Today Detroit Free Press reported a rumor that Ford CEO, Mullaly is going to announce Derrick Kzuk as the global development head in charge of worldwide product development and report directly to Mullaly. Derrick is currently reponsible for NA product development.
This starts Mr. Mullaly's plan to consolidate the platforms and use common components as much as possible. Out of this purpose, he changed the organization structure. Structure is a form having to serve the purpose. Previously seperate development is existing in each and very business units. There no necessary connections/communications among the units.
How about the engineering department struture within each division? There could be a global head of Powertrain, Chassis, Body in White. And what about the other aspects of business within each division? Marketing don't need to share too much among divisions. Same as salse. Purchasing could be consolidated to build on one supplier base. Manufacuring has a lot to do to share technologies, and could have one global head like Kzuk. What about dealership? Financing? They should be seperate.
How to organize in an efficient way to form a global corporation? GM's model, Toyota's model? Ok, how about business planning, engineering and manufacturing are globalized. But marketing, sales, financing and purchasing are localized?
Thursday, December 14, 2006
Tuesday, December 12, 2006
Emerson - Management based on process
Read the one article of McKinsey Quaterly publication, an inverview with Emerson retired Chairman and CEO, Mr. Chuck Knight.
Emerson's management philosophy is prcess based. The benifits include:
1 Get rid of beurocracy.
2 Get rid of politics
3 Set up clear accountability
Comments:
People has tendency to do things in a chaotic randomly. Most of the people don't like discipline. Yes, discipline. A good word. People usually don't like discipline. Process is the realization of discipline. For huge company, discipline is very important. Thus, a process should be in place to guide the information flow. Yes. Process is the tool to create the channel of imformation flow.
In Emerson, the business planning is a process. Quarterly business planning meeting is a process.
Somehow this is like Toyota's management philosophy. But Toyota is more related with the technical site of the operation. Toyota relentlessly pursue Kaizen to impove the process of operation. Yes. By continuously adjusting the process and making impovement to it, it always have life in it. But once implemented, it has to be rigidly followed.
Process is able to get rid of ambiguity, thus, gets rid of politics. Ambiguity is the root of politics. If the people has several choices to make, they will have opportunities to operate based on local benifits. "Do you/me a favor" kind of thing will happen.
For day to day operation, it's very important that each routine work has a process in place. Service model is adopted between departments. Process is used to guide the activities of intra and inter-departments.
But the important thing is the process should be updated continuously like Toyota does. The ultimate purpose is to improve efficiency. Toyota's way balances process and innovation.
The barrier of implement of the process based management is the cost in short term. It takes time and effort to implement a process.
Emerson's management philosophy is prcess based. The benifits include:
1 Get rid of beurocracy.
2 Get rid of politics
3 Set up clear accountability
Comments:
People has tendency to do things in a chaotic randomly. Most of the people don't like discipline. Yes, discipline. A good word. People usually don't like discipline. Process is the realization of discipline. For huge company, discipline is very important. Thus, a process should be in place to guide the information flow. Yes. Process is the tool to create the channel of imformation flow.
In Emerson, the business planning is a process. Quarterly business planning meeting is a process.
Somehow this is like Toyota's management philosophy. But Toyota is more related with the technical site of the operation. Toyota relentlessly pursue Kaizen to impove the process of operation. Yes. By continuously adjusting the process and making impovement to it, it always have life in it. But once implemented, it has to be rigidly followed.
Process is able to get rid of ambiguity, thus, gets rid of politics. Ambiguity is the root of politics. If the people has several choices to make, they will have opportunities to operate based on local benifits. "Do you/me a favor" kind of thing will happen.
For day to day operation, it's very important that each routine work has a process in place. Service model is adopted between departments. Process is used to guide the activities of intra and inter-departments.
But the important thing is the process should be updated continuously like Toyota does. The ultimate purpose is to improve efficiency. Toyota's way balances process and innovation.
The barrier of implement of the process based management is the cost in short term. It takes time and effort to implement a process.
Thursday, December 07, 2006
Customer retention, relationship copy, and why going public
Toyota tops J.D Power customer royalty rating. J.D Power performs customer retention study on yearly basis. The industry average retention rate is 47.9. Toyota Motor's Toyota brand toppled its own Lexus brand to be the first the place with an impressive rate of 63.9. "Honda retained third place with 60.3 percent retention. GM's Cadillac ranks highest among American brands and sixth overall, with a 55.5 percent retention rate. The automaker's Chevrolet brand ranked seventh, with a 55.3 percent rate. A lot of that is due to high loyalty among Chevy pickup truck buyers.
"
The rate is calculated as the total number of customers out of 100 new car purchasers of a specific brand who owned the brand before. (my guess)
It's a lot cheaper to retain an existing customer than it is to grab from someone else's. - A common mistake American firms make.
One marketing research shows that it takes 3 times (not quite sure. Need to consult the marketing textbook) as many efforts to win new customers as to keep existing customers.
Technology is easy to copy, but not management culture and relationships. The Toyota production system, product development system, supplier and customer relationships are not easy to copy and implement overnight. It takes Toyota over 50 years' continuous and relentless effort to reach the level of today. Top management needs to have strong desire and long term view to implement. It's a huge task. Need a lot of time and energy and commitment.
Wall Street is part of the reason why the top management has lost long term vision of a company. In this sense, a private company is much easier to commit to a long term goal. That's why Wall Street likes Honda to be run by a group of engineers and in the same time, hates it is run by a group of engineers.
Then why a company needs to go public to raise money? Why not just use private settlement to fund its expansion and growth? Why does it need to issue stocks to raise money? Theoretically, if a firm has potential to generate profit, everybody wants to invest in it. Banks are more like to invest on a public company because of the SEC filings, I guess. It's easy to get the financial reporting for a publicly owned company. On the other hand, a publicly owned company has to put itself under the magnifying glass of SEC and financial analysts.
"
The rate is calculated as the total number of customers out of 100 new car purchasers of a specific brand who owned the brand before. (my guess)
It's a lot cheaper to retain an existing customer than it is to grab from someone else's. - A common mistake American firms make.
One marketing research shows that it takes 3 times (not quite sure. Need to consult the marketing textbook) as many efforts to win new customers as to keep existing customers.
Technology is easy to copy, but not management culture and relationships. The Toyota production system, product development system, supplier and customer relationships are not easy to copy and implement overnight. It takes Toyota over 50 years' continuous and relentless effort to reach the level of today. Top management needs to have strong desire and long term view to implement. It's a huge task. Need a lot of time and energy and commitment.
Wall Street is part of the reason why the top management has lost long term vision of a company. In this sense, a private company is much easier to commit to a long term goal. That's why Wall Street likes Honda to be run by a group of engineers and in the same time, hates it is run by a group of engineers.
Then why a company needs to go public to raise money? Why not just use private settlement to fund its expansion and growth? Why does it need to issue stocks to raise money? Theoretically, if a firm has potential to generate profit, everybody wants to invest in it. Banks are more like to invest on a public company because of the SEC filings, I guess. It's easy to get the financial reporting for a publicly owned company. On the other hand, a publicly owned company has to put itself under the magnifying glass of SEC and financial analysts.
Monday, December 04, 2006
Blog about Lean Management
Blog by the author of the book " Rebirth of American Industry: A study of lean management":
http://www.evolvingexcellence.com/
http://www.evolvingexcellence.com/
Toyota Culture
Thinking of the Toyota's corporate culture:
1 Customer first (Customer is the reason why a corporate should be existing, everything should be done to add value to the final products or service for which customer pays the price. Same price as competitor, but more value delivered. Same value as competitor, but lower price charged.)
2 Kaizen (Continuous improvement of way of working to get rid of waste out of the system)
3 Genchi genbutsu (Research and find the root of problem directly instead of relying on report only)
4 Teamwork (Help each other, working like a team)
5 Respect (Respect individual intelligence and ability)
6 Innovation (Encourage new ways to do business)
7 Personal improve (Relentlessly pursue personal growth, never sitting still)
(Need to refine to adopt)
1 Customer first (Customer is the reason why a corporate should be existing, everything should be done to add value to the final products or service for which customer pays the price. Same price as competitor, but more value delivered. Same value as competitor, but lower price charged.)
