Automotive Intelligence Service - CSM Worldwide

http://www.csmauto.com/

Providing OEM with reports of competitor intelligence, worldwide auto industry projections, etc

Enterprise Content Management - ECM

Commercial suite:

Sharepoint 2007 a component of Office 2007

Microsoft Office SharePoint Server (MOSS) allows groups to easily create and update sites for collaboration and communication. It offers well-designed screens that help you customize the content, and you can quickly interact with these sites -- adding new files, updating reports and so on -- from several spots within Office applications.

Open source alternatives:

FileNet, OmniDocs....

Customer satisfaction

Depends on the following percefection of quality:

1 Product quality (previous post) - 74%
2 Service quality - 13%
3 Sales quality - 10%
4 Concern resolution quality - 3%

Product quality

Three elements of product quality perceived by customers:
1 Basic quality - reliability, durability, safety
2 Performance quality - Ride and Handling, NVH, fuel efficiency
3 Excitement quality - craftsmanship, interior features, exterior features

Basic quality is fundational to performance quality and excitement quality. Japanese automakers started from the beginning putting all of their resource to improve the basic quality. Then, they moved to performance quality by benchmarking Detroit automakers. Finally, they are at the third stage to deliver excitement quality. Nobody can claim that Japanese cars are dull these days.

On the same boat

For almost the whole history of Detroit automakers, profit comflicts existing between unitons and automakers. It's strange that they are fighting like enemies. Both sides are doing there best to push other to concede. The result is obvious - low production efficiency, low product quality, high labor cost.

Facing the Japanese cuting throat threat, each side has to fact the reality and willing to cooperate instead of fight.

Ford recently announced cost cutting bonus sharing for all so-called white collar and union workers. All are at the same level. This is called the first time in Detroit auto industry.

Actually, even the name "white collar" and "blue collar" should be abandoned completely. All of the people are in the same boat, and should have the same goal, and should pull the same direction to move the boat forward. Every person in the boat should be activated/motivated to work for the best of the organization. How? Distrobuting profits and incentives regardless of the work lines but according to the contribution made to the company.

Supplier Problem

Signs of troubled suppliers:

Late shipments
Quality issues
Regularly shipment through priority freight - sign of on verge of missing deadlines
Asking for fast payment – trouble with creditors

If a big supplier is bankrupt, equity fund usually take over. This scenario has happened since 2 years ago. In the previous rounds of automotive downturn, this might have happened. I don't know. The ultimate effect is for an automaker it is harder and harder to squeeze suppliers for profit margin.

To avoid the bankruptcy threat to assembly line disruption, Ford according to an article of Detroit Free Press, is hiring outside accounting and management firm, Grant Thornton LLP, to help monitor and even intervene/take over the management of a trouble supplier. Instead of reduce inventory, Ford is trying to hedge the risk of operation disruption by creating inventory bank in its assembly line.

I am wondering how a supplier could be controlled by Ford hired agency. This supplier's life is relying solely on Ford business, first. Second, the supplier must be very small.

Bankrupt suppliers:

# Dana Corp. (2006)
# Tower Automotive Corp. (2005)
# Collins & Aikman Corp. (2005)
# Delphi Corp. (2005)
# Federal-Mogul Corp. (2001)

Bankruptcy could be used to avoid stringent liability and emerge out as a more viable business entity.

Hondaism - Honda Culture

Accidentally found the book "Honda" at the shelve of UofWindsor library, by Sol Sanders. He wrote another book "A Sense of Asia". Honda culture is presented comparing with the general culture of Japanese firms. Honda is more innovative and free-minded style.

Honda management philosophy:

Company Principle
Maintaining an international viewpoint, we are dedicated to supplying products of the highest efficiency yet at a reasonable price for worldwide customer satisfaction.

Management Policy

1. Proceed always with ambition and youthfulness.
2. Respect sound theory, develop fresh ideas, and make the most effective use of time.
3. Enjoy your work and always brighten your working atmosphere.
4. Strive constantly for a harmonious flow of work.
5. Be ever mindful of the value of research and endeavor.

Honda R&D Institute, when it was set up, is an independent organization. This independent status guaranteed that R&D work is affected by company profit performance. It doesn't matter how profitable the company is, Honda R&D is always provided with enough fundings. At the time when the book was published, the fund is 2.5% of total sales. Plus, R&D is never punished when loss of sales results from a wrong research outcome.

