Time for GM and Ford to Heed Jim Womack’s Advice
November 13th, 2008 by HalTwo years ago Jim Womack wrote an open letter to the executives, employees, suppliers and investors of GM and Ford. I was so moved by the letter I reprinted it in whole. The US Federal Government is considering a bailout of these two auto makers. Some people are in fierce disagreement with that action preferring to see market forces determine winners and losers. Others are concerned for the millions of people who depend on their livelihood from the auto makers and their supply chains. The impact to the economy may be so dire that there may be no alternative to a bailout. I'll stay out of that argument.
Let's make the investment payoff.
If a bailout occurs, then it must come with conditions. The better business system has been winning in the marketplace. It's time to shift business systems…to adopt a lean way of managing the firms, not just lean production techniques. Womack says GM and Ford must make these changes:
- Rewrite the social contract.
- Introduce all of the elements of lean enterprise.
- a product development process,
- a supplier management process,
- a customer management process,
- an overarching enterprise management process, and
- a production process from order to fulfillment.
- Simplify market offerings.
Womack describes the sources of GM and Ford's woes along with his prescription for dealing with them. Let's make the investment payoff. Have a read: A Tale of Two Business Systems
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November 13th, 2008 at 10:28 pm
Here is an article my father wrote in 1986 about the foolishness of bailing out AMC: “American Motors is an old, weak fish with bad eyesight in a turbulent sea populated with aggressive, healthy predators. These predators are familiar - both foreign (Japanese and European) and domestic (General Motors and Ford). Some are new, unfamiliar breeds from such places as Korea. I predict American Motors will stop making cars in Wisconsin in the near future, whether or not the state’s money is used for a temporary propping-up operation.”
Times have changed and GM has squandered their position. They had plenty of notice 3 decades ago but they failed to adopt the practices of Toyota and Deming.
November 14th, 2008 at 6:22 am
Hal: Even the lean automakers with operations in the US are sweating GM and Ford’s troubles. Toyota uses the same suppliers and has depended upon GM and Ford to provide enough demand to keep those suppliers (and the suppliers of the suppliers) viable. Toyota’s US volume can’t do that alone.
Rather than just being in fierce competition with each other, there’s an intricate and delicate social network within this industry, and I suspect within every industry. This community is not, as the invisible hand would have it, out to do their competitors in, but to forge space within a cooperative network without overtly colluding, which would be illegal.
Should GM and Ford fold, expect to see the Toyotas head back to Japan. Their supplier management model relies upon GM and Ford also managing their suppliers and the rest of their business well. Seems no company is an island, either.