2 Kaizen (Continuous improvement of way of working to get rid of waste out of the system)
3 Genchi genbutsu (Research and find the root of problem directly instead of relying on report only)
4 Teamwork (Help each other, working like a team)
5 Respect (Respect individual intelligence and ability)
6 Innovation (Encourage new ways to do business)
7 Personal improve (Relentlessly pursue personal growth, never sitting still)
(Need to refine to adopt)
Friday, December 01, 2006
Ford - Design team
Ford senior design team:
J. Mays – Global design chief, chief creative officer
Peter Horbury – executive director of design NA
Freeman Thomas – director of strategic design NA
Moray Callum – director of design – cars NA
Patrick Schiavone – director of design – truck NA
About Freeman Thomas:
"Freeman Thomas Skips to Ford" (WardsAuto, May 2, 2005)
Former Chrysler Group designer Freeman Thomas is headed to Ford Motor Co., where he becomes director-strategic design in North America
Thomas, well known for crafting Volkswagen AG's New Beetle and Audi AG's TT with Ford's Global Design Chief J Mays in the 1990s, most recently headed Chrysler's Pacifica Advance Design Center in California.
He is credited with playing a role in the design of popular auto show concepts, including the Dodge Razor and Sling Shot in 2003.
Thomas, 47, will report to Peter Horbury, Ford's North American executive director-design, and Mays. He will lead advanced design teams in California and Dearborn, in addition to hammering out product design strategies and concept vehicles.
About Ford design team:
"Ford Realigns Global Design Staff" (WardsAuto, May 1, 2006)
Ford Motor Co. announces a realignment of its global vehicle designers that it hopes will bring the energy of Mazda Motor Corp.’s “Zoom-Zoom” design philosophy to the U.S. auto maker’s North American passenger-car lineup.
The appointment with the biggest impact is that of Moray Callum, formerly manager-Mazda Design Div., who is appointed as Ford’s design director-cars.
Other appointments include Patrick Schiavone, named Ford design director-trucks, from design director-cars. Freeman Thomas, director-strategic design for North America Advanced Studios in California and Dearborn, will continue in his role.
"Pat (Schiavone) is synonymous with trucks, having delivered the last iteration of F-150,” the spokeswoman says. “Callum was the gentlemen who really infused “Zoom-Zoom” into Mazda and can energize the car lineup in the North American market.
“Working with Freeman (Thomas) – known throughout industry as being a clever strategist – these three are a strong creative team and will work with (design chief) Peter (Horbury) to set the pace in North American design.”
About Peter Horbury:
"Horbury to Head Ford North America Design" (WardsAuto, on Dec 4, 2003)
Horbury assumes responsibility for design of Ford, Mercury and Lincoln brand vehicles, leading a team of seven design directors. He is charged with helping to evolve their exteriors to reflect the DNA of each, while taking their interiors to the next level, Mays tells media here.
The British Horbury was executive director-design for the Premier Automotive Group based in Europe, since 2002. He oversaw future product design for Aston Martin, Jaguar, Land Rover and Volvo brands.
Prior to PAG, Horbury was design director for Volvo Car Corp., overseeing studios in Sweden, Spain and California. His stamp is on the Volvo XC90 SUV and Volvo Safety Concept car.
Comments:
Judged by Fusion and Edge, looks like the re-alignment of design team at Ford starts to bear fruit. All of the three men led by Peter Horbury are indutrial top guns, including Peter himself. Volvo SC90 is gorgerous car. He was the man behind the rejuvenate Volvo looks.
In a recent wardsauto article, Peter Horbury talked emotion of desiger in the designigng process. Vehicle styling is an art. Like a piece of painting or sculpture, as a visual art, styling should revoke the deep emotion of a speculator. The emotion of the creator of the art, thus, should be connected to the speculator through the works the artist created. Creativity can only comes out of a highly passitionate brain. An art producer should have great passion on his works to produce a great product. Limitations and restrains should be balanced for this purpose. A great drawing has to be constrained within the frame of the canvas. Engineering and designing should be working hand in hand. A disciplined-bizzare kind of mode is needed. (The word might be first used by a Chryser chief, Dieter?)
Ford - Global Product Development System
Excerpts from articles of WardsAuto on GPDS, Global Product Development System of Ford Motor Company.
On August 17, 2005, " Ford Challenges Japanese Speed to Market"
Ford Motor Co. will be competitive with Japanese auto makers in quick and cost-efficient product development by the end of the year, says Phil Martens, group vice president-product creation.
Ford has tapped Mazda Motor Corp., blending some of its expertise into the GPDS, under which all future vehicles will be created.
Cost reduction varies by program, Martens says. Ford is benchmarking Mazda products, as well the competition. The total cost calculation factors in development time, test requirements and the number of engineers and equipment needed.
Ford has spent the last few years evaluating what it sees as critical paths to efficient product creation and is addressing bottlenecks or anything else that threatens to slow the process, in areas ranging from design and engineering to stamping and validation.
To this end, CATIA version 5 computer-aided-design software is being rolled out globally as the exclusive engineering interface. The advanced studio in California and one created in Dearborn about 18 months ago now are operating in sync, a collaboration that requires fewer engineers overall.
To ensure the right styling for new vehicles, marketing has been revamped up front to weigh in early on product creation, Martens says
And the product chief wants simultaneous engineering on all fronts: feasibility; design; testing and manufacturing; so all are working on the same thing, at the same time, and conversing wirelessly.
One bottleneck eliminated is in safety testing and validation.
Ford has invested $16 million in the renovation of the 12-lab Certification Test Laboratory that will be completed this summer, says Cindy Bohen, safety project engineer.
It will enable the auto maker to conduct some of the most comprehensive occupant-protection crash simulation tests in the world and make safety-related design decisions long before costly prototype vehicles are built.
Two Interior Head Impact labs send the heads of dummies into 60 different vehicle-roof points at 15 mph (24 km/h), capturing data used to engineer headliners that reduce the risk of injury in a collision.
Two Occupant Out-of-Position test areas provide data to design airbags and seatbelts.
The jewel of the facility is the new Servo-Hydraulic Reverse Crash Simulator. The “servo sled” is the only one in the world able to simulate five collision scenarios.
It simulates a frontal impact at 35 mph (56 km/h) with and without pitch (where the nose of a vehicle bows and the end raises off the ground on impact) and rear impact and side impact from two different positions – all without destroying the test device that is fitted with “bucks” representing different vehicle lines.
Susan M. Cischke, vice president-environmental and safety engineering, says the results of advanced occupant testing done at the new safety center will be shared with the auto maker’s family of brands, complementing the work being done by safety leader Volvo Cars in Sweden.
My Comments:
On August 17, 2005, " Ford Challenges Japanese Speed to Market"
Ford Motor Co. will be competitive with Japanese auto makers in quick and cost-efficient product development by the end of the year, says Phil Martens, group vice president-product creation.
Ford has tapped Mazda Motor Corp., blending some of its expertise into the GPDS, under which all future vehicles will be created.
Cost reduction varies by program, Martens says. Ford is benchmarking Mazda products, as well the competition. The total cost calculation factors in development time, test requirements and the number of engineers and equipment needed.
Ford has spent the last few years evaluating what it sees as critical paths to efficient product creation and is addressing bottlenecks or anything else that threatens to slow the process, in areas ranging from design and engineering to stamping and validation.
To this end, CATIA version 5 computer-aided-design software is being rolled out globally as the exclusive engineering interface. The advanced studio in California and one created in Dearborn about 18 months ago now are operating in sync, a collaboration that requires fewer engineers overall.
To ensure the right styling for new vehicles, marketing has been revamped up front to weigh in early on product creation, Martens says
And the product chief wants simultaneous engineering on all fronts: feasibility; design; testing and manufacturing; so all are working on the same thing, at the same time, and conversing wirelessly.
One bottleneck eliminated is in safety testing and validation.
Ford has invested $16 million in the renovation of the 12-lab Certification Test Laboratory that will be completed this summer, says Cindy Bohen, safety project engineer.
It will enable the auto maker to conduct some of the most comprehensive occupant-protection crash simulation tests in the world and make safety-related design decisions long before costly prototype vehicles are built.
Two Interior Head Impact labs send the heads of dummies into 60 different vehicle-roof points at 15 mph (24 km/h), capturing data used to engineer headliners that reduce the risk of injury in a collision.
Two Occupant Out-of-Position test areas provide data to design airbags and seatbelts.
The jewel of the facility is the new Servo-Hydraulic Reverse Crash Simulator. The “servo sled” is the only one in the world able to simulate five collision scenarios.
It simulates a frontal impact at 35 mph (56 km/h) with and without pitch (where the nose of a vehicle bows and the end raises off the ground on impact) and rear impact and side impact from two different positions – all without destroying the test device that is fitted with “bucks” representing different vehicle lines.
