Posted on 11 Dec 2008 by The Manufacturer

"Why are the car companies failing? If we copy them, aren’t we just copying their vulnerability?" Your responses...

Kevin Bush, Senior HR Manager, Synseal:

“Car manufacturers aren’t failing because of their production methods, it is because they are making a product no-one wants at the moment. The problem of over-supply in automotive has been a long standing issue which is slowly being resolved through mergers and down-scaling production volume. In a sense, car manufacturers are a victim of their own success, able to produce a greater numbers of cars in less time! The lesson is that, by all means, take the benefits of lean manufacturing and exploit them to the full, but make sure you produce something the public wants.”

Steve Chambers, Site Director, Andrew Wireless Solutions:

“I contend that the car companies would have failed long ago if it were not for their adopting continuous improvement philosophies on the shop floor. However, the very best operational tools will not overcome a flawed business strategy. For the past 40 years, (US) auto makers have depended on the sales of their “popular” models for which they are able to charge a premium to cover for their marginal or losing models. That in itself is not unusual but most other businesses continually focus on improving margins across the product lines or put more simply, “stop making what ain’t selling.” The booming economy of the past 20 years has led the automakers to believe that there will always be a market for one of its models and therefore they did not need to prepare for the inevitable downturn in the economy. Granted, no one could have predicted the magnitude of the fallen economy but a prudent business always believes that one day, the cycle will reverse.

Auto makers also rely on an antiquated marketing, branding and a distribution system that requires significant inventory (AKA cash) and have failed to make some tough decisions when it comes to cost control. I think the usefulness of the hometown Buick or Ford dealer has run its course. If the Auto execs took a bit of time to read Thomas L. Friedman’s The World Is Flat: A Brief History of the Twenty-First Century, they may have a chance to consider that we are a society perfectly comfortable ordering a book on or shoes from, why would be not buy our car on BIGCARMAKER.COM; cut out the middleman and his bricks and mortar. I am sure that a service center in a less expensive part of the city with a few examples of new and a fine selection of used cars would provide a significant ROI. Better yet, click on the web site and schedule an appointment for a knowledgeable and trained sales person to bring a test car to your home. Regardless, go for a test drive, sit quietly at a computer in the “showroom” or at home and click on the color and options that you want [including the unnecessary under primer and extended warranty that will be promoted by pop-ups instead of a fast talking salesman or “finance manager”]. A work order is issued at the factory, production occurs that evening and 3 to 5 days later your car is delivered to your home. Wake up Detroit, it is the 21st century!

I think the list goes on and on but I can assure you, the use of continuous improvement tools is not on the list of root causes for the current state of the automotive industry. If they could move their improvements ideas from the shop floor to the front office, the US taxpayer could provide funding for improving our world versus sustaining the status quo.”

Mike Farnworth, Director, Xemptor Consulting Limited:

There is nothing wrong with the processes and practices developed in the car industry and pushed into other industries: setting aside the twin burdens of pensions and healthcare in the US, there are two major problems in the car industry that are creating problems at the moment: chronic over-capacity in the market; and a customer reluctance to buy what is a discretionary product in times of hardship – assuming that those who want to buy can get the finance to do so, and think they will still have a job in six months. The competition in the market is actually the driver of process innovation and productivity improvement which keeps cars as cheap as they are. Indeed, it’s only the manufacturers who are taking initiatives such as Lean seriously – and implementing the principles in full – who will see long-term success.

And Julian’s own response…

Julian Wilson, Director, Matt Black Systems:

Victims of their own success, the market has oversupply?

Avoiding overproduction is one of the basic tenants of Lean!

No better example of the misapplication of Lean.

Hidden in my question is the riddle, “if the tools are so good why have the businesses failed?” What has gone wrong?

Going back to the origins of lean, Taichi Ono had a problem on his shoulders, Quality, delivery, profit and compliance (QDP+C), he explored solutions to those concurrent problems. He came up with Lean, or the TPS.
This was a step change in manufacturing technology, not just an improvement on what went on before.

But what has happened latterly is that the lean tools have become more important than the big problem of QDP and C, its like thinking that the pieces of a jigsaw puzzle are somehow more valuable than the finished puzzle.

The tools are great, but the question is what are they being used to fix?

Taichi Ono had a context and purpose for his tools, their power is in their ability to overcome a problem, to deliver an outcome.

Lean tools work when they are an orchestrated response to a big problem, not when they are used as a “fix all” for any problem- simply because, well, hey, they are great tools.

Taichi Ono developed these tools for his “purpose”, but this has been lost in the success of the tools. Its laughable to suggest that the tools are great but a business is failing.

Yes, there has been a shift in demand volume, in product type demand, in capital availability, in raw material prices, in credit availability etc.

But hey, these are the problems that Taichi Ono had. He developed lean to respond to them. But now, we say these problems are outside lean.

It’s what lean is for, it’s just that the way we have been using Lean is wrong, and we must not copy those errors into the future.

I believe in the West we have over possessed lean; in that journey we have lost its essence.

I contend that the failure of lean to tackle the bigger problem is a failure of lean as we use it. These bigger problems will not be addressed as long as we continue to misuse the lean tool. Copying the misuse is a poor tactic.

Lean tools must be woven into a carefully crafted response to the problems we face, not used because they are the “tools of they day”.

I contend that there is a failure of lean, and that failure is a result of the way the tools are applied. Specifically, it is a failure in the way the problems have been simplified and bounded.

This is still going on, and the failure of the car companies must act as a warning to others who think randomly applying the Lean tools will fix their problems.

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