By Jon Miller | Post Date: January 6, 2007 8:19 PM | Comments: 5
General Motors Chief Executive Rick Wagoner has been in the news this week with fighting words:
“I like being No. 1, and I think our people take pride in it,” Wagoner said this week. “It's not something we're going to sit back and let somebody else pass us by.”
We are talking here about being the number one producer of automobiles by volume and not number one by reputation, quality, profit or growth. The article quotes Mr. Wagoner as saying that GM still has production capacity. This makes me worried for GM. They do not have a problem with supply, they have a problem with demand.
I am in the middle of translating Taiichi Ohno's Gemba Keiei into English at the moment and many times he says "We do not make what will not sell." What Ohno is saying is not that Toyota never builds an automobile before they have a firm sale with a live human customer, but that the processes in their factories and their supply chains operate on a pull system and that no production is authorized without the downstream process (the customer) consuming the part and giving a pull signal.
This is called the downstream pull system. This is such a simple theory that many manufacturers who learn it mistakenly think that they do it. Of the automotive manufacturers, only Toyota has insisted on a pull system for decades and built it into how they sell and build cars. This and their relentless focus on kaizen to reduce cost and improve quality is why Toyota is in a position to become number one, and not because they are building factories faster than anyone else.
Mr. Wagoner fails to understand that the goal for the General Motors Corporation is absolutely positively definitely and without a doubt not to remain in the number one spot on the basis of the number of automobiles produced in one year. Unless all of these vehicles are sold, and unless the company is profitable and is generating free cash flow as a result, being number one is pointless for GM. Toyota understands this, and that is why they will displace GM as number one. That is also why Toyota is playing down this issue.Comments are moderated to filter spam and inappropriate content. There may be a delay before your comment is published.