Supply Chain Digest editorial staff

James Womack, currently president of the Lean Enterprise Institute and author of several books, including “The Machine that Changed the World,” about the Toyota production system, wrote a great piece in the Wall Street Journal this week summarizing his views of how the U.S. auto industry (GM and Ford) has lost its way. While supply chain management issues are only one piece of the ills that Womack cites, his observations seem spot on.

• GM and Ford can’t design vehicles Americans want to pay “Toyota” money for: Why? It is because Toyota has a fundamentally better engineering system, one that “tries out many approaches to every problem, and then gets the winning concept to the customer quickly with low engineering cost, low manufacturing cost, and near-perfect quality,” Womack writes.

•  GM and Ford are clueless how to work with suppliers: U.S auto companies vacillate between crushing suppliers with never ending lower price demands (to the point where there are not any profits left for the supplier base), and a form of “collaboration” that feels good but doesn’t seem to really deliver the results. Toyota, meanwhile, “is getting brilliant results and lower prices from American suppliers like Delphi while also giving suppliers adequate profit margins. How? By relentlessly analyzing every step in their shared design and production process to take out the waste and put in quality.”

• GM and Ford have miasmic management cultures: The bureaucratic organizations of Ford and GM turn competent people into “Dilberts.” Toyota, meanwhile, more clearly and simply assigns responsibility, engages their employees more significantly in the process, and in the end does more with less.

•  GM and Ford cling to their wide range of brands: GM has at least seven brands and Ford has eight. An auto company should have only three brands at most, Womack says: an edgy, “what’s new” brand, the flagship, and a high end brand. The most successful car companies have only two or three brands.

• GM and Ford treat customers as strangers in a one-time transaction: Toyota has done a great job at “high touch” with its Lexus brand, and is taking its process improvement methods to the dealership.

GM and Ford factories are now good enough to compete on productivity and quality, though as we’ve noted in SCDigest (see other article links below). However, many of the gains there can’t be driven to the bottom line, due to “job banks” and other labor restrictions. Yes, healthcare costs and pensions are huge issues, Womack writes, but the unions won’t on these issues now because they have little faith in management.

“There is no mystery about the lean business model,” Womack concludes. “All of the elements are operating in this country every day at Toyota and at many other American companies in a range of industries. What is mysterious is why GM and Ford can’t embrace it.”

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Why can’t the U.S. automakers embrace the obviously successful Toyota model? What would you add or change to Womack’s take? Let us know your thoughts at the Feedback button below.

Keyword: auto industry, manufacturing, Lean, collaboration, supplier integration, product development

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