Quality News

By JAMES P. WOMACK
The latest bad news is now in from GM and Ford: 60,000 U.S. and Canadian jobs will go in the next few years, 24 giant factories will close, and North American losses in the billions will continue. Clearly MoTown needs a new approach and it’s natural in the car industry to think that the secret must be a killer model — a Toyota Prius hybrid or some other concept to replace the big pickups and SUVs that floated the American firms for 15 years.



Actually, it’s not a new car model that’s needed. It’s a new business model. Toyota is leading the charge against Detroit — largely from inside the U.S. — with a fundamentally different approach to business that my MIT research team in the 1990s labeled “lean” enterprise. Compared with these Toyota practices, GM and Ford’s approach has five fatal weaknesses:
[Prius: Not built by Dilberts.]

Prius: Not built by Dilberts.

* GM and Ford can’t design vehicles that Americans want to pay “Toyota money” for. And this is not a matter of bad bets on product concepts or dumb engineers. It’s a matter of Toyota’s better engineering system, using simple concepts like chief engineers with real responsibility for products, concurrent and simultaneous engineering practices, and sophisticated knowledge capture methods. The Prius is not the result of a hunch or luck but rather the likely result of a development system that tries out many approaches to every problem, then gets the winning concept to the customer very quickly with low engineering cost, low manufacturing cost, and near perfect quality. (That’s not to say that Toyota can’t produce a dud — the first-generation Previa minivan and Tundra pickup stand out — but the likelihood of producing winners is higher than with traditional development systems.)



* GM and Ford are clueless as to how to work with their suppliers. Sometimes they try to crush their bones — which only works when the suppliers have any profits to squeeze, and few currently do. Then they embrace contentless cooperation that makes everyone feel better briefly but fails to produce lower costs, higher quality, or new and better technology. Toyota, by contrast, 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 the quality.

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