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?
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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?