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Automotive Industry

Straight From The Top

Automotive Industries, Nov, 1999 by Marjorie Sorge

AI's annual interviews with the leaders of the Big Rye automakers reveals a lot about why they pay these guys the big, big bucks.

One thing the heads of the world's five largest automakers have in common, is a belief that the changes the industry will experience over the next 10 years make the last decade look like a snails race.

Cars and trucks will be delivered faster, new revenue streams will develop, management strategies will be shifted as products will take on new forms.

Each automaker is working feverishly to cut delivery time - and each has a different theory about reaching that goal. But for everyone, logistics and manufacturing systems will change dramatically.

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While that is a major target at General Motors, Chairman Jack Smith is also eyeing new ways to mint boat-loads of money from DirectTV and the OnStar in-vehicle communications system.

Ford President Jacques Nasser sees dollar signs in e-business, too, and hoping it will help boost earnings m South America and Europe, where Ford has been weak.

Volkswagen's Jens Neumann, the No. 2 executive behind Chairman Ferdinand Piech, thinks VW can grow rapidly in North America and plans vehicles -aimed directly at that market. In sales volume, VW has been challenging Toyota as the third largest automaker in the world.

Meanwhile, Toyota President Fujio Cho aims to outpace the Germans, as he maps out growth strategies for North and South America, Europe and Japan.

At DaimlerChrysler, Co-Chairman Bob Eaton is witnessing the difficulties of globalization and the merging of two corporations -- and taking his share of flak in the process. But he's confident the new company will end up the premier automaker in the world.

In this annual special report, we bring you inside the executive offices of the most powerful automakers. In the following 10 pages you'll get their corporate strategies -straight from the top.

Fujio CHO

Toyota Rears Its Global Head

Fujio Cho has a plan to deliver vehicles quicker and boost worldwide sales. And he doesn't rule out partnerships.

It's hard, if not impossible, to make Toyota flinch. Regardless of the chaos surrounding it, the automaker steams along, relying on its benchmark manufacturing prowess and financial stability to become a global automaker.

To President Fujio Cho, globalization means establishing more production and marketing bases overseas, more than likely without any tie-ups. "Becoming a global company does not mean becoming a manufacturing partner with somebody else," Cho says. "But I do not preclude that possibility in the overall plan."

To further its globalization strategy Toyota is spending huge amounts to build up its operations in the Americas and Europe. And, to further boost its global mark it began trading shares on the New York and London stock exchanges earlier this year.

But now Toyota is pursuing yet another image -- that of an automaker able to deliver custom vehicles faster than anybody else.

Last summer the automotive manufacturing world went nuts when it was reported that Toyota had found a way to build a car -- from customer order to finished vehicle leaving the plant -- in just five days at its Cambridge, Ontario, plant. Toyota quickly clarified the report, saying that in reality it could simply make changes to the order five days before it is built. That's still a big deal, but doesn't match what Toyota can do in Japan.

There, "we have a system that enables us to change an order almost immediately before it is built," says Cho. In this case, immediately is half a day. Here's how it works.

The dealers place their general orders based on their best guess about customer desires. Then, up to a half day before build, the plant can alter the makeup if a specific customer orders modifications to the car the dealers ordered. This is possible because the suppliers are so close to the plant they can switch the mix.

The reason the ability to alter the order five days before build at Cambridge is so important is because that plant still gets many parts and components from Japan. In the past, a month's notice was needed, Cho says. Right now, Toyota has only cut the delivery time on one vehicle -- the low-volume Solara. The goal is to add high-volume vehicles and reduce the five-day notice. However, even when the bugs are worked out, Toyota will only be able to change the order on 30% to 50% of its products, Cho says.

"It's a just a matter of getting everybody to do their jobs well," says Sandy Munro, president of Munro & Associates, a manufacturing consulting firm in Troy, Mich. "Marketing must forecast properly. Then the only missing link -- if each supplier is using the Toyota Production System -- is logistics."

There are logistical difficulties, Cho admits, but Toyota is working on an on-line system that better connects plants and suppliers. "Once the customers are interconnected to our system we just have to centralize the system in the company," he says. Once that happens, Toyota will shave more time off the order-to-delivery cycle.

Automotive Industry

Straight From The Top

Automotive Industries, Nov, 1999 by Marjorie Sorge

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