Lean Manufacturing

Chrysler’s (Lean?) Six Sigma Future

By Jon Miller Published on August 5th, 2007

The Chrysler Corporation has a new CEO, Bob Nardelli. Nardelli Picked to Run Chrysler in Industry Shift, the August 6th, Wall Street Journal reports. Mr. Nardelli was most recently in the news for bringing a controversial combativeness and military style of management and aspects of GE Way, including Six Sigma, to running Home Depot.
In one famous episode during a shareholder meeting in 2006 he held the question period to 30 minutes by keeping shareholder comments to 1 minute each. Mr. Nardelli got some heat for this. If he had known to call it “takt time” he might have gotten kudos instead, like a Detroit News reporter gave Toyota for limiting talk time at a public relations event.
The WSJ article draws comparisons between automotive industry outsider-CEOs Alan Mulally (from Boeing to Ford) and now Bob Nardelli (from GE via Home Depot to Chrysler). From a Lean management standpoint, Alan Mulally wins hands down, and from a Six Sigma standpoint, the call goes to Nardelli.
The article points out that Bob Nardelli will be freer from public criticism via shareholders at Chrysler, since it is now a private company, unlike Home Depot, Ford, or GM. Cerberus Capital, a private equity firm, purchased Chrysler from Daimler earlier this year. Cerberus, from Greek mythology, is the three-headed hound from hell who kept the dead from leaving the underworld. The investment philosophy of Cerebrus Capital sounds a bit more benign than their name would indicate:
At Cerberus, we have a long-term investment horizon and focus on value creation. We invest in undervalued companies and their people, and help them to realize their potential.
We partner with our portfolio companies to help them become industry leaders. We believe competition makes the global economy more productive and more efficient, which enables companies to succeed long-term in the globally competitive marketplace.
We encourage our companies to focus on the future through prudent capital investment, R&D, new product marketing, talent development, improved operations and appropriate strategic acquisitions.

How will Chrysler’s corporate culture embrace the Six Sigma culture? How well will Tom LaSorda’s Lean manufacturing push at Chrysler be integrated with Robert Nardelli’s expertise in through Six Sigma? The WSJ article does not speculate, but points out Nardelli’s struggles with Six Sigma at Home Depot:
Mr. Nardelli started upgrading systems, cutting back workers to save money and instituting Six Sigma processes of evaluating store operations. Managers complained that it was too time consuming, that they didn’t have time to supervise staff and help take care of customers.
In defense of Six Sigma, all improvement efforts take time and resources, and if morale is already low it is unlikely that people made the time or saw to it that improvement work could be done as part of the daily work which includes serving customers and supervising staff.
There is also the small matter of the $210 million that Mr. Nardelli received for his work at Home Depot, which some shareholders found objectionable as the company’s performance did not appear to warrant such a large reward. The Wall Street Journal article reports:
Mr. Nardelli’s pay will be tied to Chrysler’s performance and based on the equity value of the auto maker, people familiar with the matter said.
That base appears to be covered. Besides, after taxes Mr. Nardelli is has around $100 million left, which ought to keep him in comfort (if not style) for the rest of his life, provided some frugality is exercised. Therefore, Chrysler CEO Bob Nardelli can think long-term, without answering to short-term financial markets and without concerning himself with his paycheck. Do the right thing Mr. Nardelli, and lead Chrysler back out of the underworld (hounds of hell notwithstanding).

  1. Harold Becklin

    August 7, 2007 - 5:19 am

    Bob Nardelli = Lean Manufacturing = Absolute Elimination of Waste = Customer Focus = Optimum Profits.

  2. JWDT

    August 7, 2007 - 10:18 am

    Bob Nardelli = Jack Welch Protege’ = Short Term Vision which does not equal LEAN Manufacturing.
    Big difference between Mullaly & Nardelli, Mullaly active part of Boeing’s Lean Journey, Nardelli, active promoter of Six Sigma, lack of understanding of LEAN principles. IMHO
    If I was working for Chrysler I would be checking the help want ads.

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