Competitiveness in the Automotive Market: A New Future!

Toyota’s manufacturing prowess is legendary in the automotive industry and even beyond.   Their philosophy of continuous improvement (called “Kaizen”) has been adopted (or at least attempted or considered for adoption) by any large-scale manufacturer.   Specifics like the empowerment of any factory employee to pull a cord (called the “Andon”) and stop an entire assembly line when a defect is noticed are also emulated by many.

Two global trends are likely to dramatically alter this competitive edge that Toyota has enjoyed for some decades now.

  1. First, by emulating Toyota as best as they can, the Detroit Three and South Korean carmakers have been able to narrow the quality gap over the years.
  2. A modern automobile is increasingly a networked computer platform on wheels.  By 2015, roughly a third of an automobile’s value will be in its electronics.   As some of my earlier posts emphasize,  electronics, despite their potential occasional glitches, is what makes modern cars better in terms of fuel efficiency, safety, emissions and other functions.  We are not going back to the past.   But, electronics and software design is not just a manufacturing issue; an andon cord in the assembly line will not detect an electronic design problem or a software bug.   The decisions that get made months and years ahead of the assembly process are what make the difference.    As of now, no car company including Toyota has a major lead on this underlying technology (of building s0-called cyber-physical systems that automobiles increasingly are).   Toyota does not have a technology lead on software development for these systems either.   Any advances from a Toyota supplier are also easily accessible to other carmakers because of a global supply chain in today’s interconnected economy.

In other words, the future of automotive competitiveness is wide open from a quality/technology perspective.   Anybody can get ahead in this race.   Sound and strategic investments to both develop new electronics/cyber-physical systems technologies and train engineers/developers on these technologies are what will make a difference.

Let the race begin, and let the best carmaker(s) win.

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