Susan M. Cischke, vice president-environmental and safety engineering, says the results of advanced occupant testing done at the new safety center will be shared with the auto maker’s family of brands, complementing the work being done by safety leader Volvo Cars in Sweden.
My Comments:
(Phil Martens left Ford after the annoucement of appointing Field Martens as CEO, America in Octomber 2005)
On process: It is the glue to hold the team together. It's the highway of information flow. It's should drive the culture change of a company when adopting a new product creation process. Like every company wide activities, top management should buy in to it. Only after the strong buy-in from the top get visible to the downstream of the corporate, an activity is able to be fruitful. Vehicle creation is a very complex process and need a lot of teams of specific expertise to be involved. A good process should be used to facilitate the corporation and streamline the communication in order to eliminate waste from the system, such as bad designing/engineering, late modifying, turf fighting, delaying, repeated data collection, etc. by doing the following,
Bringing all parts together lead by a powerful chief engineer
Avoiding segmentation
Clarifying the responsibilities
Standardizing the service and customer interfacing (eliminating being unambiguous, controlling the ramification and variance of information flow by shorting the route)
The ideal situation is like a living organic body. (Ok, my theory – living organic organization)
On tools: geometry creation – CATIA, used by Chrysler, Honda, Toyota(?), and European auto manufactures. A good geometry tool should be a good product life cycle management tool. To do this, it needs to have decent database management functionalities. It should also have basic functions of CAE. CATIA is the choice. A lot CAE tools have integrated into CATIA. In the future, a good engineer should be good at geometry creation and CAE simulation.
On people: The teams should have a strong sense of working toward a common goal – create a product customs love to have and company makes profits. Every member needs to be committed to the common goal. Don’t let the sense of goal get drying out downstream. Physically relocate all of the teams are not feasible economically, but relying on web technology, a virtual place should be created for a specific program. GPDS like process should be the backbone of it. A problem is how to balance the control of accessibility and sharing of information.
Thursday, November 30, 2006
Design and Styling
Keep a good proportion of the body is very important.
To achieve bold feeling - Raise the beltline proportion to total height from 50/100 to 70/100 with less glass.
To get sporty feeling - as short as possible front overhang, four wheels pushing to four corners, right stance (whole body tiled to front a bit, a little narrower front end, a little shrink of the top)
Short front overhang imposes challenges for Engine mount. Planting wheels to four corners are creating engineering challenges for suspension layout also.
To achieve bold feeling - Raise the beltline proportion to total height from 50/100 to 70/100 with less glass.
To get sporty feeling - as short as possible front overhang, four wheels pushing to four corners, right stance (whole body tiled to front a bit, a little narrower front end, a little shrink of the top)
Short front overhang imposes challenges for Engine mount. Planting wheels to four corners are creating engineering challenges for suspension layout also.
Ghosn - Nissan and Renault
Excerpts from an article of CNNMoney
Ghosn began shuttling among three countries and three cultures as a kid. After his birth in Brazil to Lebanese parents, he moved to Lebanon at 6. Educated by Jesuits in Beirut, he attended college in Paris, graduating from two of France's most prestigious universities.
In 1978 he joined Michelin, the French tire manufacturer. By 1990 he had risen to head North American operations and oversaw Michelin's restructuring following the acquisition of Uniroyal Goodrich. Despite his success, Ghosn recognized that his advancement at the family-owned company had come to a halt, so he moved to Renault in October 1996 as executive vice president for purchasing, manufacturing and R&D. Following a string of cutbacks and plant closings that he engineered, he became known, affectionately, as "le cost killer." In 1999 he was sent to Japan to run Nissan, in which Renault had obtained a 36.8 percent stake.
After years of bad management, Nissan was all but bankrupt. Ghosn came in and upset traditional practices, becoming a major celebrity and a comic-book superhero in the process. He announced the end of seniority promotions and cross-shareholdings with other companies, set strict financial targets and declared he would resign if he didn't meet them.
Today he is as focused on the global competition as he is on alliance possibilities. "There is no doubt they will be coming to the U.S.," says Ghosn, leaning toward his listener to make a point. He is referring to the Chinese and Indian vehicle manufacturers that will soon hit the U.S. market.
He's even planned a strategy for them: "I was sitting down with my team and I said, 'If I were a Chinese company, how would I come to the U.S. market?' It's very simple. I would come with a very cheap car. There is practically no car selling at less than $10,000 in the U.S. market."
What is miraculous to him is Toyota's consistent ability to execute in an operationally complex business without making many mistakes. "From time to time when you miss something, you're getting punished for it. If you miss two things, you're getting harshly punished. If you miss more than two things, then you start to be in serious trouble."
Not Toyota. Without mentioning the company by name, Ghosn ticks off the list of qualities that make it successful: a learning organization, humble in front of its customers, using profit as the only meaningful indicator.
Ghosn knows about mistakes. He championed Nissan's decision to locate its newest U.S. plant in Mississippi and then violated several industry principles by starting production of four all-new vehicles with an all-new workforce. Quality problems surfaced immediately and continue today; Consumer Reports refuses to recommend any of the four vehicles built there because of poor reliability. Ghosn says that the quality problems stem from three or four years ago and that he's confident they will be erased.
Ghosn began shuttling among three countries and three cultures as a kid. After his birth in Brazil to Lebanese parents, he moved to Lebanon at 6. Educated by Jesuits in Beirut, he attended college in Paris, graduating from two of France's most prestigious universities.
In 1978 he joined Michelin, the French tire manufacturer. By 1990 he had risen to head North American operations and oversaw Michelin's restructuring following the acquisition of Uniroyal Goodrich. Despite his success, Ghosn recognized that his advancement at the family-owned company had come to a halt, so he moved to Renault in October 1996 as executive vice president for purchasing, manufacturing and R&D. Following a string of cutbacks and plant closings that he engineered, he became known, affectionately, as "le cost killer." In 1999 he was sent to Japan to run Nissan, in which Renault had obtained a 36.8 percent stake.
After years of bad management, Nissan was all but bankrupt. Ghosn came in and upset traditional practices, becoming a major celebrity and a comic-book superhero in the process. He announced the end of seniority promotions and cross-shareholdings with other companies, set strict financial targets and declared he would resign if he didn't meet them.
Today he is as focused on the global competition as he is on alliance possibilities. "There is no doubt they will be coming to the U.S.," says Ghosn, leaning toward his listener to make a point. He is referring to the Chinese and Indian vehicle manufacturers that will soon hit the U.S. market.
He's even planned a strategy for them: "I was sitting down with my team and I said, 'If I were a Chinese company, how would I come to the U.S. market?' It's very simple. I would come with a very cheap car. There is practically no car selling at less than $10,000 in the U.S. market."
What is miraculous to him is Toyota's consistent ability to execute in an operationally complex business without making many mistakes. "From time to time when you miss something, you're getting punished for it. If you miss two things, you're getting harshly punished. If you miss more than two things, then you start to be in serious trouble."
Not Toyota. Without mentioning the company by name, Ghosn ticks off the list of qualities that make it successful: a learning organization, humble in front of its customers, using profit as the only meaningful indicator.
Ghosn knows about mistakes. He championed Nissan's decision to locate its newest U.S. plant in Mississippi and then violated several industry principles by starting production of four all-new vehicles with an all-new workforce. Quality problems surfaced immediately and continue today; Consumer Reports refuses to recommend any of the four vehicles built there because of poor reliability. Ghosn says that the quality problems stem from three or four years ago and that he's confident they will be erased.
Tuesday, November 28, 2006
GM's Investment in China
GM is investing 8 billion Chinese Yuan (1.02Billion US dollars) in China each year currently, to enhance research, development and production.
China is the most profitable market of GM after NA is in trouble.
GM will grow for sure and will remain as a biggest player in China.
For a huge market like China, while the local guys are still very vulnerable, whoever invests on R&D to focus on local market, will win. But GM China should operate lean, not like its America operation.
China is the most profitable market of GM after NA is in trouble.
GM will grow for sure and will remain as a biggest player in China.
For a huge market like China, while the local guys are still very vulnerable, whoever invests on R&D to focus on local market, will win. But GM China should operate lean, not like its America operation.
Chrysler's Problem
For a long time and as a known fact, Chrysler has the reputation of creating stylish cars. The most recent round of new products include PT Chruiser, 300, Charger. It is those products that Chryser postponed its fate to fall into red one year after Ford and GM.
However, Chrysler's stylish products are not selling well after the first year of intial launch. Marketing analysis shows that only 8% of people in US are the ones who have to have a new stylish care. 45% of the customers are stressing reliability and durability. After the small percet of hard core buyers get satiated, the customers bases are dying up.