When commenting on the phenomenal success of CVCC engine, the then president of Honda, Kawashima says:

"The quality of development is not solely dependent on the amount of money you devote to R&D and the number of people you have working in R&D. If that were true, our R&D company would have been dissolved long ago and we certainly could not have developed things like the CVCC. What we believe is important is the philosophy behind our work. And what counts, as far as we concerned, is this theory, the enthusiasm, and hard work"

"In our R&D, we believe that what is important is what is in our R&D people's brains. If technological breakthroughs were turned out as machines and computers work, then all you would need would be a large number of people. But it just doesn't work that way. So we believe what is important is that we administer or manage R&D in such a way that everybody there enjoys working, coming up with technological innovation. If their brains are 'strike,' then nothing is going to work no matter how much money you put into It."

- Innovation comes from freedom of imagination. The process is highly intensive brain functioning. Only enthusiasm could be the catalyst for a highly creative thinking.

Honda himself has put it more succinctly: "We do not make something because the demand, the market, is there. With our technology, we can create the demand, we can crate the market."

-How ambitious is this attitude! At a situation where giant firms are existing and ready to step you under their feet, this claim needs absolute bravery and resolution.

Union Retreat

2006, GM lost 1300USD average for each car and truck built in US, while Toyota made 2100USD. In the midst of this round of restructuring, GM steps up its effort in the past months to make union workers do more jobs and be flexible on the job categories, according to Detroit Free Press news.

This is the fundamental root of the problems of the big three US automakers. GM is going to the same direction. Ford by all means is working hard also. UAW is facing more pressure and more willing to concede on the requirements.

The quotation of the news:

It's a tough challenge

But changing long-accepted work practices is a delicate and politically charged task for automakers and union leaders.Workers who once literally could not turn a screw if it wasn't in their job description are now being tapped to perform multiple tasks. They're being asked to take on a greater role in day-to-day operations and assume leadership roles for the first time. And the union is being pushed to surrender work not related to building cars and trucks -- such as custodial work and grounds keeping -- to companies that can provide cheaper labor on a contract basis.

While such concepts are commonplace in Japanese-run factories, they run counter to hard-won labor agreements that for decades have protected workers in the domestic auto industry.

Agree. It's a tough job. It's a do-it-or-death kind of thing. Have to tackle.

What's a business model?

Excerpts from HBS working knowledge article, by Henry Chesbrough and Richard S. Rosenbloom.

This term "Business Model" is widely used, but seldom well defined. In our usage, the functions of a Business Model are to:
1 identify a market segment, that is, the users to whom the technology is useful and for what purpose;
2 articulate the value proposition, that is, the value created for users by the offering based on the technology;
3 define the structure of the value chain, that is, the network of activities within the firm required to create and distribute the products or services offered to customers;
4 estimate the cost structure and profit potential of producing the offering, given the value proposition and value chain structure chosen;
5 describe the position of the firm within the value network linking suppliers and customers, including identification of potential complementors and competitors;
6 formulate the competitive strategy by which the innovating firm will gain and hold advantage over rivals

Chrysler's 2nd Restructuring in 2000's

Following GM and Ford, Chrysler Group is constructing a restructuring plan now. The new plan will be release on Feb.14, 2007. Some speculations starts to show up in media recently. The following is extractions from Detroit Free Press.

"Teams from Mercedes and the consulting firm McKinsey & Co. have become fixtures at Chrysler headquarters in Auburn Hills. Company officials say that a 48-seat Airbus corporate jet has been jammed with staffers shuttling to and from DaimlerChrysler's offices in Stuttgart, Germany."

McKinsey for a long time has been involved in with Chrysler. Strategy and operation should be two contributions of McKinsy to the management of DCX. It is speculated that Chrysler and Mercediz will be come closer, sharing platforms and purcurment of common parts. This looks logical in the perspective of cost reduction. But as some executive worried from Mercediz side, the sharing will jeopodize Mercediz brand image.

Toyato brand and Lexus brand are sharing platforms and parts. But to what percentage, it is not known. Luxury brand need to have luxury features and service. It's a good way to go for DCX if the speculation is true.

Design what customer wants

Read an article about how the two domestic automaker, Ford and Chrysler's designers are doing to make the design more close to what customer needs and wants.

Of course, reliablility, durability and fuel efficiency are the main fators affecting the purchase decision of customers. Those factors including safety features are fundamental factors. When the fundamental factors are close or at the same level, the differentiator will be the design (extierior and interior). Chryser cars have good exterior shape but lack the fundamental factors. Toyota perviously is weak on design but excellent on the fundamental factors.

The article reports that Ford designers visited focus group of customers to adjust the concept design. Through concept to Clay model and functional prototype stages, Ford are using focus group of customers to evaluate and decide the design.

Chrysler designers have long time started to observe how people are doing with their vehicles on the shopping center parking lot.

Toyota sent its designers to live with American families to better understand what customers need and want. It started to focus the customers long time ago in Japan. The article mentioned that when Nissan design Infinity, it adopted similar customer oriented method. Same with Hyundai.