Procurement Lessons from Detroit: Choosing Suppliers, Picking Locations


In last week’s WSJ, Holman Jenkins wrote a story titled "Detroit Was a Cluster," concerning the disaster otherwise known as the UAW.

I saw this problem firsthand as I worked in the automotive industry in the '90s. Based out of Japan, I worked for the Tools division of Atlas Copco as a worldwide technical liaison for all Japan-related automotive installations.

I have probably seen upward of fifty automotive assembly plants around the world - Japan, US, Sweden, Italy, Thailand, China, Canada, Germany. It quickly became rather clear that work style, tempo, and level of bureaucracy were all quite different around the world.

It was especially striking – shocking, actually – to see a GM engine plant in the Detroit area. Nice facility, but so slow with workers sitting by the assembly line playing guitar and reading books in between reaching out for the suspended electrical nutrunners (assembly tools) we sold to them. Ten quick operations – and back to the guitar.

In contrast, the engine lines at Yamaha (they built engines for Toyota and Ford) were busy! Each worker had several assembly stations along the line to man, and it was high-intensity work at that. So high that it's obvious why job rotation is needed to avoid physically wearing people out.

Bureaucracies were also staggering at the GM plant. The line foreman, the plant electrician, his assistant, and one more person had to be there to "install" a new tool control unit. When I went back to Japan and oversaw the first installation of the same tool in Japan, we only needed one resource from the client. And there was no waiting around. A few minutes and we were done.

No, the damage done by the UAW is hard to estimate.

Takeaway for procurement:

Detroit is a lesson to remember when picking suppliers. Are they flexible enough to stay ahead technologically and operationally, or are they infested with union piece rate mentality and laden with a stifling bureaucracy?

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