Here is installment #4 of the Jim Womack Q&A, where we discuss the car buying process, the teaching (or lack thereof) of lean principles in our universities, supplier relationships, and some of the blog reader Q&A.
Part 1 Part 2 Part 3 Part 4 Part 5
Q: In the book, Lean Solutions, you argue that companies should allow you to communicate your planned big-ticket purchases, such as automobiles, and getting a discount for sharing that information. It makes a lot of sense given how these purchases aren’t snap decisions and it would allow the manufacturer to better plan their supply chain. But, much conventional wisdom and habit stands in the way. Do you think Toyota would be the first to move in this direction? Or will startups like ZipCar (which allow you to pay for use of a car, almost a time-share model) innovate new sales methods or customer relationship models?
Toyota’s biggest failure in the past fifty years has been its inability to apply process thinking to the independently owned sales and service network. In Japan, where Toyota has an equity share in its dealers, Toyota has for decades utilized a totally different and process-focused approach to sales and service including extensive planning ahead with customers about the timing and specifics of their next purchase. American and practically all other car dealers, by contrast, have been hunters rather than farmers, looking for the quick deal from inventory rather than a continuing customer relationship with sharing of plans.
Toyota has recently said that it will now make a major effort to apply process thinking to dealer networks, probably beginning in Europe, and all of us who buy cars should wish them every success. We are making a major effort in this book to show how a totally different system of sales and service would work and we hope that a few dealers and then a lot will drink the Cool-aid.
Q: Do you think schools, in particular Industrial Engineering, Mechanical Engineering, or MBA programs are teaching enough about lean thinking and lean principles?
No. Period. We recently came across a new industrial engineering text from a major American publisher titled something like “Principles of Lean Engineering” in which the first chapter was about….Economic Order Quantity! It got Jim so mad that he decided it was time to bring together all of the right-minded engineering faculty along with operations faculty from business schools to create the just-formed Lean Education Academic Network (LEAN). The idea is for right-minded faculty to share all of the existing teaching materials and then devise the kind of textbooks and teaching materials that should have been universally used years ago. Professor Peter Ward at Ohio State has stepped forward to lead this effort and all lean thinkers should stay tuned for details.
This said, it’s important to realize that most lean learning is gemba learning. Toyota doesn’t expect kids entering the company to know anything about lean, just how to read, write, and do math. They take it from there by teaching the kids to see and then giving them increasingly challenging process analysis and improvement exercises throughout their careers. So there is a lot of education to be done running far beyond the university world. But universities simply must quit teaching worst practice.
Q: Ford recently announced a plan to move toward longer-term cooperative relationships with fewer suppliers rather than forcing year-upon-year cost reductions and frequently switching suppliers. Haven’t we heard this before? Do you think Ford, GM, and Chrysler can really stick with the Toyota-type model or will the supplier relations pendulum continue to swing between cooperating and beatings?
Toyota makes its supplier management brilliant by working collaboratively with suppliers to analyze and improve every development and production process. (Every day working for Toyota is hard, hard work. But as the years roll by the long term gets better and better.) If the Detroit-based firms can’t figure out how to do that and to target price on the understanding that both the customer and the supplier have to make an adequate return, it will make no difference or many or few suppliers they have, how long contracts are for, or how nice they set out to be with their suppliers. Life for both parties will be brutish an short.
(From an anonymous blog reader)
Q: What happens after US companies implement Lean and 6 Sigma to the nth degree and the only wastes left to cut out in our continuous improvement efforts are so small they are barely justified? Where do we go from that point? And if we are all on the same playing field, equalized by Lean, how will companies gain competitive advantage?
Good grief. If you think you have reached the point of diminishing returns in process improvement you need to resign and go into another profession. Toyota has been taking cost out of every process while putting quality and flexibility in for more than fifty years and still finds that there is more to be done. As for competitive advantage: The best form of competitive advantage is always to improve faster than everyone else.
(From Bill H., Utah)
Q: Lean is well under way at some Military bases. Do you see “Lean Government” catching on? How would an entity as large as the government implement Lean?
We get calls and e-mails about lean initiatives from across government and at all levels all the time. And we think there is an enormous opportunity. But it’s important to be realistic: A lot of processes that governments administer are screwed up because powerful interests want them screwed up. The Internal Revenue code isn’t nearly im possible to understand and administer for no reason! A lot smart lawyers make sure it’s that way. And lot’s of us benefit everyday in the form of taxes not paid because the government can’t hope to audit very many tax returns when they are so complicated! Another example from today’s news: Lean thinkers shouldn’t count on a fast, efficient and consistent process for picking Supreme Court justices any time soon! It’s all politics all the time and everyone tries to monkey with the process to get the outcome they seek.
However, a large fraction of what governments do is routine administration and service provision: Issuing building permits and fixing the roads. These processes start with a high degree of consensus about value and are a great opportunity for lean thinkers. Today’s example: LEI is moving to a new office and Jim just discovered that it takes a month in Cambridge, MA, to process a building permit, in a situation where LEI only needs to replace carpets, ceilings, and a few walls in a well-managed building with an excellent set of “as is” plans and many previous inspections. Huh? Do we detect a defective process?
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