Issue: Sep 2006


Ford's Way Forward Must Tap its Lean Roots



by Jerrie Colish

Commenting on the dramatic retreat announced by the Ford Motor Company, James Womack, founder and chairman of the Lean Enterprise Institute, said that Ford needs to tap its lean roots to find a road out of the automaker's deepening financial hole.

"This historical record is clear. Henry Ford was the world's first systematic lean thinker, a path later perfected by the Toyota Motor Corporation," said Womack who is co-author of the recently published Lean Solutions: How Companies and Customers Can Create Value and Wealth Together.

"Ford focused on the value creating process for product development and production, rather than his assets and organization. He then continuously removed the waste in his design and production processes to create more value for customers. Along the way," Womack explained, "he pioneered the consistently interchangeable parts and the moving assembly line for which he is famous, but these were means not ends. The fundamental idea was always for managers to relentlessly examine every value-creating process to eliminate the wasted steps while speeding the product to the customer."

Lean Management Needed

"Unfortunately, Ford lost his way by the 1930s because he was never able to develop a management system for his giant enterprise that supported his fundamental insight. The 'flow production' system he pioneered at his Highland Park plant in Detroit for the Model T in 1914 became sclerotic mass production by the time his Rouge Complex, also in Detroit, was finished in the 1930s and the company steadily declined. After World War II, Toyota, which has always viewed itself as the heir to Ford's breakthrough insights, developed a management system that brilliantly supported Ford's process thinking and pioneered the lean enterprise."

"My prescription for new Ford CEO Alan Mulally is to fundamentally rethink Ford's management system -- product development, supplier management, logistics, and information management, and the way managers think about their work -- in order to tap the roots of Ford's original triumph," said Womack.

"In addition, it's time to finish rethinking the social contract with employees as Ford becomes a normal company (not an oligopolist with General Motors) in a normal town (where labor doesn't come from one supplier) that must live in a global market. And now that Ford has acknowledged that it's historic market share can't be sustained, it's important to rethink its brand strategy to get rid of hopeless makes that can never make any money - Mercury, Jaguar, Lincoln too? The remaining brands need to be refocused on what customers really want -- sophisticated, hassle-free transportation in every price range."

Womack noted that a breakthrough product concept -- like the Explorer SUV and F100 pickup which carried Ford through the 1990s despite its management weaknesses -- is always desirable. "However, a more practical approach for creating competitive advantage in the years ahead may be to rethink the vast gap between the car maker and the customer to provide hassle-free mobility on a continuing basis to customer partners rather than selling cars to strangers in one-time transactions. Even Toyota hasn't been able to do this."

"Who knows whether Ford Motor Company has the time to successfully find a lean way forward," said Womack. "But it will be tragic if the originator of lean thinking is crushed in the end by failing to learn lean lessons from its most earnest pupil, Toyota."

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