct part is in place, the cockpit won't move to the next station.
Delphi plant manager Brian Donato says the system is an outgrowth of Mercedes' push for tighter quality control that began with the new program.
Like other customers, Mercedes also has pressed for cost controls, he says.
"But the biggest push is the quality question," he says. "The message always comes with a quality overtone."
Another concern was welding and trim precision. That required the supply chain, including Mercedes itself, to invest in automation. Not far from the Delphi plant, Johnson Controls Inc. produces seats and headliners for the new Mercedes models. Johnson Controls automated its manual parts-tracking system for the program. It also automated the job of gluing together and forming the materials that make up the headliner.
For the first time, the vehicle design requires carpeting on some interior panels. Johnson Controls relies on an automated process to marry those subcomponents.
"Mercedes set new quality targets for us," says Larry White, general manager for the Mercedes-Benz business unit. "There's a higher focus on structure and teamwork."
Internally, Mercedes invested heavily in automated body welding. According to Taylor, the new body technology is capable of tighter tolerances than Mercedes could achieve in the past. The transition meant a tenfold increase in the number of plant robots for the new models, from about 80 before to more than 800 now.
One of the Vance plant's newest suppliers is Germany's Brose Group, which supplies integrated window regulator and door latch modules. Sixteen of Brose's 37 plants worldwide support Mercedes operations, and the company has been a Mercedes supplier for 75 years, according to Hans Weingarten, head of Mercedes-Benz worldwide production and Taylor's boss.
But the Brose plant had just barely started production when Taylor and Weingarten visited it last month.
Mercedes worked closely with Brose over the past two years to make sure the supplier would be up to par. Part of that assurance came from automation - a cluster of robots apply sealing to panels as they move through assembly.
Brose's new module design also helped. Like other suppliers, Brose was asked to participate in the early stages of the M-class design. The resulting multipart door module features a wet side and a dry side.
The wet side faces out. If water seeps inside the door, it won't cause the window electronics protected on the dry side to malfunction.
"We know you're going to be one of our strongest partners," Taylor told Brose managers, who had gathered in the manufacturing area for a reception. "Maybe you can help others."
|The expansion of Mercedes' US plant required a wave of new supplier investment around Vance, Alabama. Here's what some companies spent to set up their operations in the southeast US state.|
|ATS Wheels USA||Aluminum alloy wheels||$98 million (E80.6 million)|
|Benteler Automotive Corp.||Chassis systems||$20 million|
|Brose Group/Vance||Door and latch modules||$13 million|
|CRH North America Inc.||Seat adjuster systems||$28 million|
|Delphi Corp.-Safety & Interior Systems||Interior parts||$85 million|
|Gestamp North America||Sheet metal stampings, underbody assemblies||$200 million|
|ISE Innomotive Systems US||Front, rear modules||$34 million|
|Johnson Controls||Seats, headliners, interior panels||$26.3 million|
|Marubeni Metal Blanking||Sheet metal blanks||$11.5 million|
|Plastech Engineered Products||Injection-molded parts||$40 million|
|Recticel North America||Interior panels||$24 million|
|Source: Economic Development Partnership of Alabama|