Second Century Automobile

Author: Matthias Holweg
Publisher:
Publish Date: 2006-06-01
Features: As the automotive industry enters its second century since its inception, it is plagued by the pain of low profits and the rigidity of the value chain that fails to meet customer expectations. Finished goods inventory pile up in dealer warehouses and global distribution centers, while CEOs of manufacturers are clapping for minor improvements in factory efficiency. The value stream model, which originated in the early 20th century based on Henry Ford's mass production model, clearly no longer meets the strategic flexibility required by today's market conditions. This book reveals how the automotive industry has fallen into blindly improving factory performance while ignoring the efficiency and profitability of the entire system. It analyzes how companies can respond to customer demand—providing the right product at the right time and place—through a lean supply chain system rather than just increasing production. Extending the "pull logic" of lean production to customers can help businesses avoid overproduction and eliminate high inventory and promotional costs in actual operations. These are currently the main problems in automotive production and sales and the fundamental reasons for the industry's low profitability. In the second century of the automotive industry, successful businesses will no longer be those that constantly seek larger production volumes or simply improve operational efficiency, nor will they be those that squeeze the last drop of profit from suppliers. Instead, they will be those that customize production according to customers' personalized needs. This book reveals the fundamental reasons for the automotive industry's low profitability, how the industry has fallen into blindly improving factory performance while ignoring the efficiency and profitability of the entire system, and how companies can respond to customer demand through a lean supply chain system rather than just increasing production.