Is GM Smoking Something?

Industry News: GM To Offer Zero-Percent Financing, Raise Prices, Screen Hummer Buyers

It's very hard to figure out what GM is thinking these days. In the first link above, the Jalopnik blog highlights an inconsistency I also noticed... it's the old laws of supply and demand popping up again. It always amuses me, in a way, that this basic law of microeconomics is even considered a "Lean lesson" because Toyota leaders like Ohno wrote about it. The basic supply and demand laws dictate the prices for just about everything -- unless you are a monopoly provider or a (obscure econ word warning...) "monopsony" buyer (meaning you are the only buyer, or one of a few buyers for an item). There's no board game called Monopsony that I'm aware of.

GM likes to flout the laws of supply and demand, as evidenced in the Japopnik post. GM says they are raising 2009 prices for the typical excuse of "rising material costs" -- the last excuse of a scoundrel. Just because your raw materials and inputs cost more, that might mean NOTHING to your buyers and their valuation of your final product. Just because flour prices have gone up (and they have), that doesn't mean people are willing to pay more for bread and pizza. It's simple supply and demand economics.

So while GM announces they plan to raise prices in 2009 (a "price rise," as they call it here in England -- ah, the small differences), they were also offering ZERO PERCENT financing to buyers recently (basically a price cut). If you're having to cut prices to spur demand, why announce you're raising prices? Because you can? Good luck with that. I'm sure we'll be treated to yet another annual story about how GM no longer plans to rely on incentives and cheap financing to move metal. Let's see what they have to do to artificially prop up the June 2009 numbers (see "robbing Peter to pay Paul.") Pulling ahead sales from future months is such a laughably short-term strategy (and old habit) .... but again, typical GM.

So while GM is bitching about price increases, they're also (guess what) still attempting to squeeze those damn steel suppliers who are (guess what) trying to increase steel prices because of... wait for it... their rising material costs!!! Yes, we are living in bizarro land. The steel suppliers are now exerting THEIR market power for a change. And I bet GM doesn't like how that feels. From a WSJ article on this:

As emerging countries increase their need for steel to build infrastructure, commercial buildings and automobiles in their respective countries, the demand for steel has outstripped supply. That has caused prices to shoot up, most drastically in the past year.

That has left U.S. auto makers, which had long dominated steelmakers during negotiations, in a weak bargaining position. For decades, U.S. auto makers were the steelmakers' most lucrative customers and bullied them into selling them long-term contract steel at discount rates.

When you bully suppliers, they want to come back to bully you when they get the chance. Shouldn't be surprising... you reap what you sow?

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GM to try to Inspect Quality In After Letting Experience Walk Out the Door

GM preps for new hires after buyouts

This is a particularly sad story. We often debate the proper role of layoffs and headcount reductions in the Lean community. It's "conventional wisdom" perhaps in the Lean movement that we should not let efficiency improvements that result from Lean methods lead to layoffs. To do so would undercut the employee participation that is required for Lean (and an organization) to be successful in the long run.

Many consider it to be a different story if the business is shrinking because of a declining market or declining market share - case in point, General Motors. At a high level, GM's leadership has a responsibility to prevent decline -- through product design, marketing, and general management of the whole enterprise. Toyota claims to have not laid off employees in 50 years. This is partly due to continually being in a growth mode rather than constantly shrinking.

This most recent article about GM paints a different picture. GM is not just shrinking the workforce. They are throwing out older, more expensive workers to be replaced by newer, less expensive ones. This is not "Lean." This is not in keeping with the "respect for people" principle of the Toyota Production System.

Some 19,000 GM hourly employees are leaving as part of the labor deal GM negotiated with the United Auto Workers last year that allows the company to replace departing workers with lower-paid new hires. Most are slated to leave July 1.

That's 19,000 individuals with skills, knowledge, and experience. If GM views them merely as a back and a set of hands, then shame on GM. They might defend the decision by saying, "Someone paid $14 can just as easily turn a wrench as somebody making twice as much." What about the accumulated experience and problem solving abilities that should be there in the older employees? I guess that never was valued much??

Don't they realize the impact this mass exodus could have on quality? Oh wait, they do:

The biggest challenge for GM may be accomplishing the massive undertaking without compromising the quality of its cars and trucks. Having begun to win new respectability on the quality front, the automaker can't afford costly and reputation-marring mistakes on the factory floor, which is a risk when there is significant turnover.

"We are very intensely focused on making sure our quality isn't compromised," said Joe Mazzeo, GM's executive director of manufacturing quality. "Our customers don't know this is going on, and they don't care."

