A lot has been written and commented by the mainstream media and Internet bloggers relative to the impending crisis among the big three U.S. automotive companies (Chrysler, Ford, and General Motors) and their current pleas for government assistance.  There are lots of opinions relative to whether these companies should be allowed to either succumb to the natural forces of the market or be given cash to live another day.  I personally believe that the cost of outright failure would be too severe for the U.S. economy to adsorb right now, but I also strongly believe that before these companies are provided any form of assistance there needs to be a complete new thinking and culture of management leadership. Too much traditional thinking and my-boy preservation exists at the cost of global competitiveness, especially in the area of supply chain strategy alignment.

Over on the 21st Century Supply Chain blog, Randy Littleson called attention to an MSN Money blog entry penned by financial commentator Andrew Horowitz entitled A Plan to fix the U.S. auto industry.  Andrew’s posting is interesting in that it speaks in part to supply chain management’s role in solving some structural problems related to these companies. I especially liked his first observation which points out that these industry players continue to believe that the way to sell cars is to stuff dealers with lots of finished automobiles so buyers can immediately take them off the lot. 

This notion has always perplexed me since so many other companies, both automotive and otherwise, have proven that a lean inventory strategy supported by robust demand sensing and just-in-time production capabilities can accomplish the same purpose without that entire expensive inventory.  Randy Littleson points out in his commentary that Toyota has revolutionized the industry with their relentless focus on lean manufacturing methods, grounded by “pull vs. push” manufacturing flows.  The Internet has radically changed the way many of us research and select our automotive purchases, but this hasn’t translated itself to the big-three’s finished goods inventory strategy.

We could literally add many more paragraphs commenting on Detroit’s, especially Chrysler’s insistence on a supplier management strategy driven by price vs. true collaboration and partnership.  Here again, the Japanese, Korean, and even the German automakers have all made the transition.  An article on FT.com points out that some of Europe’s largest companies, including BMW, Daimler, and Volkswagen are taking extraordinary measures to help out suppliers weakened by the current credit crisis.

Andrew Horowitz stated the following.  “These are times that require new ideas and a brave new management that will embrace a global marketing theater.”  Let’s add another requirement that this new management include innovative supply chain management strategy that will enhance global competitiveness.   No money comes without new management, especially savvy supply chain management.

Bob Ferrari