Bodo Wiegand heads Germany’s Lean Management Institute. In his latest newsletter, on Wiegand’s Watch, he discusses the significance of recent problems in well-known German corporations, specifically VW, Siemens, and Deutsche Bank. The VW emissions test scandal has been covered in the media worldwide. Siemens executive were indicted for bribery last year in Greece, for acts related to the Athens Olympics in 2004, and the top management of Deutsche Bank was replaced in 2015 after scandals that included manipulating the London inter-bank lending rate (Libor), and mis-stating financial reports.
“Toyota broke a two-year silence on a revamped manufacturing process—built on sharing components among vehicles—that it says will produce half its vehicles by 2020 and slash costs. But its unveiling follows a path blazed in recent years by German rival Volkswagen AG—a reversal for the Japanese pioneer, whose production system was for decades seen as the gold standard, giving the world such manufacturing concepts as ‘just-in-time inventory’ and ‘continuous improvement.'”
Other than that Toyota has a plan, the article does not directly reveal specifics. As several readers pointed out in their comments, sharing components across models is not a new idea and is not risk-free, even if executed perfectly, as it reduces the differences between your standard and luxury models in ways that customers may notice.
The most revealing parts of the article, to me, are (1) the reference to VW, and (2) the keyword “modular assembly.” I don’t believe that Toyota has borrowed much from VW since the look of the 1947 Toyota SA, a dead-ringer for the already dated but yet to be successful beetle.
Modular assembly sounds self-explanatory but it isn’t. It is a specific approach to assembling cars brought to VW by former GM purchasing executive Jose Ignacio Lopez in the 1990s, in which up to 90% of the work traditionally done in a car assembly plant is done by suppliers and all that remains is the final assembly of large subsystems.
The Porsche plant in Leipzig, for example, does not stamp, weld, or paint car bodies. It receives them ready to assemble, in a spotlessly clean facility that customers are encouraged to visit.
The whole site is in fact dominated by its visitor center, complete with a fine-dining restaurant overlooking the plant and where new buyers can receive an hour’s worth of training on their new cars on the test track. In the same spirit, VW has set up an assembly plant in downtown Dresden, with glass walls to enable passers by to watch cars being assembled.
Modular assembly was used by GM in Lordstown, OH, in 1999, and then by VW in Spain, and by DaimlerBenz for the Smart in Hambach, France . At the time, Toyota evaluated the concept and passed on it. Apparently, Toyota’s production leaders changed their minds.