I’ll Bet That Merck’s "Lean" Effort Fails
Merck was in the news quite a bit today, but this is the first article I've seen that mentions any claim to a “lean” strategy. If Merck thinks they are going to cut 7,000 jobs over the next two years AND implement lean, they've stumbled across a lean strategy nobody else has ever made successful.
They've “announced” the layoff number, but not who is going to be laid off. Leave that hanging over people's heads and then expect them to contribute to continuous improvement efforts, or any sort of true lean effort? Good luck! Why would people make improvements that are going to possibly lead to their job going away? Merck might be able to do some things to cut cycle time or inventory, probably because the starting point is so “non-lean.” But, will they have a sustainable lean model? I doubt it, with the layoffs hanging overhead.
It also sounds like Merck management is grasping for a strategy and credibility, after the Vioxx problems. The Wall St. Journal this morning said the Merck CEO made mention of wanting to be like Dell…. so do they want to be Toyota or Dell? The analyst reaction was curious, to say the least:
In the private meetings, Mr. Clark, whose experience is mostly in Merck manufacturing, has talked about his admiration for the low-cost manufacturing process at computer maker Dell Inc. That left “a couple of people scratching their heads,” said David Risinger, an analyst at Merrill Lynch who attended one of Mr. Clark's sessions. Dell makes a low-margin product with a short life cycle, while Merck makes a high-margin product with a long life cycle, said Mr. Risinger.
It's strange, but this afternoon the WSJ updated the article, removing the references to Dell and adding the lean story. I wonder if Merck was embarrassed that the analysts were “scratching their heads”??
Toyota learned from Ford and others, but they invented their own system. Dell didn't really have anyone to copy in the PC industry either (they didn't copy Toyota). Will Merck be successful trying to copy them, or do they have to find their own way? I'd suggest Merck should develop a business system that works for Merck's business, then stick with it. For now, it sounds like a desperate attempt to convince Wall Street that they're getting better.
Updated in January 2006