As with many business decisions, such as outsourcing or offshoring, the "savings" or "benefit" from such a move is easy to calculate. It's easy to calculate the savings from paying workers $14/hour instead of $28/hour, even considering the buyouts and "go away" payments to departing workers. But the COSTS are much less easily quantified. What is the cost of poor quality? What is the cost of poor morale, of either having to work alongside a new junior employee who makes an embarrassing low wage or the low morale of a new employee who resents the older employees who make twice as much for the same job?

How does GM plan to maintain quality? Sure, the new employees will be trained, they won't just be thrown into jobs.

Also, in an unusual step, GM will carry out quality checks of every vehicle headed off the factory floor during the initial transition. Typically, vehicles are picked at random for the checks.

The people at GM must have listened to Dr. Deming a little bit. They MUST know that you can't "inspect quality in" to a product. The need to increase inspection adds cost and must be an acknowledgment that they KNOW quality will suffer. They won't be able to catch all of the defects. The customer will notice. GM says their customers don't know this is going on. Um, maybe try to avoid being quoted in a newspaper article about how this is happening. Readers of this blog know it is happening. Tell your friends.

I doubt we'll see loads of books and Harvard Business School publications about the "General Motors Method" of throwing out expensive employees and replacing them with cheaper ones. Or maybe it's already called the "Circuit City Method." Ford has been doing the same thing, as have other auto suppliers. It's the standard playbook anymore, unless you're Toyota or a truly Lean company.

Step 1: Fire expensive employees. Step 2: Hire cheaper ones. Step 3: Profit. Oh wait, both companies are still struggling.

Can the GM leaders be thrown out and replaced with newer, cheaper executives?

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Reader Question: GM and Lean

From Devin, a graduate student, posted with his permission:

"I'm an operations management student who is writing a report on lean manufacturing at GM. However, the more I research, the more I find that there's far more to write about with regard to what GM is not doing than what it is.

I guess my question is, would you agree that GM has simply applied the aspects of lean that most conveniently fit its work culture? I mean, I look for examples of lean at GM, and all my research really pulls up is things like a kanban system at a Saturn plant or the use of the "five whys" for a process improvement of some sort.

It seems to me that these aspects of lean are simple enough to implement that they don't really require the cultural change of something like standardized work, but they're enough for the company to see some moderate improvements that it becomes content with, and as a result, causes the company not to explore any of the other aspects of lean."

Any GM folks care to chime in, even anonymously? Is this a fair question? How would you respond from your experiences?

This is also a classic Lean adoption question that could apply to other companies. Do you try to adopt everything from Toyota or just the pieces that don't challenge your old thinking too much?

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LeanBlog Podcast #40 - A UAW Retiree on Lean

Here is LeanBlog Podcast #40, an interview with a retired UAW/GM employee who wishes to remain anonymous, at this point. We have traded many emails over the past year, about Lean, and I'm impressed with this individual's true passion for Lean and Toyota Production System concepts. We both agree that the "root cause" of many Lean struggles comes back to management's inability to create trust and to give up some control to the employees who actually do the work. The intent here, from my perspective, is not "management bashing," but rather to illustrate that there are some on the UAW side who "get it" and success is going to require true cooperation and sacrifices on both sides.

For earlier episodes, visit the main Podcast page, which includes information on how to subscribe via RSS or via Apple iTunes.

MP3 File Right-Click to "Save As"

LeanBlog Podcast #40 Key Points & Key Words

• "Quality Network" - GM and the UAW
  
• GM had been working with Lean methods since the early 1990's, but not associating it with "Lean" (Toyota) until this decade
  
• The need for trust and culture change -- changing the "them vs. us" attitude

If you have feedback on the podcast, or any questions for me or my guests, you can email me at leanpodcast@gmail.com or you can call and leave a voicemail by calling the "Lean Line" at (817) 776-LEAN (817-776-5326) or contact me via Skype id "mgraban". Please give your location and your first name. Any comments (email or voicemail) might be used in follow ups to the podcast.

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The Blog Had The 18-Hour Flu

So I think things are back to normal after a somewhat stressful day of wondering why my blog "broke." Unlike some web/blog outages and problems, it wasn't due to anything I did or tried to change. It just broke. Settings that worked fine up until Thursday morning no longer worked. It wasn't a general Blogger outage (the first thing I checked), it was my site's settings.

