Think back to the last car you bought. Did you get all the features you wanted? Probably not. Half of U.S. car buyers drive home in a car they didn't intend to buy. You really wanted the silver two-door coupe but ended up with a blue four-door sedan. But hey, it was at a considerable discount and the dealer threw in a sun roof and CD player. According to authors Holweg and Pil, the auto industry is entrenched in Henry Ford's legacy of mass production and lean manufacturing. They believe it's time to take the focus off the "one-size-fits-all" approach and put it on a "build-to-order" strategy based on customer needs.
Currently, cars are mass produced and sitting in inventory because no one wants to buy them. The glut of inventory from mass production is good news for the consumer since dealers will discount cars to get them off the lot. Yet, this forces consumers to make unnecessary concessions. Rather than wait for the car with all the features they desire, they buy another car at a discount.
Holweg, who teaches at the University of Cambridge, and Pil, a professor at the University of Pittsburgh, conducted over ten years of research in the auto industry. Their methodology includes benchmarking assembly plants, analyzing six European vehicle manufacturers, surveying suppliers and logistics firms, and interviewing dealers and customers. Charts and graphs help illustrate their points and help readers realize how the auto industry is suffering. It's time to take the spotlight off the factory and put it on customer needs. Mass production doesn't fit anymore because "customers are more demanding, supply is overabundant, and competition is global," the authors say.
Although the auto industry won't change overnight, the authors do offer encouragement based on their research and experience. "Building cars that customers want not only has the long-term potential of returning the industry to profitability; it can also break the current cycles of boom and bust by eradicating artificial variability and demand swings." Most manufacturers focus on either process, product, or volume. Currently, although some may excel in one of these areas, no one yet has achieved success in all three. Taking a comprehensive approach to delivering all three is a strong start for maximizing the value chain. —S. J. Johnston