Customers First

Below is a link to Knowledge at Wharton article. Yes, it’s one more about the current plight of the US auto industry, but I found it to have an interesting tie to previous discussions in this forum around Lean Consumption.

Car Trouble: Should We Recall the U.S. Auto Industry?
(You may need to register with Wharton to gain access to the article, but it is free)

The article points to the fact that the quality gap between US and Asian manufacturers is largely closed, and is not likely to be a determining factor for consumers in the near future. The problem instead will be that Detroit does not make customers their top priority by staying with tired models in the hope that people will buy them.

There are some exceptions to North American products, but these are based on producing a few ‘hit cars’ rather than orchestrating a fundamental long term approach to build stronger companies. This short term focus is held up to do nothing more than provide minimal relief and distract automakers from dealing with other issues.

Then comes the tie in to Lean Consumption. The article proposes that differentiation will be at the dealer level, where customers interact with their purchase. Here’s a direct quote from the article, including reference to a book published just last month:

“Another researcher at IMVP, Matthias Holweg, a lecturer at the Judge Institute of Management at the University of Cambridge in England, believes that U.S. automakers can learn a lot from European companies. He says the automakers that will come out on top in the industry’s second century will not be those that opt for larger and larger scale (an approach that Wagoner has said GM must pursue) or achieve efficiencies on production lines. In a book titled, The Second Century: Reconnecting Customer and Value Chain through Build-to-Order, Holweg and co-author Frits K. Pil of the Katz Graduate School of Business at the University of Pittsburgh argue instead that manufacturers will lose ground unless they design and build vehicles as if customers really mattered. In their view, that means building cars to order, as European companies often do. “

I’ve added this title to my reading list. I’ll plan on posting some comments once I get through it. It would be interesting to directly compare theories with Womack & Jones…

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Luke Van Dongen

Luke, an auto industry engineering veteran, blogged here from 2005 to 2006.

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