Downtime, pressure, scowls, and flashbacks

I had some flashbacks to my time at the GM engine plant, circa 1995. We would have machining centers go down (for various reasons, including not doing enough planned maintenance) and managers would respond by coming out to the gemba to stand and glare, pressuring employees and maintenance folks to work faster. We always joked that nothing ever got fixed by a superintendent or plant manager standing there.

As the length of downtime progressed, arms would be crossed, brows would furrow, and scowls would grow. Oh yeah, don't forget the yelling. At times yesterday, I felt like I was standing there, scowling at myself (as both superintendent and maintenance tech for the blog). As they say, hope is not a strategy, and scowling or pity do not get machines back up and running. I tried to get out of that mode and mood ASAP.

Thinking back to GM again, I had the idea back in 1995 that, if machines got fixed faster with the plant superintendent standing there (the guy who claimed that you had to "beat down on people until they did exactly as they're told"), then we our plant should buy a bunch of life-sized cardboard cutouts that could be strategically placed around the plant. If you kept them far enough away, you might not know if it was "real Bob" or "cardboard Bob" watching you work. The photo to the left represents what he would have looked like (well, without his toupe'). It wasn't a very collaborative or "Lean culture" environment, at least not until we got a new plant manager with a NUMMI background.

My blog downtime

Many of you might want to quit reading here if you don't care about blog tech stuff. My blog and hosting setup is a bit unusual maybe -- it's hosted for free on the Blogger service (owned by Google), but my domain (leanblog.org) is hosted (a paid service) through godaddy.com. There are some settings on godaddy.com that point your browser from leanblog.org to the material stored on the Blogger servers. That was all working fine... until yesterday.

I did some internet searching and found some reports that folks with my setup were impacted by the rollout of a new Google feature called "Sites." It's a correlation, but also seems like a causation. I could blame Google for what some have called a faulty design and faulty integration of the services (a shared databased.... ah "synergy"...) Some other Blogger blogs were down for the same reason (including this one that had the same 404 error as me).

Hansei (reflection)

I'll look in the mirror and think about how I could have avoided the problem. It's a bit loose use of the term, but I could have "5S-ed" my site set up a while back. Months back, I had tried setting up the "Google Apps" platform for my domain, leanblog.org. I was never able to get it working, so the setup was just, well, sitting there. If I had never partially set up Google Apps, I wouldn't have had the problems that occurred when they added the "Sites" feature. Not sure how I could have (or should have) anticipated that. Live and learn. Note to self: Don't ever leave half-installed features hanging out there... I shut down all of the Google Apps features and that helped get things back up and running.

My other (and final) reflection point was that, in my haste to "fix" things, I rushed into one "solution" that broke something else. The tech instructions from Blogger are very general and not helpful enough and godaddy.com's tech support couldn't help. I'll give a big thanks to the website "Blogbloke" and his instructions that got things back up and running.

I hope that's it for the downtime... thanks for your patience and we'll get back to real Lean topics soon.

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Some Questions About Managers

Earlier this week, I asked some questions that managers and leaders should ask, prompted by an email I received through the blog.

I've been thinking about this and I've been trying to keep my "no blaming" hat on. Managers are part of a system -- therefore, we shouldn't blame individual managers, necessarily, for their "bad" behavior.

• Is the manager being held accountable for things that are out of their control?
  
  
• Is the manager being blamed by higher leaders?
  
  
• Has the manager had adequate training and mentoring about how to manage?
  
  
• What behavior is expected or rewarded by their managers?
  

Even if there is a "bad manager" involved, we should ask "why?" and probe to see if there is a root cause within the organization or the management system. What do you see in your organization? What other questions would you ask?

Back when I was at GM, we had a plant superintendent who was a legendary screamer. One day, he called me and another young IE into his office. He wasn't going to yell at us, but before talking, he called a unit manager on speaker phone. He yelled and cursed and screamed at the unit manager, putting on quite a show.

Since I was leaving soon for grad school (and didn't plan on coming back), I had the courage to ask the superintendent, "Why did you behave like that? What are we supposed to learn?"

He claimed, basically, to be part of a system. His boss yelled at him like that, so he was passing it on. He traced through the levels of screaming and cursing, basically tracing it all the way up to GM's board of directors.... therefore, he wasn't "choosing" to act that way, it was just the expectation and culture he had been a part of for over 30 years. I could sort of see his point, but it also seemed like a lame excuse... but his career might have stalled out earlier if he had tried to buck the system, right?