Sales of a product of 3 years old from Chrysler will start to decrease fast. Contrast to this, Toyota's Corolla increased 13% in 2005, even after it was lauched in 2002.
Chrysler claims its recent trouble is due to product mix. Since most of them are gas guzzler, it is greately impact by the fuel price. This is kind of true, but not the whole picture. For a long run, reliability and durability win.
Chrsler cars and trucks are lack of new techonlogy also. 6 speed automatic transmission, VVT engine, active safety, etc, are all missed by Chrysler. For a long run of a corporation, innovation wins.
However, Chrysler's stylish products are not selling well after the first year of intial launch. Marketing analysis shows that only 8% of people in US are the ones who have to have a new stylish care. 45% of the customers are stressing reliability and durability. After the small percet of hard core buyers get satiated, the customers bases are dying up.
Sales of a product of 3 years old from Chrysler will start to decrease fast. Contrast to this, Toyota's Corolla increased 13% in 2005, even after it was lauched in 2002.
Chrysler claims its recent trouble is due to product mix. Since most of them are gas guzzler, it is greately impact by the fuel price. This is kind of true, but not the whole picture. For a long run, reliability and durability win.
Chrsler cars and trucks are lack of new techonlogy also. 6 speed automatic transmission, VVT engine, active safety, etc, are all missed by Chrysler. For a long run of a corporation, innovation wins.
Tuesday, November 21, 2006
Crash safety - ESC, Side Airbags
Insurance Institute of Highway Safety (IIHS) (Virginia based), and National Highway Traffic Safety Administration (NHTSA) are two major forces to drive safety standards in US.
IIHS is influential only through commercial measures. High ratings of IIHS will make a vehicle more liked by consumers. NHTSA is a government agent to enforce safety standards. It is usually slower to adopt a new standard, either because of long bureaucratic process or because of resistance and reluctance of automakers.
Some safety related figures:
Side impact crashes are the second-deadliest after frontal crashes, killing 9,300 in 2005, or 29 percent of vehicle deaths.
The insurance institute said last month that side air bags, which provide head protection, reduce driver deaths by 37 percent and deaths in SUV crashes by 52 percent.
In 2005, rollover deaths increased 2.1 percent to 10,816
Traffic deaths increased in 2005 to the highest level since 1990, up 1.4 percent to 43,445. Car crashes are the leading cause of death for Americans age 5-35 and cost $230 billion annually
ESC (electronic stability control)-- currently in about 40 percent of all vehicles -- could save 10,300 lives a year and prevent 250,000 injuries a year, according to the NHTSA. It could also reduce by one-third the 2 million annual single vehicle crashes, saving billions of dollars.
IIHS is influential only through commercial measures. High ratings of IIHS will make a vehicle more liked by consumers. NHTSA is a government agent to enforce safety standards. It is usually slower to adopt a new standard, either because of long bureaucratic process or because of resistance and reluctance of automakers.
Some safety related figures:
Side impact crashes are the second-deadliest after frontal crashes, killing 9,300 in 2005, or 29 percent of vehicle deaths.
The insurance institute said last month that side air bags, which provide head protection, reduce driver deaths by 37 percent and deaths in SUV crashes by 52 percent.
In 2005, rollover deaths increased 2.1 percent to 10,816
Traffic deaths increased in 2005 to the highest level since 1990, up 1.4 percent to 43,445. Car crashes are the leading cause of death for Americans age 5-35 and cost $230 billion annually
ESC (electronic stability control)-- currently in about 40 percent of all vehicles -- could save 10,300 lives a year and prevent 250,000 injuries a year, according to the NHTSA. It could also reduce by one-third the 2 million annual single vehicle crashes, saving billions of dollars.
Monday, November 20, 2006
Honda Ways
(Excerpts from an Internet posting)
What does Japanese carmaker Honda of America Manufacturing Inc. do that other manufacturers could emulate?
Relationships are based on a belief that respect for the individual will ultimately result in a better product.
It maintains a relatively small supply base.
It maintains an intimate relationship with its suppliers.
It doesn't establish or break relationships quickly.
It consults with line workers to solve problems.
It forms problem-solving and quality-conscious groups.
It rewards ideas that lead to improvements.
What does Japanese carmaker Honda of America Manufacturing Inc. do that other manufacturers could emulate?
Relationships are based on a belief that respect for the individual will ultimately result in a better product.
It maintains a relatively small supply base.
It maintains an intimate relationship with its suppliers.
It doesn't establish or break relationships quickly.
It consults with line workers to solve problems.
It forms problem-solving and quality-conscious groups.
It rewards ideas that lead to improvements.
Chinese Auto Market Growth
Stirred by AutoChina 06' show, Wall Street Journal and other major media have a lot of covers of Chinese auto market. Lastest projections are:
This year (2006), sales reach 7 million, overpassing Japan as second largest market after US.
By 2010, sales hit 10 million. (Toyota is planning to have 10% share, 1 million sales)
By 2020, sales reach 20 million, becoming the largest market in the world.
Plus, India is booming.
All of the heavy duty players are scrambling to update their strategy in China, Asia. There are also over 100 local players who are competing at lower ends. A consolidation will come soon.
This year (2006), sales reach 7 million, overpassing Japan as second largest market after US.
By 2010, sales hit 10 million. (Toyota is planning to have 10% share, 1 million sales)
By 2020, sales reach 20 million, becoming the largest market in the world.
Plus, India is booming.
All of the heavy duty players are scrambling to update their strategy in China, Asia. There are also over 100 local players who are competing at lower ends. A consolidation will come soon.
Sunday, November 19, 2006
5S & 5 Whys
5S: Sort, Streighten, Sanitize, Sweep, and Sustain. Method to organize working environment
5 Whys: Ask whys five times to locate the root cause of a problem.
For Wikipedia:
5S is a reference to five Japanese words that describe standardized cleanup:
5 Whys: Ask whys five times to locate the root cause of a problem.
For Wikipedia:
5S is a reference to five Japanese words that describe standardized cleanup:
- Seiri (整理): tidiness, organization. Refers to the practice of sorting through all the tools, materials, etc., in the work area and keeping only essential items. Everything else is stored or discarded. This leads to fewer hazards and less clutter to interfere with productive work.
- Seiton (整頓): orderliness. Focuses on the need for an orderly workplace. Tools, equipment, and materials must be systematically arranged for the easiest and most efficient access. There must be a place for everything, and everything must be in its place.
- Seiso (清掃): cleanliness. Indicates the need to keep the workplace clean as well as neat. Cleaning in Japanese companies is a daily activity. At the end of each shift, the work area is cleaned up and everything is restored to its place.
- Seiketsu (清潔): standards. Allows for control and consistency. Basic housekeeping standards apply everywhere in the facility. Everyone knows exactly what his or her responsibilities are. House keeping duties are part of regular work routines.
- Shitsuke (躾): sustaining discipline. Refers to maintaining standards and keeping the facility in safe and efficient order day after day, year after year.
Saturday, November 18, 2006
Chinese Auto - 06' Beiing Auto Show
Excerpts from reports of Bejing Auto Show.
Homegrown Chinese brands stole the show Saturday at the opening of the Beijing Auto Show, upstaging their bigger and better-known international counterparts with original designs and big ambitions.
....
Sleek Chinese high-end sedans, hybrids, roomy SUVs, and convertibles in rainbow colors competed cheek by jowl with their foreign counterparts and in many cases drew the larger crowds.
.....
The most remarkable thing, Murtaugh said, is that the knock-offs of U.S. and European vehicles that dominated the Chinese car industry five years ago are gone, replaced by original designs.
.....
"The Japanese took a long time to get into being original,"
.....
Chinese brands now account for about one-fifth of mainland sales but the government has said it wants to see homegrown cars take 60 percent of the market share by 2010.
Comments: Looks like the domestic players are attacking all frontiers.
Homegrown Chinese brands stole the show Saturday at the opening of the Beijing Auto Show, upstaging their bigger and better-known international counterparts with original designs and big ambitions.
....
Sleek Chinese high-end sedans, hybrids, roomy SUVs, and convertibles in rainbow colors competed cheek by jowl with their foreign counterparts and in many cases drew the larger crowds.
.....
The most remarkable thing, Murtaugh said, is that the knock-offs of U.S. and European vehicles that dominated the Chinese car industry five years ago are gone, replaced by original designs.
.....
"The Japanese took a long time to get into being original,"
.....
Chinese brands now account for about one-fifth of mainland sales but the government has said it wants to see homegrown cars take 60 percent of the market share by 2010.
