Did you know that the Japanese "saved" Porsche...?

Posted by godong car on Tuesday, 19 October 2010

Many times I hear people arguing about which nation builds the best cars. Well, there is no such thing... How do you define the term "best"? 

Anyway, no matter of what you like, one thing is certain. When it comes to manufacturing techniques and precision, the Japanese are the best. Below is just a simple example (you can read the complete article here) of how efficient the Japanese are and how they have also helped other manufacturers. Don't get me wrong, I do like Porsches, although I would buy a GT-R instead... ;-)

"By the early 1990’s, however, Porsche was in trouble. Sales plummeted to 11,500 units in 1993 (of which only a quarter were sold in the United States) as the result of international recession, toughening competition, the poor exchange rate (which increased the apparent cost of the car in Porsche’s largest market, the United States), and increased real cost of producing cars. The company was making too many models and not enough examples of each.

Production problems were widespread as well. The management focus was on the product itself, which was expensive to make because the cars were assembled rapidly and then the faults corrected in a time-consuming and costly manner after the car was finished. There were also problems with parts suppliers. Many of the suppliers were the same ones that had been used since the 1950 return to Stuttgart. Timely and correct order completion were subordinated to these relationships, and as a result, fully 20% of all parts were delivered more than three days late, and a third of all deliveries contained the incorrect number of parts. Thus, in 1992, then new chief executive Wendelin Wiedeking described the past as “one long mistake…solved…by raising prices", and indeed, Porsche was on the brink of bankruptcy. The company had invested 600 million marks in a sedan model that would eventually be axed instead of being built, and the company had racked up $300 million in losses by 1995. The world’s smallest independent auto manufacturer was about to fold.

Wiedeking had much previous manufacturing experience and had devised a “turnaround” strategy within three months of his appointment as CEO that incorporated at its center the ideas of lean production. At his previous work at Glycol Metallwerke (where he was charged with turning the company back into a profitable entity, which he did), a German automotive parts supplier, he learned about Japanese production techniques, and went to Japan to study these firsthand. Following this trip, he reported that “the gap between the Japanese and German auto business was in three areas: production, production, and production. [The Porsche] engineers were doing an excellent job. Production efficiency was the gap…to close.” This confirms that on an organizational and philosophical level, lean production was actually quite compatible with Porsche. So, Wiedeking took twenty managers from Porsche to Japan, and eventually hired consulting company Shingijutsu, which was founded by Yoshiki Iwata, champion of Toyota’s lean production system, called Toyota Production System.

Though the arrival of the Japanese consultants was far from smooth, it brought enormous benefits that eventually contributed to the turnaround and subsequent success of Porsche. Using the proven kaizen technique, the number of hours necessary to build a car was reduced from 120 to 72, the number of errors per car was reduced by 50%, and the workforce was simultaneously decreased by 19%. In what was retrospectively named the circular saw massacre, the eight foot tall shelves containing 28 days of parts inventory was quite literally hacked to pieces. These shelves had previously required workers to climb ladders and then dig through parts bins, and were replaced with carts, each of which was stocked with only the necessary components for building one car, that traveled along the line with the worker so that it was no longer necessary to interrupt tasks to find parts. The space required to build the cars was also reduced by 30% as a result."

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