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Automotive Industry

The big story - Opinion & Analysis - correlation between manufacturing performance and quality in automobile operations - Brief Article

Automotive Industries, July, 2002 by Ron Harbour

It's that time again at Harbour and Associates. Every year about now, my company publishes The Harbour Report, our comprehensive guide to automotive manufacturing performance in North America. We provide plant-by-plant and company-by-company productivity rankings, as well as our opinions about the systems and practices in place at the plants and companies we visited and reported on.

As expected, Japanese manufacturers Honda, Toyota and Nissan continued to lead almost all of the company assembly, stamping and powertrain productivity measures. And news about General Motors' performance, meanwhile, has been trumpeted throughout the automotive industry. Of the former Big 3, GM can now challenge the dominance of the Japanese manufacturers.

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While the Japanese OEMs and GM may have shared the spotlight, almost all of the automakers in the report had their share of highlights. Take Mitsubishi's assembly operation in Normal, Ill, which passed Toyota and moved into third place among companies in the assembly rankings. And Ford and DaimlerChrysler also provided some proof that their operations were moving in the right direction.

Still, The Harbour Report's biggest story of the year was not the performance of any one company, nor the measures of the Japanese manufacturers vs. the former Big 3. In 2001, the big story was the ever strengthening correlation between manufacturing performance and quality.

A few weeks before we announced the results of The Harbour Report, J.D. Power and Associates issued its Initial Quality Survey of new vehicles. These two industry reports deal with very important, but different subjects. Yet, the companies atop both reports were often the same -- because there is little doubt that many of the same processes and practices that improve a plant's quality performance also impact manufacturing operations.

Today, every automotive manufacturer is making an effort to eliminate waste, reduce cost and improve the quality of its operations as well as its products. Over the years, the companies that have made the biggest productivity improvements often have seen big gains in their quality numbers as well. After all, the key objectives of a lean manufacturing operation are elimination of waste, reduction of costs and improvement in quality. Likewise, companies that are focusing hard on quality are more likely to see big improvements in productivity.

The two are so closely related because improving one aspect almost always improves the other. For example, companies that truly are working on quality are likely to be putting in manufacturing systems in which error-proofing and other quality procedures are implemented at every step of the production process. The result is fewer hours for repair and rework, which improves both productivity and quality results.

Companies that focus on easier-to-manufacture designs often are getting the resulting benefit of higher quality products that can be produced with fewer resources and less capital. What's more, better process engineering and product design reduce the need for on-line inspections. There is less rework being done at the end of the process, as well as fewer repairs at the dealer level, which means lower warranty costs.

As a result, companies that are targeting their efforts at improving their manufacturing operations or their quality numbers more often than not are reaping benefits on both fronts.

improving manufacturing processes must be a key strategic initiative for any automotive manufacturer these days. improving quality also must be at the top of a company's priority list. As shown by results in both The Harbour Report and J.D. Powers' quality survey, some manufacturers are experiencing the best of both worlds.

RON HARBOUR is president of Harbour and Associates, manufacturing consultants in Troy, Mich. www.harbourinc.com

Automotive Industry

The big story - Opinion & Analysis - correlation between manufacturing performance and quality in automobile operations - Brief Article

Automotive Industries, July, 2002 by Ron Harbour

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