Comments: Looks like the domestic players are attacking all frontiers.
Team Work
Autotive production, including planning, design, engineering and manufacuring is a very complex process. It needs intensive coorperation of thousands of people. It's one of most complex task in human history. Building the Pyramid or Great Wall sure need organization, but far below the complex of building and engineering a car.
How to organize and coordinate among the teams? It's a big challege!
Teams have to have common goals. The interface between teams have to be designed well. A service model should be in place. A team/department should provide service and accept service to and from other teams. Response time, level of service should be specified explicitely.
A general process should be in place to make sure the flow of info/material is smooth among teams/departments.
The memembers should not be treated as robots. They are human being. They need to take responsibility and have a sense of accomplishment.
(Blogged when babysitting Will at Windsor Central Library)
How to organize and coordinate among the teams? It's a big challege!
Teams have to have common goals. The interface between teams have to be designed well. A service model should be in place. A team/department should provide service and accept service to and from other teams. Response time, level of service should be specified explicitely.
A general process should be in place to make sure the flow of info/material is smooth among teams/departments.
The memembers should not be treated as robots. They are human being. They need to take responsibility and have a sense of accomplishment.
(Blogged when babysitting Will at Windsor Central Library)
Friday, November 17, 2006
Chinese Auto Market & Product Development
The luxury car sales in China increased 80% (YTD) compared with last year, vs total car sales increase of 38%.
Toyota is projecting the light truck market will pick up in the near future (within 4-5 years) based on the reasoning that Chinese rurual income is increasing.
The mid-size sale is projected to growth from roughly 5 million now to 10 million in 2012 . The projection possiblely is a bit too aggressive. Conservatively estimating, it should reach 7-8 million by then. The middle class is growing with the Chinese economic growth.
The market is there. With a big market like this, no company could afford to go without a local product development team. The time of simply bringing in a model developed for American or European market has gone. Lessons should be learned from the US market. All of the big foreign players, Toyota, Nissan, Honda, Hyundai, has American R&D center. The even have design studio at California. It's very obvious that the only an existance of local development team could capture the markets trend and cash in that trend.
GM has established with SAIC a R&D center, which is playing some roles in cutomizing Cadilallc. A Cadillac SLS model is introduced in Beijing Auto Show 06. It has the exact same underpinning with its US cousin, SLT. The interior is changed a lot, the back seats to be specific, to adapt to the fact that the rich people in China usually has a chauffer to drive for them.
There are two groups of Chinese plays in the field of Chinese auto market: Domestic and Joint Ventures. Chery and Geely are representatives of domestic players. Limited by skills, they are competing in the low entry level market relying on re-engineering (reverse engineering) development. They are accumulating experience, techology and skills very fast. They are quick learners. The are starting to grasp the critial abililiy of engine, transmission, even hybrid development. When they are getting more and more mature, they will expand their product line and mix, change their offensive frontier to middle and entry level luxury segments.
Joint Ventures are starting to develop self-development capabilities. But limited by their natures, they are only developing some kind of complementary skills. They will rely most on their parents' develoment center aboard. Wait to see. Is that possible that the Joint Ventures develop the whole vehicle for the Chinese market? Like Ford Europe? and GM European Operation, and Toyota NA? It's possible after their market share grows to a point.
Toyota is projecting the light truck market will pick up in the near future (within 4-5 years) based on the reasoning that Chinese rurual income is increasing.
The mid-size sale is projected to growth from roughly 5 million now to 10 million in 2012 . The projection possiblely is a bit too aggressive. Conservatively estimating, it should reach 7-8 million by then. The middle class is growing with the Chinese economic growth.
The market is there. With a big market like this, no company could afford to go without a local product development team. The time of simply bringing in a model developed for American or European market has gone. Lessons should be learned from the US market. All of the big foreign players, Toyota, Nissan, Honda, Hyundai, has American R&D center. The even have design studio at California. It's very obvious that the only an existance of local development team could capture the markets trend and cash in that trend.
GM has established with SAIC a R&D center, which is playing some roles in cutomizing Cadilallc. A Cadillac SLS model is introduced in Beijing Auto Show 06. It has the exact same underpinning with its US cousin, SLT. The interior is changed a lot, the back seats to be specific, to adapt to the fact that the rich people in China usually has a chauffer to drive for them.
There are two groups of Chinese plays in the field of Chinese auto market: Domestic and Joint Ventures. Chery and Geely are representatives of domestic players. Limited by skills, they are competing in the low entry level market relying on re-engineering (reverse engineering) development. They are accumulating experience, techology and skills very fast. They are quick learners. The are starting to grasp the critial abililiy of engine, transmission, even hybrid development. When they are getting more and more mature, they will expand their product line and mix, change their offensive frontier to middle and entry level luxury segments.
Joint Ventures are starting to develop self-development capabilities. But limited by their natures, they are only developing some kind of complementary skills. They will rely most on their parents' develoment center aboard. Wait to see. Is that possible that the Joint Ventures develop the whole vehicle for the Chinese market? Like Ford Europe? and GM European Operation, and Toyota NA? It's possible after their market share grows to a point.
Tuesday, November 14, 2006
Advertisement
A piece of news about Ford is shifting a bit its current Bold Move ad to include more product specific info responding to dealers' requirements. Ford spokesman said the Bold Move is helpful so far to build brand image. Dealers claim the Bold ad is a bit too focused on lifestyle.
Then what is advertisement for? Increase visibility, right? Should it be created for different purpose? For corporate, for brand image, for products?
Then what is advertisement for? Increase visibility, right? Should it be created for different purpose? For corporate, for brand image, for products?
Monday, November 13, 2006
Auto industry news - Toyota's global expending plan
Read an article from Yahoo/Finance about Toyota's plan to reach the goal of 15% of world wide auto market share by 2010.
The growth targets are the countries currently undergoing motorization (Toyota's term, same meaning of the German term mobility, mobilization). They are Russian, China, India and Brazil.
Toyota project the world auto production will increas to 73 million from 65 million currently. Toyota currently holds 11% of the worldwide martket share behind only GM.
In Octobe, Toyota outlined plan to produce 9.8 million by 2008.
Excerpts from the article:
Toyota already has one plant in India, with production of 44,500 units, one plant in Brazil, without output of 57,800, and five plants in China, with combined output of 443,000. It plans to open another plant in China in mid-2007 and boost production at other facilities to raise China output to 693,000. Its first Russia plant, with capacity of 50,000 units, is scheduled to open in late 2007.
The growth targets are the countries currently undergoing motorization (Toyota's term, same meaning of the German term mobility, mobilization). They are Russian, China, India and Brazil.
Toyota project the world auto production will increas to 73 million from 65 million currently. Toyota currently holds 11% of the worldwide martket share behind only GM.
In Octobe, Toyota outlined plan to produce 9.8 million by 2008.
Excerpts from the article:
Toyota already has one plant in India, with production of 44,500 units, one plant in Brazil, without output of 57,800, and five plants in China, with combined output of 443,000. It plans to open another plant in China in mid-2007 and boost production at other facilities to raise China output to 693,000. Its first Russia plant, with capacity of 50,000 units, is scheduled to open in late 2007.
Nolasco (Toyota spokesman) said there are no additional plans at the moment to build new facilities, but noted that Toyota has a policy of trying to build its cars close to the markets where they are sold. (Mr. Henry Ford's philosophy)
Toyota - SBA of Oakland University: Student - Faculty Supplier Relations Conference
The confernce was held on Nov.11, 2006. Judged by the name of the conference, Toyota might sponspored the conference. It was held on Oakland Center, Oakland University.
Vice President, Purchasing, Toyota Motor Engineering & Manufacturing NA, Mr. Simon Nagata, presented and gave a opening speech on Toyota's View on Supplier Relations. One representative from Toyota presented the way Toyota deals with its suppliers.
Two famous people, previous Chrysler president, Thomas T. Stallkamp, and The Toyota Way author, Professor of Industrial and Operations Engineering, Prof. Jeffrey K. Liker, are also two main speakers. Tom Stallkamp was famous figure in Chrysler. Heard about of him when I first started my job with Chrysler in 2000. He is the father of the Chrysler Expanded Enterprise program, SCORE. A book on this topic was just published by Mr. Stallkamp. Prof. Liker presented the part related with supplier relationship of his famous book.
A professor from Okaland University gave a presentaion on how supplier relationship is impacting the a firm's competetive advatages. He has a consulting firm focusing on supplier management. His presentation is full of tables based on the data his firm collected during the past years. Name of the professor is John W. Henke, Jr. His firm is Planning Perspectives, Inc.