By the way, this was a guy who also didn't believe in Statistical Process Control.... that the line should keep running as long as the product wasn't "out of spec." And this was a plant that claimed to be managed under "The Deming Philosophy." Hardly.

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Partly Correct on Rising Car Prices

GM Expects Car-Price Rise - WSJ.com

GM is raising prices:

"In December, GM raised its prices an average of 1.5%..."

This is great news if you're an employee, stockholder, or fan of General Motors. This means market demand is strong for products and overproduction has been curtailed (they're not dumping as much product on rental car fleets and they have some hot products).

The rest of the sentence I originally quoted read:

"In December, GM raised its prices an average of 1.5%, mainly because of higher raw-materials costs, especially nonferrous metals, steel and oil."

No, no, no. That is such a tired excuse, "our costs went up, so we have to pass it along." GM raised prices because they can, because the market will accept that (or they think it will). It's just so politically increase to say you're increasing prices because of increased demand, isn't it? They're not entitled to raise prices because of steel costs or elective costs, such as investments in new technologies...

"[CFO] Fritz Henderson said the industry has less manufacturing capacity than in the past and therefore less pressure to sell vehicles cheaply to move inventory."

It's all about supply and demand. I'm sure GM realizes that... they just can't say it, right?

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Toyota Gains Lead in Overproduction?

Toyota beats GM in global production; GM No. 1 in global sales

So it turns out that GM *sold* more cars than Toyota in 2007, but it's basically rounding error and a virtual tie (as pointed out well by the Lean Thinker blog). He's right, who cares who sold more? It's profit (and long-term profitability) that matters.

I wasn't going to comment until I saw the headline that Toyota *produced* more than GM. How odd -- Toyota produced 213,000 more vehicles than GM.... so they produced more cars than they sold.

In the latest neck-and-neck numbers race between the world's top two automakers, Toyota Motor Corp. said Monday it had made a record 9,497,754 vehicles worldwide in 2007, up 5.3 percent from the previous year.

That's about 213,000 more automobiles than the 9.284 million that GM made last year.

Now, I'm somewhat "tongue in cheek" saying that it's the "waste of overproduction." If Toyota's "heijunka" (or level loading of production) says it was more cost effective to slightly overproduce (to be made up for in a period where sales will be higher than production), then it's not necessarily the worst thing ever. Keeping production level brings many benefits to the stability of the supply chain and the supplier base. Constantly changing production to meet demand isn't necessarily the best business decision, nor is it "not Lean" to have a little bit of planned out inventory... am I explaining that well?

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Still Squeezing the Suppliers?

Marketplace: Supplier gets dwindling sums for its parts

This story has been in the blog backlog, but it's always an important topic, the idea of not just squeezing your suppliers on price. It's not a good idea to just demand lower prices, without partnering up on shared improvements. Why are so many auto suppliers bankrupt? The lack of partnership in the industry has to be at least a part of it.

We see the same dynamic in healthcare, where "reducing costs" often means "squeezing the suppliers" (the doctors or the hospitals). Forcing a "price reduction" is not the same as true cost reduction. That's not sustainable, continually forcing the price down because you have market power. Maybe that's one reason more healthcare organizations are looking at Lean. With the pricing pressure, one to keep their profits up is to reduce cost (and a lot of that has to do with improving quality).

Many doctors are backing out of the Medicare and Medicaid system and more are dropping insurance plans that squeeze them too much (via the Kevin M.D. blog).

"We were spending inordinate amounts of time and resources on things that have nothing to do with the quality of patient care," said gynecologist Felice Gersh, medical director of the four-doctor practice. "I would be more than happy to be a member of all the health plans if they paid me reasonably and quickly."

Sounds like a lot of waste and Non Value Added activity? I know my dentist's office complains that my dental insurer purposely delays payment or loses submissions, another form of "squeezing."

Back to the Marketplace piece, a long-time supplier complains:

Myers says over the years, GM has pressured him to keep prices so low that his last price increase was in 1984.

AL Myers: The methods that they're using now border on cruelty to animals. They're so relentless and so overbearing with their requests for price reductions that they really don't care whether you go out of business or not.

A GM spokeswoman says the company goes to extreme lengths to keep suppliers profitable. Because when suppliers go out of business, she says it's disruptive and costly to find new ones. But in 2005, GM said it would slash purchasing costs by 30 percent.

So is GM helping take 30 percent of the cost out of the supply chain, or are they just squeezing and paying less?

I think, for both the manufacturing sector and for the sake of healthcare, that we need to find more ways to be Lean, to find true cost reductions (again, quality improvement and partnership are a good start), instead of just slashing what we spend.

