Context
In the 1980s American carmakers were losing the market to Japanese companies that built cars cheaper and better. Roger Smith, who ran General Motors from 1981 to 1990, decided to answer with technology: by a widely cited estimate, the company spent about $45 billion on modernizing plants and robots.
Symptom
The new automated plants performed worse than expected. The flagship plant in Hamtramck, according to reports from the time, had 260 robots, and they malfunctioned: welding doors shut and painting each other instead of the cars. Quality and productivity did not catch up with Japanese competitors.
Cause
The robots repeated the old process with its mistakes. How work was organized, who was responsible for what and how quality was controlled all stayed the same, so automation also sped up the production of defects.
The fork
Invest even more in equipment, or first rebuild the process and the way work is organized.
Decision
In parallel GM created a joint venture with Toyota, NUMMI, at its closed plant in Fremont, California. Toyota did not turn the plant into a high-tech one: it had fewer robots than GM's showcase plants.
Execution
NUMMI rehired a large share of the former workers, whom GM had considered the worst in the company. The workers were organized into teams, job classifications were simplified, and everyone was given the right to stop the line if they saw a problem.
Outcome
According to published accounts, NUMMI, with the former workers and simpler equipment, became one of GM's best plants for quality. The automated plants did not achieve this. The difference showed that the advantage lay in a system of work, which cannot be bought together with the equipment.
What it means for you
Automation repeats a process faster and more precisely, including its mistakes. That is why the process is described and simplified first, and automated after.
- Which of your processes do you want to automate without having described them?
- Who in the company can stop the work if they see a mistake?
- Which part of the problems will a new system solve, and which part will you simply move into it?
We would start by walking the process from beginning to end with the people who do it, and marking every place where work goes back for correction.
Key dates
| Year | Event |
|---|---|
| 1981 | Roger Smith becomes head of General Motors |
| 1980s | Plant modernization program, estimated at about $45 billion |
| 1984 | GM and Toyota joint venture NUMMI in Fremont |
| 1990 | Smith steps down as chief executive |
The plant's story continues in the Tesla case analysis: in 2010 Tesla bought the former NUMMI plant in Fremont.