The Toyota cheif mentioned in the meeting this is first effort Toyota is making to introduce its supplier relationship managenent policy.
Vice President, Purchasing, Toyota Motor Engineering & Manufacturing NA, Mr. Simon Nagata, presented and gave a opening speech on Toyota's View on Supplier Relations. One representative from Toyota presented the way Toyota deals with its suppliers.
Two famous people, previous Chrysler president, Thomas T. Stallkamp, and The Toyota Way author, Professor of Industrial and Operations Engineering, Prof. Jeffrey K. Liker, are also two main speakers. Tom Stallkamp was famous figure in Chrysler. Heard about of him when I first started my job with Chrysler in 2000. He is the father of the Chrysler Expanded Enterprise program, SCORE. A book on this topic was just published by Mr. Stallkamp. Prof. Liker presented the part related with supplier relationship of his famous book.
A professor from Okaland University gave a presentaion on how supplier relationship is impacting the a firm's competetive advatages. He has a consulting firm focusing on supplier management. His presentation is full of tables based on the data his firm collected during the past years. Name of the professor is John W. Henke, Jr. His firm is Planning Perspectives, Inc.
The Toyota cheif mentioned in the meeting this is first effort Toyota is making to introduce its supplier relationship managenent policy.
Friday, November 10, 2006
Big Three Gaps
Any company that has to support three retirees for every active worker would have a hard time making ends meet, as General Motors (nyse: GM - news - people ) knows all too well. But that widely publicized legacy burden isn't the only reason domestic automakers are in trouble. On average, Toyota (nyse: TM - news - people ), Honda (nyse: HMC - news - people ) and Nissan (nasdaq: NSANY - news - people ) generate $2,400 more profit per vehicle than GM, Ford Motor (nyse: F - news - people ) and Chrysler Group. That's $11.5 billion in gravy that the Japanese companies can invest in new products and factory expansion. Manufacturing consultants at Harbour-Felax Group studied all six companies to see where the profit gaps occurred. Here is a breakdown per vehicle.
Comments: All of the gaps are rooted to products and can be closed with several selling products. As Mr. Carlos Chosn put it, "There is nothing wrong with a company that great product cannot solve".
Chrysler Product Creation
Continue reading the book Japanese Automotive Industry for a while. Brian spinning. Need to shift a bit to other books. This time, it is The Critical Path by Brock Yates. It's more like a novel. A lot of accent of every day spoken English. Don't like the style.
It's about the process of Chrysler's 1992 plan to overhaul its minivan. Ever since the minivan was launched in 1984, it has dominating the market place. But competitions from domestic and Japanese automakers are forcing Chrysler to come up with a new generation.
1 A production planning team of 18 was formed led by Nemeth. The team is composed of the main players:
1) Frank Sanders - Financial expert, for a firm budget
2) Dick Winter - Product Planner, who created Eagle Talon, Plymouth Lser, Mitsubishi Eclipse
3) Herm Greif - Quality control and vehile evaluation expert
4) Bruce Donaldson - Manufacturing
5) Tom Edson - Very sharp project manager who are desperate for a new product
Mission of the team: The new minivan team is dedicated to design, build and deliver a product - second to none - that will ensure Chryser global minivan dominance into the 21st century.
2 Started with "Red Book", a general writing of engineering and design plans the set cost, size, weight, power, etc.
3 From "Red Book", "the architecture" is generated. H-Point is the main focus to decide the architecture. From H-point, a set of exact postions called "hard point" are decided. Hard points decide the following dimenstions:
1) Wheelbase
2) Suspenion pickup points
3) firewall and engine location
4) fuel tank postion
5) instrument panel placement
H-point is critical. To decide it needs system level consideration. H-point should be low enough for easy entry and exit. Too high, the handling performance will be sacrifice, and passengers have difficulty to enter. Expeically if the car is design for women. Too low, it's car like. Lose visibility of the driver, interior room.
(Probably will continue to insert more here)
Final approved budget: (excerpt from the book)
Vendor tools, dies, and material handling - $675.8 million
Manufacturing - $834.7 million
Powertrain (Engine, transmissions) - $91.1 million
Acustar (components purchased from Mitsubishi joint venture) - $80.9 million
Research and development - $247.0 million
Pre-production launch - $109.9 million
Update Windsor engine plant - $47.0 million
It's about the process of Chrysler's 1992 plan to overhaul its minivan. Ever since the minivan was launched in 1984, it has dominating the market place. But competitions from domestic and Japanese automakers are forcing Chrysler to come up with a new generation.
1 A production planning team of 18 was formed led by Nemeth. The team is composed of the main players:
1) Frank Sanders - Financial expert, for a firm budget
2) Dick Winter - Product Planner, who created Eagle Talon, Plymouth Lser, Mitsubishi Eclipse
3) Herm Greif - Quality control and vehile evaluation expert
4) Bruce Donaldson - Manufacturing
5) Tom Edson - Very sharp project manager who are desperate for a new product
Mission of the team: The new minivan team is dedicated to design, build and deliver a product - second to none - that will ensure Chryser global minivan dominance into the 21st century.
2 Started with "Red Book", a general writing of engineering and design plans the set cost, size, weight, power, etc.
3 From "Red Book", "the architecture" is generated. H-Point is the main focus to decide the architecture. From H-point, a set of exact postions called "hard point" are decided. Hard points decide the following dimenstions:
1) Wheelbase
2) Suspenion pickup points
3) firewall and engine location
4) fuel tank postion
5) instrument panel placement
H-point is critical. To decide it needs system level consideration. H-point should be low enough for easy entry and exit. Too high, the handling performance will be sacrifice, and passengers have difficulty to enter. Expeically if the car is design for women. Too low, it's car like. Lose visibility of the driver, interior room.
(Probably will continue to insert more here)
Final approved budget: (excerpt from the book)
Vendor tools, dies, and material handling - $675.8 million
Manufacturing - $834.7 million
Powertrain (Engine, transmissions) - $91.1 million
Acustar (components purchased from Mitsubishi joint venture) - $80.9 million
Research and development - $247.0 million
Pre-production launch - $109.9 million
Update Windsor engine plant - $47.0 million
Thursday, November 09, 2006
A book - Japanese Automotive Industry
Borrowed a book from WPL last Saterday. The title of the book:
The Japanese Automobile Industry: Technology and Management at Nissan and Toyota
Finished the first chapter, about history of Nissan and Toyota. Actually passed the first half of the chapter of Nissan.
1 Compared with Nissan, from the right beginning, Toyota founder, Kiichiro Toyoda, was taking and philosophy of eclectic copying/adopting GM, Ford, Chryser and other machinery tool manufacturers of America, making them internally. Toyota copied a V6 Chevrolet engine of GM in 1934 with overhead valve configuration. From the copying work, so called "reverse engineering", Toyota developed experience and capability for subsequent improvement. While Nissan bought a design from Austin with a side mounted valve system. Technologically, this is inferior to overhead valve engine. No body wants to sell you the best technology.
2 Not like Nissan, Toyota was not tying with any advanced Western automaker. It's basically dissembling the vehicles and copied the design.
3 Not like Nissan, Toyota used general purpose machine tools instead of mass-production specialized tools. Totota avoided to use huge stamping presses in order to make the change to product design easier. Since they copied the cars, they were knowing from the beginning that the cars they made would have a lot problems. This philosophy also brings one more benefit - avoid big investment. This is also made shift product easier to accomodate costmer demands shift.
Ok. Too tired. Have go to bed.
The Japanese Automobile Industry: Technology and Management at Nissan and Toyota
Finished the first chapter, about history of Nissan and Toyota. Actually passed the first half of the chapter of Nissan.
1 Compared with Nissan, from the right beginning, Toyota founder, Kiichiro Toyoda, was taking and philosophy of eclectic copying/adopting GM, Ford, Chryser and other machinery tool manufacturers of America, making them internally. Toyota copied a V6 Chevrolet engine of GM in 1934 with overhead valve configuration. From the copying work, so called "reverse engineering", Toyota developed experience and capability for subsequent improvement. While Nissan bought a design from Austin with a side mounted valve system. Technologically, this is inferior to overhead valve engine. No body wants to sell you the best technology.
2 Not like Nissan, Toyota was not tying with any advanced Western automaker. It's basically dissembling the vehicles and copied the design.