Former GM Chief Passes Away

Roger Smith, Former G.M. Chief, Dies - New York Times

Roger Smith passed away at age 82. While he was demonized by Michael Moore and he's been criticized here for his "lights out factory" vision, Roger Smith tried many innovative things.

Jim Womack is quoted as saying:

“To his credit, he knew something was wrong there, so he began an age of frantic experimentation,”

Smith should be remembered for reaching out to Toyota's Chairman, Eiji Toyoda, leading to the creation of NUMMI. That paved the path for Toyota's North American expansion. (Detroit News photo)

This has most certainly been good for the spread of Lean beyond the automotive industry, the realization that Lean is not a "Japanese system."


Other remembrances:

• Wall St Journal
• Detroit News
• Detroit Free Press

"Beat Down On Them"

As I thought about this post earlier, with the employee quote about being beaten down, I had a flashback to my time at GM, circa 1996.

While we were in the midst of trying to implement Toyota methods, with the leadership of a new plant manager who was trained at NUMMI, we had a neanderthal superintendent (the #2 in charge of the plant).

His unfortunately classic line was, when complaining about a manager (and by extension, the employees), "you have to beat down on them, beat down on them, BEAT DOWN ON THEM, until they do... exactly... what... they're... told."

What a disgusting philosophy of management. And he meant it to (try to picture the fist pounding gesture he made as saying that). Attitudes like that, as opposed to a lack of technical Lean competency, is what slowed GM's plant progress, to be sure.

Lean leaders don't want employees who do exactly what they're told. The contrast to Toyota is so clear and obvious.

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How Toyota Became #1, and Will Again

I've mentioned this book before, coming out Nov 1, it's called How Toyota Became #1: Leadership Lessons from the World's Greatest Car Company.

I had the exciting chance to have dinner tonight with the author, David Magee. I have, in my possession, four autographed copies of the book, courtesy of David. One is claimed by a Lean Blog reader who volunteered to do an early review (and I'm keeping one for myself so I can review it). I still need to think of a contest or a way to give away the other two books. Maybe a copy goes to someone who comes up with a reader contest idea!

It's ironic and probably somewhat insignificant, in the big picture, that I got these copies on the day when headlines said "GM regains #1 position over Toyota" (link to a CNN article). That's probably a short-term blip rather than a wholesale shift in the industry, don't you think?

Here are David's previous books(also available through amazon.com). Ignore the one on orthopedics, different author!

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The Same Kind of Different Car Company

By Andy Wagner:

A poignant story showed up in the Washington Post during the recent GM strike that hits at the heart of the principle of respect for people. It came from the Saturn plant in Spring Hill, Tennessee. Management, required to work during the strike, gave their friends, their union hourly workers, rides to the picket line. They delivered hot coffee and donuts. They showed that respect for people is alive in well at the real Saturn, despite the fact that Spring Hill, home of the "different kind of car company" doesn't even assemble cars any more.

Today, most of Saturn's products are now designed in Europe by GM's Opel division and built on the same lines as every other GM vehicle. Surprisingly, the article showed that while the vision of Saturn's founding died in a boardroom in Detroit, there still is something unique in Spring Hill. If only the culture had become a model for the rest of the company, rather than a short-lived "experiment", the strike, and GM's current condition, might not have come to pass.

When I was a youngster growing up in Ford country on Detroit's west side in the early 1980s, we heard a lot of buzz about the "new car company" that GM was starting in Tennessee. A few folks even made the move, leaving Detroit behind and moving south to be a part of it. By the time of Saturn's anti-climatic launch in 1990, the Ford die-hards felt like we had the last laugh. While GM had spent 10 years and billions of dollars creating a new division to build and sell small cars to compete with the Japanese, Ford took a different approach.

CEO Don Petersen, under the influence of weekly meetings with Deming, rebuilt the company from within. A team philosophy was adopted across the company. On the product side, they introduced vehicles that met the market's desires. Production teaming at the plant level improved quality and reduced costs. Escort and Taurus took the crown as best sellers while Motor Trend Car of the Year awards flowed in year after year. During the late 1980s and early 90s, Ford racked up market share almost as fast as the Japanese, and ironically, they did so with techniques and philosophies that GM said couldn't be done in their existing plants.

So what happened? What happened to Saturn, the noble experiment? What happened in Dearborn to Don Petersen's "Better Idea"? The same thing, I suppose that happened to Wiremold. Deming's "constancy of purpose" lasts only as long as leadership believes in it.

