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.
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