3 Not like Nissan, Toyota used general purpose machine tools instead of mass-production specialized tools. Totota avoided to use huge stamping presses in order to make the change to product design easier. Since they copied the cars, they were knowing from the beginning that the cars they made would have a lot problems. This philosophy also brings one more benefit - avoid big investment. This is also made shift product easier to accomodate costmer demands shift.
Ok. Too tired. Have go to bed.
Chinese Auto - Geely
Excerpt from Reuters
Geely Automobile Holdings Ltd. <0175.hk> sealed a deal with Britain's Manganese Bronze Holdings Plc on Thursday to make iconic black London taxi cabs in China, as China's motor industry woos the overseas market.
Geely -- which makes some of China's cheapest vehicles and harbours ambitions of selling beyond its home market -- will set up a US$54.3 million car-making venture in China by mid-2008.
Manganese gets 48 percent of the joint venture, in return for which Geely gets two board seats and 23 percent of the British firm -- becoming its largest shareholder.
Manganese Bronze hoped to win shareholders' approval for the deal in early 2007, said group finance director Mark Fryer.Under the agreement, the partners aimed to produce around 40,000 cars annually -- about 10,000 of the London cabs and 30,000 limousines or sedans -- in Shanghai.
Manganese Bronze gains access to cheaper Chinese-made auto components -- some of which executives have said they intended to export to Britain.
……
The auto maker plans to more than double its annual production capacity to 650,000 vehicles in two years, from 300,000 planned for the end of 2006.
Comments: The people of Geely are smart. They learn through joint development/joint venture/paid service from other specialized suppliers, obtain the technology, and develop and produce its own version. Geely's CVVT engine is co-developed with FEV.
Geely might be too fast to come to international market. They are trying to follow Toyota's footprint. Toyota might at the same development stage have tried to enter the world auto market, especially NA. The Americans ridicule the car, laugh at its shabby quality. But after 10 years, 3 rounds of release, at the beginning of 1980s', Japanese had already become threat to Big threes.
Geely Automobile Holdings Ltd. <0175.hk> sealed a deal with Britain's Manganese Bronze Holdings Plc on Thursday to make iconic black London taxi cabs in China, as China's motor industry woos the overseas market.
Geely -- which makes some of China's cheapest vehicles and harbours ambitions of selling beyond its home market -- will set up a US$54.3 million car-making venture in China by mid-2008.
Manganese gets 48 percent of the joint venture, in return for which Geely gets two board seats and 23 percent of the British firm -- becoming its largest shareholder.
Manganese Bronze hoped to win shareholders' approval for the deal in early 2007, said group finance director Mark Fryer.Under the agreement, the partners aimed to produce around 40,000 cars annually -- about 10,000 of the London cabs and 30,000 limousines or sedans -- in Shanghai.
Manganese Bronze gains access to cheaper Chinese-made auto components -- some of which executives have said they intended to export to Britain.
……
The auto maker plans to more than double its annual production capacity to 650,000 vehicles in two years, from 300,000 planned for the end of 2006.
Comments: The people of Geely are smart. They learn through joint development/joint venture/paid service from other specialized suppliers, obtain the technology, and develop and produce its own version. Geely's CVVT engine is co-developed with FEV.
Geely might be too fast to come to international market. They are trying to follow Toyota's footprint. Toyota might at the same development stage have tried to enter the world auto market, especially NA. The Americans ridicule the car, laugh at its shabby quality. But after 10 years, 3 rounds of release, at the beginning of 1980s', Japanese had already become threat to Big threes.
Wednesday, November 08, 2006
Toyota Philosophy - Kaizen
Read a piece of news about how Toyota is trying to control the health care cost in its US plant. For the past 5 years, Toyota health care cost doubled to 11,000USD per person in its US plants. Toyota is experimenting setting up a plant clinic for its employees and supplier employees in one of its NA plant. The clinic is focusing on providing proactive measures to avoid big expense of hospitalization when health condition gets worse.
The news comments this is the traditional Toyota way to do business – Kaizen philosophy.
Read a book last night about Chrysler development of its Minivan (not finished yet). The author claims that Americans like revolution instead of evolution. They are running into a point of failure and make revolutionary measures to change their system. While the Japanese like evolution – Kaizen. They relentlessly improve on their system. Never give it up. Toyota is a good example. It is keep on stressing reducing cost and avoid big company disease. (The specific definition of this disease might be bureaucracy when a company is getting big)
Evolution vs. Revolution. Which philosophy is more applicable for a business operation? Revolution is a result of evolution. When evolution accumulates to a point which the old system/frame could not support the new contents, the system will have a fundamental change. The problem is in nature revolution rarely existing. Every thing needs time to happen. The long time lasting actually is evolution. The final system is totally different from the beginning. So, separate evolution and revolution is only decided by time. If the time is lasting longer for a new system to take form, it is called evolution. If it happens very fast, it's called revolution. Revolution only exists in human society. In nature, it does not exist. Revolution always brings waste, pain and disaster, chaos. I admire Toyota system.
Evolution needs careful planning and foresight.
The news comments this is the traditional Toyota way to do business – Kaizen philosophy.
Read a book last night about Chrysler development of its Minivan (not finished yet). The author claims that Americans like revolution instead of evolution. They are running into a point of failure and make revolutionary measures to change their system. While the Japanese like evolution – Kaizen. They relentlessly improve on their system. Never give it up. Toyota is a good example. It is keep on stressing reducing cost and avoid big company disease. (The specific definition of this disease might be bureaucracy when a company is getting big)
Evolution vs. Revolution. Which philosophy is more applicable for a business operation? Revolution is a result of evolution. When evolution accumulates to a point which the old system/frame could not support the new contents, the system will have a fundamental change. The problem is in nature revolution rarely existing. Every thing needs time to happen. The long time lasting actually is evolution. The final system is totally different from the beginning. So, separate evolution and revolution is only decided by time. If the time is lasting longer for a new system to take form, it is called evolution. If it happens very fast, it's called revolution. Revolution only exists in human society. In nature, it does not exist. Revolution always brings waste, pain and disaster, chaos. I admire Toyota system.
Evolution needs careful planning and foresight.
Toyota Being Big
Toyota today posted 35.1% net operating gain for the past quarter compared with year ago. The operating profit for the past half year reached 9.1 billion US dollar. The whole year projection is 18.3 USD. As a huge contrast, the combined loss of Big three last year is 7.6 billion.
The whole world is stirred by this announcement, especially the financial and auto industry world. Wall Street Journal, New York Times, Detroit Free Press, etc. are all covering it.
Main factors of the gain are: Sales up worldwide, internally cost control, favorable weak Japanese yen.
It is predicted Toyota very soon will pass GM as the world biggest auto maker, with worldwide sales around 9 million.
The same pattern repeats again and again – whenever there is fuel price hike, Bid Three is losing market share, while Toyota and Honda pick up.
Is Toyota able to avoid the problems of being big? It is labeled big-company disease by Toyota senior management. It looks like they are well prepared to face this challenge. A big concerns being big is operating efficiency. Toyota is able to copy its TPS to the worldwide when it sets up new plants. However, the expansion rate should be controlled moderate and should be planned carefully. Its suppliers need to make sure follow closely. The plants should be built with flexibility in mind. They should be able to switch product very fast. For the past, Toyota never resort to acquisition for grow. The reason might be TPS could only be built from scratch. Union is a big hurdle for TPS implementation.
Ordered the book of Toyota Product Development, how to organize to come up with a product fast is another concern being big.
The whole world is stirred by this announcement, especially the financial and auto industry world. Wall Street Journal, New York Times, Detroit Free Press, etc. are all covering it.
Main factors of the gain are: Sales up worldwide, internally cost control, favorable weak Japanese yen.
It is predicted Toyota very soon will pass GM as the world biggest auto maker, with worldwide sales around 9 million.
The same pattern repeats again and again – whenever there is fuel price hike, Bid Three is losing market share, while Toyota and Honda pick up.
Is Toyota able to avoid the problems of being big? It is labeled big-company disease by Toyota senior management. It looks like they are well prepared to face this challenge. A big concerns being big is operating efficiency. Toyota is able to copy its TPS to the worldwide when it sets up new plants. However, the expansion rate should be controlled moderate and should be planned carefully. Its suppliers need to make sure follow closely. The plants should be built with flexibility in mind. They should be able to switch product very fast. For the past, Toyota never resort to acquisition for grow. The reason might be TPS could only be built from scratch. Union is a big hurdle for TPS implementation.
Ordered the book of Toyota Product Development, how to organize to come up with a product fast is another concern being big.
Monday, November 06, 2006
Worldwide Auto Production
Excerpt from Detroit Free Press
Between now and 2012, the world's car and truck production will grow to nearly 78 million from about 62 million vehicles last year.