Before we get all depressed, I'd have to say that the stories of Ford in the '80s and Saturn during the strike of 2007 give me a glimmer of hope. Ford showed, during that brief bit of history, that even an old dinosaur could have new life with the right leadership. And the Spring Hill plant shows that respect for people, once established, endures, even when management doesn't know how to make the most of it. With a bit of persistence, perhaps someday we'll be able to say that we had an opportunity to work at a place like that.

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UAW / GM Reach Deal

Deal helps GM narrow labor cost gap:

I'm not going to spend too much time reading about or writing about the strike, since it's not really a Lean issue.

From the Detroit News:

"But the new contract can only do so much. A better cost structure and reduced legacy costs won't cure all of Detroit's ills. Only better-quality cars and trucks that consumers yearn to buy will insure a brighter road ahead for GM, Ford and Chrysler."

Lean Thoughts on the UAW Striking GM?

Detroit News Article

I'm too far removed anymore and I'm not sure if there's really a Lean story in any of this mess. Does anyone care to comment?

My questions:

• When the news just focuses on the "cheap labor costs of Toyota" (as I just heard from an idiot on cable news), does that do a disservice to anybody? Has anyone seen an article about the strike that mentions the competitiveness gap between the "Detroit Three" and Toyota? Is Lean ever mentioned?
  
  
• Is the "Voluntary Employee Benefits Association" (VEBA) just an accounting trick? Instead of creating value, they're also playing accounting games.... am I seeing that wrong?
  

Click "comments" to chime in...

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GM Does Teach Kaizen in the Standard Work Class

Detroit Free Press Forums

In my previous post, I questioned if GM was teaching true "Standard Work" to reporters who came to their training center in Lansing. My cynicism may have gotten the best of me, as it seemed, from the article, that GM was teaching the reporters than Standard Work meant "do as you're told."

I posted a comment on the Free Press article and got the response I linked to above:

I have been through that class at GM. You do get a chance to re-write the process. You basically start with the proposed process and build mini-vehicles like that for a while. Then you go back and discuss any possible changes, make the changes and then go back to building them again (trying to be number produces and quality). Its common sense, but that ain't common anymore.

At GM first line supervisors better know the process. With the absenteeism of the UAW many supervisors actually spend time on the line or making parts.

I stand corrected, at least as far as the class goes. I hope that the spirit of Kaizen is carried through into the factories and shopfloors.

Updated: GM Shows "Standard Work" to Journalists?

GM teaches writers to build it right each time

Updated: GM *does* do some kaizen in the class

What we call Lean or TPS, they call "GMS":

General Motors Corp. touts its global manufacturing system as the reason it's been able to improve quality and get more efficient every year. But for many, it remains an esoteric concept.

Reporters were invited in:

To help explain, GM invited more than a dozen automotive journalists to participate in a training program Friday at its Lansing Delta Township Assembly Plant. The writers had to execute "standardized work"-- precisely following a set of prescribed steps to do a job.

Once the most efficient way to do a job has been determined, GM executives said, the work must be done exactly the same way every time. That reduces the chance of forgetting a step.

It's a short article and maybe a short exercise, but there are a few things that might be missing in this exercise:

1. The people doing the work are supposed to write the standard work, or at least have input. Standard Work isn't the "do as you're told system."
   
   
2. Standard Work includes "kaizen," or continuous improvement. It's your job to follow the standard, but also (and maybe more importantly) to come up with ways of IMPROVING the work sequence and methods. If GM didn't have the reporters do that, the point was missed, big time.

I wasn't there, so I realize I'm in the realm of speculation. But, I hope GM is really involving workers and is not continuing in the Taylorist path of "we'll determine the best method, you follow it." That didn't work BEFORE it was called a "global manufacturing system" and Taylorism certainly isn't "Lean." It might even be "L.A.M.E." (Lean as Misguidedly Executed).

Suppliers: GM better, rivals not

Detroit News Article

GM, Ford, and Chrysler are frequent targets here for their "beat up the suppliers" approach to supply chain management. Here's some encouraging news for GM (and for their suppliers)... not such good news for Ford

General Motors Corp. has substantially improved its rocky relationship with parts suppliers for the first time in 15 years, while the rapport has worsened at Ford Motor Co. and Chrysler, according to a study to be released today.

GM's improvement suggests the automaker's aggressive plan to work more harmoniously with its parts makers is gaining traction.

