Chrysler matches Toyota in a Single Skew-able Metric - Who Cares?

Chrysler matches Toyota in efficiency - Detroit News

I didn't mean for this to become "beat up on the Detroit Three" week... this comes in waves. If you don't like these posts, my short-term focus on the auto industry will probably subside for a few months again.

Chrysler is crowing about efficiency gains -- matching Toyota. That may be true if you're looking at a single narrow metric -- direct labor hours per vehicle. This metric isn't a proxy for a company's overall financial performance, as the long-term profit and outlook gap between Chrysler and Toyota is huge.

Hours per vehicle (or hour per anything) is easily skewed. You can add automation (which might cost more) or you can outsource work to vendors, so it doesn't count. Don't get me wrong, efficiency is important, but it's not worth fixating on any single metric. You can improve hours per vehicle in positive ways -- by designing the cars so they can be built easier or through shopfloor "kaizen" efforts.

Chrysler LLC tied Toyota Motor Corp. as the most efficient automaker in North America, while General Motors Corp. and Ford Motor Co. joined in virtually erasing the productivity gap between Detroit's Big Three automakers and their Asian rivals, according to the 2008 Harbour Report North America.

Matching Toyota's vaunted manufacturing efficiency stands in paradox to another report released this week showing Chrysler lagged the industry for initial quality -- even as Ford and GM made progress in that regard against Japanese companies.

That's why I would give the labor productivity news a big "Who Cares?" as a response. If Chrysler was doing so well with Lean (or the Chrysler Operating System), quality AND productivity would be improving together.

Chrysler says it's already rolled out quality-improvement initiatives so it can match its productivity gains. All three Detroit automakers are challenged to produce their vehicles in North America profitably -- something none achieved in 2007.

The fact that Chrysler focused on productivity and THEN rolled out quality initiatives... that seems like a bad sign. When I was at GM, circa 1996, we had a new NUMMI-trained plant manager. Our factory was at the bottom of the barrel, among powertrain parts makers, of productivity AND quality.

As a somewhat naive engineer, I asked the plant manager in a group meeting, "Which are we going to be focusing on first, quality or productivity??"

He answered in a very patient manner, "You can't separate the two. We'll be improving quality AND productivity. They go hand in hand. Safety, Quality, Delivery, Cost, you improve them all with these [Lean] methods."

I put "Lean" in brackets since that was a dirty word in GM at the time. We had to call it "competitive manufacturing" and we certainly couldn't call it TPS.

It's a shame Chrysler wasn't simultaneously catching up to Toyota's quality levels while they made isolated productivity gains.

I also want to point out what Kevin Meyer wrote on this topic.

Subscribe via RSS | Lean Blog Main Page | Podcast | Message Board