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Sensible IT Strategy

The auto industry has stumbled and soared.

The auto industry has stumbled and soared. It’s been bruised and battered. All of this has been in its long-time love/hate relationship with information technology (IT). For instance, in the 1980’s the love affair was with robotics and lights-out factories. By 2000 the industry warmly embraced eBusiness only to dismiss it a few years later. Manufacturing will have a far better, more consistent record with IT when it stays unwavering in its attention on core, rarely changing manufacturing objectives.

The rush to automate (or resistance to automate) is often rooted in deeply emotional issues. These include:

  • Past scares from IT projects gone bad

 

  • Personal promotional/advancement opportunities

 

  • Generational age differences in management

 

  • Media’s rhapsodizing about IT as “The Way”

Perhaps nowhere does the love/hate pendulum swing more than in the manufacturing function itself. Lost in the promise of IT is the fact that ultimately, the consumer buys physical material, not “information.”

The auto industry’s success introducing new automation is a mixed record at best. A common, broad malady occurs on the crest of every IT boom. The IT tidal wave becomes so strong it begins to eclipse the real core of manufacturing—the actual physical material and processes. Manufactured goods become almost a forgotten by-product. “Computer bits,” however, can never take center stage in manufacturing.

Toyota, foremost among all manufacturers, has not deviated from its unwavering emphasis on manufacturing, not IT. This includes eliminating waste, continuous flow of materials, and so forth. Thanks to its decade-spanning strategy, Toyota has steadily increased its market share. Indeed, this automaker derives the overwhelming share of its profits from North America.

IT without a doubt has improved productivity, quality, market responsiveness and lowered costs in the auto industry. Nevertheless, manufacturers often apply it with religious zeal and suffer the consequences. Today, innovation in the auto industry is almost synonymous with IT. For many, there is an unexpressed belief that everything will be entirely digital, sooner or later. An example is the “digital factory.” The danger with this mentality is that it suggests the only really innovative improvements are computer based. A Ford executive, for instance, recently encouraged the industry to rely on “bytes, not molecules.” The reference was sweeping. It included everything from computer crash simulations to computer models of supply chains. An overemphasis on “information,” however, can divert attention from the actual products and physical processes. This is where value add occurs. Furthermore, auto showrooms don’t sell “bytes.” They sell molecules, that is, the actual vehicle.

Certainly computer models are great for asking “what if” questions. The danger is when these “virtual, digital worlds” supplant the real, physical world. This leads workers into deluding themselves into believing that the digital world they created is indeed reality. Any computer model is only a theory. Again vehicle buyers don’t buy theories or computer models. They buy the actual, physical vehicle.

A chasm also exists between old and younger manufacturing managers. Raised on video games and the Internet, the younger generation is far faster at embracing IT to fix core manufacturing problems. This often plays out as traditional manufacturing types (i.e., older managers) being viewed as old fashioned and out-of-date by their typically younger co-workers.

A danger in some cases is applying the power of IT to do “work arounds” rather than directly addressing and fixing a core problem. For instance, in the 1980s General Motors had very poor relations with its union workers. Its CEO, Roger Smith, poured billions of dollars into projects aimed at vastly reducing its unionized workforce. GM’s factory-of-the-future efforts, however, never approached the expected labor- or cost-reduction targets.

Certainly a major question to ask before throwing IT at a problem is to ask, “Is the problem due to bad information, poor information coordination, poor quality information?” Simply showing ROI (return on investment) is not enough. Ideally, manufacturing decision makers will also evaluate an IT proposal to insure it is congruent to the company’s manufacturing direction. For instance, Jidosha Kiki, a supplier of braking and suspension systems, insists that all capital investments are aligned with its production strategy. Specifically this is to:

  • Decrease inventory

 

  • Minimize labor content

 

  • Decrease production space

 

  • Attain zero defect rates.

The Japanese parts maker similarly insists that it produce only what is demanded using minimum manpower, minimum equipment, minimum facilities, and minimum materials. Operating in this fashion insures that IT investments support the central manufacturing character of the enterprise—not the other way around. In this way, IT can truly help a “company survive forever,” another key manufacturing tenet of Jidosha Kiki.

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