General Motors of adapting a system of lean production
There is need for change with GM, in 1998 they took 50% more hours to produce a car than Toyota do, this has probably caused them to make a loss on all there products also in the modern era thus why they’re struggling for survival while Toyota sell more cars than them. main benefits TGM could gain from adopting lean production are cost and the stock process One main benefit for GM of using lean production is the fall in costs which help to increase profits.
Lean production uses less factory space overall, specifically because of the Just-in-time (JIT) process for stock. The JIT process is designed to give businesses stock for just when they need it, cutting out storage costs and insurance costs, which helps increase the profits GM can make. However, should GM choose to implement this process in all their 178 plants that are located across 12 countries, there are likely to be problems with supply of parts, especially if they require 300 suppliers per plant as Toyota do.
Should GM switch to lean production, they’re likely to require different needs from suppliers, possibly needs current suppliers can’t fulfil because of technical differences or problems with transportation, meaning GM may have to seek for for new suppliers of which they have no developed relationships with. Although, due to Lean production cutting waste levels, possibility less suppliers overall are needed.
Problems with the supply of parts could arise on the parts being delivered on time, causing a stock shortage due to suppliers not effectively reacting to the demand of stock, and no stock will cause the costly scenario where the production line altogether comes to a stop. This could also be out of suppliers hands for cases such as a fuel strike, if stock was stored instead of using the JIT process then problems like these could be taken into account with extra stock stored, whereas with JIT this is not an option due to the lack of storage space.
Additionally, without using the JIT process, bulk orders of stock would be favoured, taking advantage of economies of scale. As well as the stock process, another main factors should be taken into consideration, such as the product ranges at General Motors. General Motors, as their name would suggest, produce a range and models of different cars from small cars to large SUVs. Toyota’s vehicles are based upon one specific base, in which they can modify to produce the model that is required.
Because of the vast variety of cars that GM produce, the idea that they can use the same base and methods to produce a small Daewoo and a relatively large Chevrolet is not applicable, because of the costs per unit, both financial and time and the size of each products. General Motors therefore will have problems trying to copy the blueprint of Toyota, as their product range differs significantly. General Motors could solve this problem by re-designing all of their models.
It takes 3 years for GM to design a new model, which would be a far too lengthy period of time for GM to have to wait in order to implement lean production, even for Toyota, who are deemed to be superior by ‘commentators’ take 18 months to re-design car. Therefore, the time for GM to fully implement the system, whereby re-design is required, may prove lean production inefficient up until that point as GM’s products were not designed to be manufactured in the lean production way, which could worsen their profits.
However, in the long-term, when all the products are re-designed, the process would be able to run efficiently, thus reducing the earlier figure from 1998 which states that it took GM 50% more hours to produce a car than it does for Toyota, if this is reduced profits ultimately rise. In conclusion, I would rank the product ranges in most consideration as for when weighing up the benefits of lean production. GM has a wide range of products compared to Toyota, it would have to be considered whether GM, like Toyota could manufacture their products around a specific base, which I believe they can’t, even with lengthy further re-designing.
Although there are figures that state GM take 50% more hours than Toyota to produce a car, the date of the research is from 1998, making me believe this data is not relevant to the modern era. Even if it still takes GM more hours to produce a car, this would be at least partly due to some its product ranges, such as Dodge, which brings higher revenue per car, and more time consuming than possibly all segments of Toyota cars. Secondly, I believe the possible fall in costs, specifically because of the JIT process, would be ranked in second.
Benefits from the JIT process are utilising the full factory space by not having vast amounts of stock tied up in the capital of the business. When all runs smoothly, and good communication is kept between suppliers and the businesses, this option is the best bringing more profit in. However, there are vast amount of problems that could stop this from happening, it is unlikely that GM, like Toyota, has all of its suppliers at there plants within a half a days drive, especially if new suppliers are needed. Overall, I don’t think GM would benefit from lean production for many years at least should they adapt it.
Because of the economic climate, the costs would be far too high to re-design the products, which is essential for lean production to work efficiently, by the time the process could become profitable, the demand for oil/ fuel powered cars could be minimal. I believe GM should focus more on the future of the market for cars, and try to adopt an alternative plan for their future approach. They would possibly look into electric cars, to follow the trend of other major car manufacturers, and by doing this, I then believe a lean production approach would benefit, as re-designing would need to be done in either way.