Car Guys vs. Bean Counters - PeachParts Mercedes-Benz Forum

MTI · #1 06-14-2011, 02:10 PM

Interesting analogy.

To some restaurant owners, people booking reservations weeks in advance is a sign that “we did something wrong.” Perhaps the food is too good … best to back off a bit on the quality of the meat and produce. Ease off on the butter! We’ll reduce cost, improve margins! And the customers, presumably, will keep coming, right?

Skippy · #2 06-14-2011, 02:41 PM

I might have to go read that.

It also reminds me of what I was reading yesterday about the history of Buell. Basically, they got acquired by Harley, which was run by a bunch of people who simply didn't "get" the sport bike market, and every time they took creative control away from Erik Buell and his guys, things went expensively wrong.

rs899 · #3 06-14-2011, 03:05 PM

Could be an interesting book.

Also appropriate is that the crappy tire chosen as the background for the book was made in the US by Kelly originally and then production was shipped to Chile. I have some of those on my Rabbit....

strelnik · #4 06-14-2011, 03:16 PM

Quote:

Originally Posted by rs899

Could be an interesting book.

....

Lutz always said that after he retired from the car companies, he would teach, lecture and write until he was 80, then quit working definitively.

benhogan · #5 06-14-2011, 03:25 PM

there's a flip side to this...

if you kill all the accountants and let the engineers roam free (if you build it they will come), you run the risk of runaway costs.

'if you build it, they will come' basically translates into 'cost plus' pricing. Whatever the cost plus a decent markup and people will pay it no matter what. this strategy only works if the competition really sucks (read: Yugo-level).

this strategy will no longer work because the second and third-tier car makers have gotten much better. I think a Kia's quality has improved dramatically. Kia has basically narrowed the gap between it and MB to the point where the consumer will be faced with a hard choice for his consumer dollar.

if MB really insists on the 'cost plus' pricing, you might have a really really good C-class but it will be priced out of reach.

A good compromise has to be reached between the bean counters and the engineers. I think cost savings advancement could be made in the area of manufacturing i.e. more efficient factories. It will be hard to compete otherwise I think.

I'm sure I will get a lot of flak for this but hey.

Can you tell who might be an accountant in here?

MTI · #6 06-14-2011, 03:30 PM

No flak, you have a point. It reminded me of a recent story of PIXAR out in NorCal. They have an on campus "Pixar U." where employees can take continuing ed classes. The article mentioned that they have financial dept folks taking classes in . . . animation. Having the opportunity to learn about the creative craft side has apparently smoothed over a few minunderstandings about why it costs so much to make Woody and Buzz look better in TS 3 than in TS and TS 2.

iwrock · #7 06-14-2011, 06:19 PM

No flak here... I would only change one thing about what you said... I would replace Kia with Hyundai. Kia does not really have any cars on the same level that the europeans are. Hyundai has the Genesis Coupe, and IMO it's very close to the M3. Not quite the same finesse and swag as the M3 but with time, it will be as good.

75Sv1 · #8 06-15-2011, 07:19 AM

No flak from here, but a different perspective. Yes, I agree that top quality cost, and you have to make decissions. My problem is that corners are cut where they shouldn't. Many examples. Then long term quality suffers and recalls eat your profits.
One example might be the transmission on the previous generation of Ford Tuarus. They put in $1 valaves instead of $2 valves. The trans were notorius for puking out at around 70K to 80K miles.
Tom

jcyuhn · #9 06-15-2011, 11:00 AM

I just like the title. The WSJ has had some excerpts over the last few days. Interesting reading, and definately show some serious problems GM had.

Kuan · #10 06-15-2011, 11:43 AM

I used to make new servers work in the kitchen for one week before they were done with their "run in" period. Catering sales would have to go through a process of costing out a menu with the chef. What a change in perspective.

strelnik · #11 06-15-2011, 12:31 PM

Quote:

Originally Posted by benhogan

there's a flip side to this...

if you kill all the accountants and let the engineers roam free (if you build it they will come), you run the risk of runaway costs.

'if you build it, they will come' basically translates into 'cost plus' pricing. Whatever the cost plus a decent markup and people will pay it no matter what. this strategy only works if the competition really sucks (read: Yugo-level).

this strategy will no longer work because the second and third-tier car makers have gotten much better. I think a Kia's quality has improved dramatically. Kia has basically narrowed the gap between it and MB to the point where the consumer will be faced with a hard choice for his consumer dollar.

if MB really insists on the 'cost plus' pricing, you might have a really really good C-class but it will be priced out of reach.

A good compromise has to be reached between the bean counters and the engineers. I think cost savings advancement could be made in the area of manufacturing i.e. more efficient factories. It will be hard to compete otherwise I think.

I'm sure I will get a lot of flak for this but hey.

Can you tell who might be an accountant in here?

I think both sides of this discussion have forgotten the same peripheral issues: requirements and discipline to keep or modify them.

Quick explanation:

The strategic planners plan for and propose a car that has X features at X price. This is priced out at the expected control volume (for you accountant-types) or estimated number to be sold.

The issue comes when people ignore requirements/performance standards etc.

The engineer who is in love with gadgets that no driver wants violates business rules.

So does the purchasing agent that accepts less than specified product quality, expressed in measurable terms.

So does the plant manager that shoves incomplete or poorly assembled cars just to make a production quota: quantity over quality.

Toyota knew this, so did MB. When the now-dead Chrysler followed these rules, they were profitable because they made cars that matched their strategic intent: " To buy cars that people like, that they enjoy driving and that want to buy in the future."

W. Edwards Deming called these attributes Design quality and product quality.

Philip Crosby called these the cycle of quality as conformance to requirements, leading to a business model that would put the company on a path to prosperity through continuous improvement, which also meant: reduction of cost through strategic reduction of waste.

I had the good fortune to work for both these guys.

Nowadays, American CEOs just think it's faster to job out the stuff to China, throw away the rejects and run away with their bonus before the house of cards falls.

Why do you think we are in the mess we are in right now?