Comparing Toyota to Ford:

...82 percent of suppliers consider Toyota a preferred or very preferred customer, compared to 10 percent for Ford, which has the worst supplier relations, according to the survey.

This was true at some work I did with a Tier 1 auto supplier once... the same company made parts for Toyota and Chrysler, and they MUCH preferred Toyota as a customer, partly due to their attitudes and partly due to the fact that Toyota actually kept their production plan stable instead of changing it constantly (Beer Game, anyone?).

There are more metrics and examples in the article, check it out.

Toyota Way Principle #11 says:

Respect your extended network of partners and suppliers by challenging them and helping them improve.

Dr. Deming used to preach, as part of his 14 points:

2. Adopt the new philosophy of cooperation (win-win) in which everybody wins. Put it into practice and teach it to employees, customers. and suppliers.

4. End the practice of awarding business on the basis of price tag alone. Instead, minimize total cost in the long run. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.

Looking at the data, GM has a long ways to go, but at least they are improving.

On a scale of zero to 500 -- with zero being the worst -- the survey rated GM's overall relations with its suppliers at 174, up from 131 last year. "We've never seen that type of improvement before," said John Henke, president of Planning Perspectives. "They've just generally been doing things better from the standpoint of working with their suppliers."

As they have since the report began in 2001, the suppliers ranked Toyota and Honda the best companies with which to work.

Of the six companies ranked, Toyota had the best relations with suppliers with a score of 415, followed by Honda (380), Nissan (289), Chrysler (199), GM (174) and Ford (162). Ford and Chrysler fell several points from last year.

Henke called a Ford program to improve supplier relations a "disappointing failure."

Any suppliers care to comment on how the "Detroit Three" are doing?

LeanBlog Podcast #24 - Jim Womack, State of the Auto World

Episode #24 of the LeanBlog Podcast is the 2nd part of my recent conversation with Jim Womack, of the Lean Enterprise Institute. In this episode, we talk about the state of the auto industry, from the time of The Machine That Changed the World through today. Who does Jim think is in the best shape among the "Detroit Three?" Jim also answers some questions from Lean Blog readers.

MP3 File (Right Click to Save-As)

Show Notes and Approximate Time, Episode #24

• 1:50 “We had some brief hopes for Ford in ‘Machine’”
• 2:20 “Mind of Toyota” book is a Womack must-read: “it’s a great book, harder than heck to read” Inside the Mind of Toyota: Management Principles for Enduring Growth
• 3:00 Womack on GM’s decline
• 4:15 What about the Ford Atlanta plant going from most efficient to shut down? The Taurus story, original development took 7 years when Toyota was taking only 3. At least it was what the public wanted and was easier to put together than the comparable GM product.
• 7:00 GM’s political footprint is shrinking as factories are closed outside of Michigan and Ohio, while Toyota’s is growing with factory expansion.
• 9:15 BBC series on the auto industry and lean production, pulling the cord much more at Toyota, and how people were scared at the Ford plant to pull the cord (mistrust between workers and management).
• 10:15 “If it were just a plant-on-plant competition, they [Ford] would be OK, they’ve learned enough… all over the company, the managers are not pulling the andon cords.”
• 10:40 More on Ford management and the “corrupt” Ford culture
• 12:10 How things stand with GM today, according to Jim
• 12:50 “Ford and Chrysler have a different magnitude of problem than GM.” If not for the legacy problems, GM would be OK, not a world-beater… “not as good as they should be.”
• 14:30 “Ford and Chrysler’s problem is management.”
• 14:45 Question from the blog, from John Hunter, “What 3 publicly traded companies have the deepest understanding and execution of Lean?” Danaher, “can’t vouch for it personally….” Tried to put them in the Lean Thinking, but was escorted off the property because the President declared they had deep secrets….
• 16:15 Article about Danaher from Business Week
• 17:00 G.E. has been a “make the numbers” company as opposed to a “fix the company” company, says Jim. But now GE is saying they have to be like Toyota… “is there anything beyond Six Sigma or even to Six Sigma?”
• 18:25 Lots of other little guys out there, privately held. “Wish I could point to other examples of large companies…”
• 19:00 LEI is doing some research for how to take a traditional mass production mentality company and transition them to a lean management approach, what methods do you have to implement?
• 20:00 “The world is pretty Dilbert-like.”
• 20:30 “I wish I could rattle off the 14 companies who have actually done it…. No stock tips.”
• 20:50 From Joe Wilson, what about “Lean and Mean? Do you wish you had picked a different word than Lean?
• 21:15 “It also rhymes with green…. A word is a word, you have to pick something.” Jim meant it to describe “how to do more with less” but many have spun it into “how to do less with a whole lot less, including people.”
• 22:00 “If lean is taken on by managers who are clueless to the real meaning, well then over time, the meaning becomes the meaning that people deduce from the behavior of those managers. I can’t do anything about that.”
• 23:00 “Lean got us out of the nationalism and ethnic focus,” that it had something to do with Japan. “Lean” was designed to focus on an objective measure of performance. (the term coined by Jon Krafcik)
• 24:40 “Sorry that so many clueless people [made lean “mean”]… it’s a lot of stupid meanness, where you try to hurt others and end up hurting yourself.” Toyota was about growth, not trying to get rid of people. “Where you get into the problem with Lean is when you have these big behemoths that are fading fast…”
• 26:10 Jim spent a week in Australia looking at healthcare organizations… “How would Toyota run healthcare?” “Toyota treats car parts better than a hospital treats its patients, and treat people better than hospitals treat their staffs.”
• 26:45 “We’re going to bankrupt every company with our healthcare practices.”
• 27:45 Far more than half of the visitors to the LEI website and those signing up for workshops have nothing to do with manufacturing… “How would Toyota run Starbucks?”

