Manufacturing Basics and
Hi MBBP Subscribers,
This week's article was written by Jim Womack, Chairman and CEO of Lean Enterprise Institute. It's entitled, "The Lean Way Forward at Ford (Part 2 of 2)." It was written in 2006 and its of interest because the answers to Jim's questions have now been answered. If you missed Part 1 of 2, it's still available at:
Have a nice day, and stay connected.
P.S. Don't miss November's Very Special MBBP Subscribers offer at the bottom of the article. It is relative to my new training product, The Lean Manufacturing Training Toolbox.
Business Basics, LLC
Business Basics, LLC
The Lean Way Forward at Ford (Part 2 of 2)
What a different system it was! Henry Ford had managed by going to the gemba to inspect the value creation process. General Motors executives managed by analyzing financial abstractions. For example, asset utilization (normalized for sales volume), days of inventory, cost of scrap, etc. in the factory. Available engineering hours utilized in product design. Managers were then rewarded for making numerical targets using methods developed by staff experts that managers rarely understood. A good way to make many of these numbers was to make products in large batches in order to achieve high asset utilization and low cost per individual step. The total value creation process from end to end -- which had been so clear to Henry Ford -- was gradually lost from view.
Soon Ford executives using the financial measures developed by finance czar J. Edward Lundy were even more rigorous in analyzing the performance of their area of control than GM executives. Robert McNamara and the Whiz Kids were the exemplars. And Ford did regain competitiveness as a GM clone, claiming a stable second place in the auto industry.
addition, by the late 1940s Ford was one of three
it suddenly became apparent at that point that the leading Japanese
the late 1980s, as
What we couldn’t report, because we had no way to measure it, was the status of the management system. And this was largely unchanged. Ford managers were still manipulating abstractions because the gemba consciousness of the early Ford Motor Company had been lost. Even worse, in the product development and supplier management processes, no change had occurred at all.
Ford could still be successful in its home market for another 20 years by
developing large pickups and SUVs. These were essentially America-only
vehicles, suited to wide roads and low energy prices. They could only be
1997 I got a call from Jac Nasser, who had just taken over Ford’s North
American Automotive Operations on his way to becoming CEO of Ford. He
matter-of-factly told me that Ford’s Explorer and F100 pickup series
were the only Ford products that made serious money and that he calculated
that he had four years to become as efficient and effective as
We sat down to talk over just what this would mean -- dramatically changing the supplier management system, dramatically changing the product development system, dramatically changing the production management system, dramatically changing what managers do -- and he quickly concluded that it was just too hard. So he changed the management metrics, purged the poorest managers according to the metrics, and experimented with selling cars on the web! I was not asked back and had no desire to go back.
actually survived for five years beyond Nasser’s projected meltdown date
addition, finish rethinking the social contract as Ford becomes a normal
company (not an oligopolist) in a normal town (where labor doesn’t come
from one supplier) that must live in a global market. Finally, rethink
brand strategy to get rid of hopeless makes that can never make money –
Who knows whether this is doable in the time still available but it is the lean way forward. It will be tragic if the originator of lean thinking is crushed in the end by failing to learn lean lessons from its most earnest pupil.
How is Ford doing today?
In October 2010, Ford Motor Company may report the biggest third-quarter profit in its 107 year history as CEO Alan Mulally's overhaul of the model lineup and focus on the Ford brand boosts the company's share of the U.S. auto market.
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