That's the equivalent of adding almost the size of today's entire U.S. auto market to the world total in seven years.But this growth won't be happening in the United States. Indeed, of the 16 million extra sets of wheels being built by 2012, fewer than 1 million will come from North America.
More than half the world's growth will occur in China and south Asian nations such as India, Thailand and Malaysia.China alone will grow its output by 106%, from 4.7 million to nearly 9.8 million vehicles annually in that period, while growth in the heretofore "developed world" of North America and western Europe will be only 5% or so, according to CSM.
Between now and 2012, the world's car and truck production will grow to nearly 78 million from about 62 million vehicles last year.
That's the equivalent of adding almost the size of today's entire U.S. auto market to the world total in seven years.But this growth won't be happening in the United States. Indeed, of the 16 million extra sets of wheels being built by 2012, fewer than 1 million will come from North America.
More than half the world's growth will occur in China and south Asian nations such as India, Thailand and Malaysia.China alone will grow its output by 106%, from 4.7 million to nearly 9.8 million vehicles annually in that period, while growth in the heretofore "developed world" of North America and western Europe will be only 5% or so, according to CSM.
Friday, November 03, 2006
How to organize
Extraction:
Enter Zetsche as top dog. After running Chrysler from 2000 to 2005, he took over DaimlerChrysler 14 months ago. Zetsche quickly set about slashing some 9,300 jobs by offering workers buyouts. More important, to shake up Mercedes' hidebound culture he kicked off a radical restructuring, organizing the company around functional elements of the car--motors, chassis, and electronics systems--instead of by model lines.
Comments: Organizing around functionality solves the problem of commonality across different platforms. Platform style organizing will generate overlaps among different platforms. Car and Truck platforms must both have brake departments. Platform should be existing above the egineering level, made up of heads of Engineering, Prodution, Marketing, Financing, Sales. It should focus on high-level strategy setting and process monitoring.
Enter Zetsche as top dog. After running Chrysler from 2000 to 2005, he took over DaimlerChrysler 14 months ago. Zetsche quickly set about slashing some 9,300 jobs by offering workers buyouts. More important, to shake up Mercedes' hidebound culture he kicked off a radical restructuring, organizing the company around functional elements of the car--motors, chassis, and electronics systems--instead of by model lines.
Comments: Organizing around functionality solves the problem of commonality across different platforms. Platform style organizing will generate overlaps among different platforms. Car and Truck platforms must both have brake departments. Platform should be existing above the egineering level, made up of heads of Engineering, Prodution, Marketing, Financing, Sales. It should focus on high-level strategy setting and process monitoring.
The following is an extract from an online publication, Mr. Alan Mulally's first impression with Ford Motor Company - NO BUSINESS PLAN.
Ford Motor Co.’s new ex-Boeing CEO Alan Mulally has said in an interview with Fortune magazine just 12 days into his new job that when he arrived, when asked where decisions were being delayed while he ‘got up to speed’, “Boy, I don't think so. One of the first things that I noticed was that Ford had many separate meetings about the business: product development, quality, production, marketing and very, very, good meetings.
"But what we didn't have was a business plan. And so my experience, that has been that it's an absolutely critical part of the management system to review every week what the plan is that we're on: the business environment of the customers, the vehicles, the revenues - every part of it."
My comment: Yes. Every business unit is excellect. But, if all of the units are working without a common goal, each is pulling into different direction, the results is, still the old saying, sum is far less than the addition.
Mr Mulally agreed that an estimated $3,400 unit cost advantage over Ford enjoyed by Toyota’s US-produced vehicles was about right, and emphasised the need for Ford to restructure to operate profitably at lower volume, and to accelerate product development, “where we get a chance to evolve the designs so they are easier to manufacture and have more common parts.”
Ford Motor Co.’s new ex-Boeing CEO Alan Mulally has said in an interview with Fortune magazine just 12 days into his new job that when he arrived, when asked where decisions were being delayed while he ‘got up to speed’, “Boy, I don't think so. One of the first things that I noticed was that Ford had many separate meetings about the business: product development, quality, production, marketing and very, very, good meetings.
"But what we didn't have was a business plan. And so my experience, that has been that it's an absolutely critical part of the management system to review every week what the plan is that we're on: the business environment of the customers, the vehicles, the revenues - every part of it."
My comment: Yes. Every business unit is excellect. But, if all of the units are working without a common goal, each is pulling into different direction, the results is, still the old saying, sum is far less than the addition.
Mr Mulally agreed that an estimated $3,400 unit cost advantage over Ford enjoyed by Toyota’s US-produced vehicles was about right, and emphasised the need for Ford to restructure to operate profitably at lower volume, and to accelerate product development, “where we get a chance to evolve the designs so they are easier to manufacture and have more common parts.”
Thursday, November 02, 2006
HR - Organization
For long time, I think HR head is a very important position for a corporation. Employee morale is related to the policies of HR. Among the policies, promotion and incentive are two main factors. HR is responsible to come up with a promotion and incentive policy based on review and evaluation. The review and evaluation should be objective and reflect the wants and needs of the corporation. For a product development unit, technology and skills are the key element to promote a person. The chief engineer should be a person with expertise in all of major subsystems.
Read an article about the new CEO of Ford will bring in his previous HR at Boeing to Ford. Two more big tasks for a HR head of a corporation like Ford, are corporate structure construction and labor negotiation.
Just like a human body, the whole organization should be an organic one. Different functions should coordinate and cooperate to serve the best of the organization.
Top executives: Brain
HR : People – Muscle; Organization structure – Skeleton.
Finance: Capital – Blood
Accounting: Monitoring profitability/against lost - immune system
Marketing: know and get known to others – Sensing system/mainly Eye/Ear and Mouth
Sales: Providing service to others – Arms and Legs
Product development: Provide service for sale – Practicing muscle and skeleton and generate new skills.
Read an article about the new CEO of Ford will bring in his previous HR at Boeing to Ford. Two more big tasks for a HR head of a corporation like Ford, are corporate structure construction and labor negotiation.
Just like a human body, the whole organization should be an organic one. Different functions should coordinate and cooperate to serve the best of the organization.
Top executives: Brain
HR : People – Muscle; Organization structure – Skeleton.
Finance: Capital – Blood
Accounting: Monitoring profitability/against lost - immune system
Marketing: know and get known to others – Sensing system/mainly Eye/Ear and Mouth
Sales: Providing service to others – Arms and Legs
Product development: Provide service for sale – Practicing muscle and skeleton and generate new skills.
Wednesday, November 01, 2006
Encouraged by the reading of Andy Grove, funder of Intel, started and determined to keep a diary. Keep tracking the footprint of thought.
Using English to write is not easy. Sometimes, might use Chinense to move this diary forward.
System - Economy is a system, the organization of a company is a system. The process of product development, like developing a modern vehicle, is a complex procedure. How to make this system efficient - highly productive? Toyota Product Development system is os far the best. Ordered the newly published book "Toyota Product Development system". The first auther is currently working as the Engineering Director of Stamping Unit at Ford. Wondering why Ford does put him on charge of the Production development.
The newly proposed GPDS (Global Product Development System) is so complex. Even trying to understand it is not a easy job. Just wondering a process as complex and complicated as GPDS will eventually work. Will compare it with Toyota system after the book comes.
A new book titled "The Origin of Wealth" is on the shelf of Borders. Quickly went through the Preface and first several pages of the first chapter. The economic system is complex, evolutionary system. "Designed without a Designer". It's evoluting as an biological sytem
Albert Einstein's quote "Things should be made as simple as possible, but not simpler".
Using English to write is not easy. Sometimes, might use Chinense to move this diary forward.
System - Economy is a system, the organization of a company is a system. The process of product development, like developing a modern vehicle, is a complex procedure. How to make this system efficient - highly productive? Toyota Product Development system is os far the best. Ordered the newly published book "Toyota Product Development system". The first auther is currently working as the Engineering Director of Stamping Unit at Ford. Wondering why Ford does put him on charge of the Production development.
The newly proposed GPDS (Global Product Development System) is so complex. Even trying to understand it is not a easy job. Just wondering a process as complex and complicated as GPDS will eventually work. Will compare it with Toyota system after the book comes.
A new book titled "The Origin of Wealth" is on the shelf of Borders. Quickly went through the Preface and first several pages of the first chapter. The economic system is complex, evolutionary system. "Designed without a Designer". It's evoluting as an biological sytem
Albert Einstein's quote "Things should be made as simple as possible, but not simpler".
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