Book Review
The
Second Century: Reconnectin
g
Customer and Value Chain Through Build-to-Order
By Matthias
Holweg and Frits
Pil, International Motor Vehicle Program Principal Investigators (IMVP)
The MIT Press, 2004
The global automobile industry's focus on improving manufacturing in the past
decade has created lean and efficient production operations. Yet, a mismatch
between the gleaming lines of new cars rolling out of leaner factories and
what customers want has contributed to low profit margins and the proliferation
of costly inventories and sales incentives.
The Second Century describes how this critical issue is hampering the industry and outlines ways to reshape the value chain for sustainable competitiveness.
The book, by Matthias Holweg, university lecturer at the Judge Institute of Management, University of Cambridge, and Frits Pil, associate professor at the Katz Graduate School of Business, University of Pittsburgh, is based on their latest research. The authors build on recent data gathered from the global assembly plant study – the same benchmarking work that formed the basis of IMVP's seminal work on lean manufacturing: The Machine that Changed the World.
Moving beyond
the factory, Second Century highlights information collected on suppliers,
design, logistics providers, dealers, and customers to create a holistic picture
of the entire value chain. Using this data-driven approach, Holweg and Pil
provide insight on what it will take to move lean beyond the shop floor.
As the auto industry moves into its second century, systematic and sustained
efforts to implement lean have resulted in dramatic improvements in labor
efficiency.
Today the average Japanese plant takes only 13 labor hours to build a standardized vehicle. In parallel, labor utilization rates have also dropped dramatically in the plants across North America and Europe. Similar strides have been made on the quality front. The message from The Machine that Changed the World was heard globally, the authors acknowledge.
Despite these improvements, the auto industry remains under pressure. Months of inventory back up in dealer lots and distribution centers while dealers lure buyers through costly incentives. The challenges are rooted in legacy value streams from Henry Ford's mass production model from the early 1900s. This system does not deliver the strategic flexibility needed in today’s increasingly competitive and demanding market, the authors say. Although the industry can produce billions of product variations, most customers still can't get what they want. Usually they compromise by selecting from a limited number of finished products sitting on lots. Customers who insist on a specific variation wait weeks and pay extra.
The Second Century provides a comprehensive look at the dysfunctional nature of current value-chain strategies drawing on data they collected from car factories, suppliers, logistics providers, customers, and other significant players in the value chain. They systematically discuss the product and process changes needed to bring about responsiveness to customer needs through build-to-order. They move beyond the dealer, the factory, and the design studio, to understand the web of relationships and the dynamics that prevent firms from maximizing system-wide performance. These ideas are applicable to firms in many industries.
Holweg and Pil argue that the winners in this century will not be those who search for larger and larger scale or those who run efficient factories and squeeze the last drop of profitability from their suppliers. The winners, they say, will be those who managed their value chains as if customers mattered.
Buy The Second Century at Amazon.com.
Related IMVP news:
Matthias
Holweg Joins Univ. of Cambridge
|
|
new