Focusing on the Small, Forgetting the Big

The Detroit Three car companies, and all companies for that matter, are taking sometimes draconian steps to cut costs.  Some examples:

Over the past several weeks, engineers and technicians working at General Motors Corp.'s sprawling proving grounds west of Detroit started noticing a curiosity: an increasing number of wall clocks had the wrong time, or stopped working altogether.

The reason: As part of a drive to cut $15 billion in costs, GM is no longer keeping the 562 clocks in working order, which will eliminate the expense of replacing and disposing of the clock's batteries and the cost of resetting them twice a year for daylight-saving time.

Ok, it sounds like a rather incidental cost.  But is it the right focus?  Instead of leaving 562 clocks hanging on the walls eventually showing 562 different times, how about seeing which ones are really necessary and removing the ones that aren't.  If a clock is really necessary, then allowing its timekeeping to lapse probably creates more waste than the savings generated by not servicing all the other clocks.  How much time is now wasted when people show up to meetings late?

It's not the only new measure GM is taking to save every last nickel. In its Renaissance Center headquarters, employees working late have to climb stairs when navigating its labyrinth of lower floors -- the company now stops the escalators at 7 p.m. In designated cleanup areas of certain offices, the company has changed the type of wipe-up towels it buys. In a memo to employees, a staffer explained this will lower GM's "cost per wipe."

I'm not going to get into a "cost per wipe" discussion.  Let's try some more.

Earlier this month, Ford said it will cut its North American salaried work force by approximately 10%, and is trimming its capital spending, manufacturing, information-technology and advertising costs. GM and Chrysler have both halted or slowed work on new vehicles to cut development expenditures. Neither company held news conferences at the Los Angeles Auto Show last week, a standard function at such shows.

Perhaps some good savings, but again, are they the right focus?  Whacking 10% of your knowledge and training investment?  Reducing the ability to be competitive when you come out the other end of the tunnel?  Basically ensuring you'll always have vehicles that lag behind competitor technology?

Next year, GM isn't giving out its "Mark of Excellence" awards to its top-selling dealers.

That's a good savings.  We've often discussed the waste of awards, and this is a good example.  Plus, is receiving a "mark of excellence" from a company like GM really something you want?

At GM's metal-fabricating plant in Grand Blanc, Mich., Steve Bean, a union committeeman, said he recently had to tell workers they would have to wait until at least next year to get $270 stipends they were promised in order to buy T-shirts, hats or coats emblazoned with their union local.

Another good one.  $270 for logo gear?  Per employee?  That's nuts.  Instead they should charter a flight to American Apparel in LA, give them a tour, and give them a few minutes to shop at the AA company store.  They might learn something about how to manufacture efficiently from this growing underwear and t-shirt company.

Voice mail at most of the company's plants has been eliminated, a move that GM spokesman Tony Sapienza said saved something like "a million" dollars. Now, the only way to get union representatives or officers on the phone is to catch them at their desk or station. Recordings that used to say, "please leave a message," now say "please call back." "It's all good business practices, but now it's extreme business practices to the point where we're not wasting anything," Mr. Sapienza said. "We're cutting to the bare minimum."

So now it will take longer to get questions answered, to find solutions to problems, and to resolve issues.  Instead of a quick phone call you'll have to go wandering around a million square foot factory.  Yep... there's some savings...

At the proving grounds in Milford, Mich., where the clocks are now frozen in time, GM has switched to regular Ticonderoga No. 2 pencils instead of the more expensive mechanical pencils that used to be freely available in storage closets, known in GM-speak as "pull stations."

I'll give them that one as well, although I'm betting that the "pull station" is the closest GM has ever come to a "pull system."

A focus on savings, even tiny savings, is great.  Everyone should always be on the lookout for waste.  But superficial savings can sometimes create deeper waste.  And how about taking a few steps back and looking for the real big wastes... such as building cars that no one wants just to keep factories humming...

Perhaps they can use some of those bailout billions to get their clocks back on time... while still manufacturing the same old way.

Comments

[RH]

Kevin,
I enjoy your blog and have gotten many valuable insights. GM has many professionals with similar background and knowledge to yours and are using lean principles to turn things around. There is a long way to go and the picture is far more complicated than the one you are depicting.

Please stop covering the GM troubles by making operational assumptions from press snippets. This is only undermining the credibility of the rest of the site.

Thanks.

[TheHobbyGuy]

On the voice mail one, I have to disagree with you. Most employees use less than 10% of the phone and voice mail functions that are implemented in a corporation. Companies buy millions of dollars worth of software and features and spend millions to maintain them each year. Think how many voice mails each day do you leave and then you end up sending an email anyway. Or perhaps you call them on their cell and leave a second voice mail. Did you ever press # or 9 for all those other paid for features? And how many times have you listened to a voice mail and could not even figure what number to call back at..LOL! "Hi its John call me at 84 blah blah...too low to hear....inaudible...7" Keep up the great posts!!

[miket]

Are the GM robots getting suicidal again?