Automotive Industry Trends
July 2006
Lean Manufacturing: Benjamin Franklin Never Went to Japan
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Benjamin Franklin, possibly the United States’ first well-known efficiency expert, said in his 1758 The Way to Wealth, “You call them goods; but, if you do not take care, they will prove evils... if you have no occasion for them, they must be dear to you. Remember what Poor Richard says, ‘Buy what thou hast no need of, and ere long thou shalt sell thy necessaries.’” Whether or not Franklin could have envisioned twenty-first century automotive manufacturing processes and inventories is doubtful, but nevertheless, his folksy words still deliver industrial-strength wisdom 250 years after he wrote them.
Lean manufacturing has no doubt existed in some form since the earliest of enterprises, but for the auto industry it was Henry Ford who first examined squandered time, effort, materials, and ideas, citing Franklin as one of his inspirations. Again and again in the decades that followed, Ford and Franklin proved themselves correct as vastly larger enterprises adopted their ways of thinking. After World War II, the U.S. War Department exported lean principles to the devastated nations of Europe and Asia. In Japan, the principles were enthusiastically adopted, and the kaizen culture of industry quickly took hold. The word kaizen means “improvement,” or, more specifically, “to take apart and put back together in a better way.” It became one of the methods used by Taiichi Ohno as a daily practice of manufacturing philosophy at Toyota. Today, U.S. manufacturers have Americanized the word kaizen and combined it with blitz to mean an intensely focused short-term project of efficiency improvement. Franklin’s thoughts have come back home.
One of the most fertile areas for improvement in lean manufacturing is in inventory. Among the solutions for lean inventory management is IHS’s Intermat Solutions. Intermat is a parts inventory management pioneer that was recently acquired by IHS. Though companies worldwide have invested in ERP (enterprise resource planning), CSM (component and supplier management), and EAM (enterprise asset management) systems, they are unable to make the most of the investment if inventory nomenclature is not standardized. A gate valve by any other name is still a gate valve, but when lean inventory management is the goal, a valve catalogued by another name is a duplicate. Bert Turner, who heads up the IHS Intermat Solution for GM, said, “IHS Intermat Solutions’ tools and services provide comparable parts data that uncover potential duplicate inventory and significantly reduce the risk of future inventory duplication. The only way to truly maintain a duplicate-free inventory is to have a standard for describing parts and utilize that standard to ensure that new item additions are unique and do not presently reside in the catalog.” IHS Intermat Solutions sweeps through a company’s catalogue, cleaning up its data, translating it into a standard language and composing clear and uniform descriptions of parts and supplies. This discipline has enabled companies to get leaner and save millions of dollars. “Lean manufacturing heavily depends on accurate information to enable efficient decision making,” Turner said. “IHS Intermat Solutions provides GM with a sustainable process for maintaining accurate manufacturing support parts information, allowing GM to make timely fact-based decisions.”
As the tempo of competition increases, that timeliness in decision and action will have greater rewards than at any time before. “U.S. automakers need critical, accurate, and timely information to compete in the global economy,” Turner said. “The consumer and financial markets do not tolerate ‘retro’ actions or second chances. It is imperative to depend on real-time information that in turn enables effective and efficient decision making.”
Benjamin Franklin said, “An investment in knowledge pays the best return.” For many car makers, the knowledge and management of inventories is a key to kaizen—improved efficiency, cost savings, and competitive advantage.
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