If you have feedback on the podcast, or any questions for me or my guests, you can email me at leanpodcast@gmail.com or you can call and leave a voicemail by calling the "Lean Line" at (817) 776-LEAN (817-776-5326) or contact me via Skype id "mgraban". Please give your location and your first name. Any comments (email or voicemail) might be used in follow ups to the podcast.

Click here for the main LeanBlog Podcast page with all previous episodes.

It's NOT the Fault of GM's Workers

NPR : Reasons for GM Slide Go Beyond Work Force

Honestly, I'd expect more from liberal NPR and their headline. You'd expect NPR to be the friend of the UAW "working man" (or woman), but I don't appreciate how their headline is implying that GM's problems were the fault of normal workers, instead of management.

Japan's Toyota has overtaken United States rival General Motors in sales volume for the latest quarter, and is on pace to knock off GM as the world's biggest automaker.

There are lots of reasons for GM's decline, but industry analysts say assembly workers aren't to blame.

Of course workers aren't to blame. The difference between Toyota and GM is a difference in management systems, not a difference in workers. Look at the success of NUMMI, where Toyota is running a plant with the same workers GM was failing with, before 1983 (well, most of the 1983 workers are retired now, I'm sure). Toyota didn't hire EVERYONE back, but they were able to succeed with the UAW and its workforce.

GM was once no match for Toyota when it came to building cars fast. In 1998, it took GM workers an extra 10 hours to push a vehicle off the line. By 2005, GM had narrowed that gap to about an hour.

Is the implication here that GM workers were lazy before and now they're working harder? The "hours per vehicle metric is driven primarily by vehicle design and the design of the management system that runs the plants. Sure, you could also blame the inflexible work rules dreamed up by the UAW, but that's not the "workers" fault. If vehicles are designed to be more easily assembled, that would have a big impact on hours per vehicle. Even if you want to dump on GM workers, you'd have to agree, then, that they aren't working harder than they were in 1998. Lean practices would increase efficiency at the factory level, I'm sure that's a factor too.

Toyota Way author Jeff Liker pointed out:

"There would be evidence of what they learned from Toyota in every factory in the world," Liker said. "One of the more advanced ones is the Cadillac plant in Lansing (Mich.) where the quality and productivity is pretty close to Toyotas."

But it was too little, too late, he added.

GM copied some Toyota methods, but is that evidence that they copied the management system? Probably not. Hence, GM's troubles.

Indeed, the company has designed many vehicles that consumers just didn't want to buy. That damaged GM's image and cost thousands of workers their jobs.

"Some of the plants that have the reputation for being the best in terms of quality of the work force, teamwork, all the things that management asks, are the ones that were selected to be closed," Liker said.

To me, it's definitely not the workers' fault. Management designs vehicles and has responsibility for making sure these cars meet the needs of the workers. Having a super efficient factory that builds cars that don't sell isn't very Lean at all, even if the factory used Kanban and 5S. Lean isn't just a set of factory tools, it's an overall management system that includes product development and other aspects of the enterprise.

I think the article/audio story mostly gets in right, pointing out the systemic problems and management errors of GM. But, NPR should have titled their story "Reasons for GM Slide Aren't the Workforce." You won't get very far with Lean if you're dumping on or blaming your employees.