TPS Benchmarking

The Trouble with Exploring “all options” at Chrysler

By Jon Miller Published on February 18th, 2007

Chrysler is feeling the squeeze. Third quarter losses were twice as large as projected. The DaimlerChrysler leadership are using their wits in an ongoing effort to turn things around. Chief Executive Dieter Zetsche has stated that “All options are open.”
Sadly, “all options” are probably less than five, and likely do not include anything more radical than continuing to do what Chrysler has always done, just borrowing money and time from new sources. It is impractical, if not impossible, to truly pursue “all options” and often this is code to stock analysts that “We will make the changes needed to increase shareholder value.”
The upshot of this is that the happy plans made in good times by Daimler to acquire Chrysler are not working out so well and now DaimlerChrysler Moves Forward On Plans to Sell or Spin Off U.S. Unit according to a February 18, 2007 Wall Street Journal article.
Setting aside the development of the Toyota Production System for a moment, there were three key events in Toyota’s history. Chrysler could learn from these.
First, Toyota started out in the automatic loom business. They sold the patent for this invention to a company in England, and opted to manufacture automobiles. The future was not in textiles, but in automobiles. This was a smaller decision for Toyota to make 70 years ago than it would be for Chrysler today. However, if they are considering “all options” Chrysler should ask whether what the world needs over the next 70 years is more automobile design and production capacity.
Second, Toyota welcomed the scientific method into their management thought process. They learned and applied the teachings of Deming, Juran, Ford, Gilbreth, Maslow and others. Science values fact, learning through experimentation and learning from failures and mistakes. Chrysler may be facing a near-death experience for the third time in 25 years. What has Chrysler learned?
Third, Toyota made vehicles for the U.S. military. On the brink of bankruptcy due to making too many cars at too high a cost and selling too few of them, Toyota was saved by the special demand for vehicles during the Korean War.
Taiichi Ohno talked about the shift from from “reduced volume production” to “limited volume production” in his book Workplace Management. The key difference in meaning is that the former is slimmed down operating model based on decreasing sales, while the latter is an operating model that is based on intentionally limiting the production volume to only what you will sell. “We do not make what we will not sell,” said Taiichi Ohno about Toyota’s operating model.
Chrysler, you are a very good industrial design firm. Invent something that fills an emerging need. Then make a commitment to the scientific process and the persistent habit of learning from past mistakes. And get the U.S. government to pay for these things, ideally without a war.

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