Rooster's Revenge

Overnight successes do not happen overnight and new ideas are sometimes not so new.

While employed by an automotive OEM company in 1993, I was recruited to assist with a business process reengineering effort conducted by an outside consulting firm.

My contribution to the endeavor at a macro level was to stop doing what Alfred Sloan created and do what Billy Durant would do if he were alive: run the car business like the soft drink business. Let me explain.

Soft drink companies like Pepsi and Coca-Cola make two things, and two things only: marketing and syrup. That’s right, syrup.

They do not make the bottles. They don’t make the cans. They don’t even mix the syrup with water and pour it into the bottle or can. Independent companies do this for them.

The syrup is the product design. Water is water, and cans are simply transportation vehicles for the product.

Roger Penske recently purchased Saturn from General Motors. He is quoted as saying:

“The proposed acquisition marks the beginning of a new business model in this industry,” he wrote, “a model in which the distribution side of the business controls the brand, and manufacturing is conducted by one or more sub-contractors.”

Now, if only the other automotive companies would follow Penske’s lead, the industry as a whole would be better off. Workload would have a chance to be leveled at the manufacturing site. Economies of scale would increase utilization while reducing costs.

And, a fundamental shift in the business model like this would lead to another idea I have been preaching for a long time: build the vehicles on demand.

There will come a day when a customer walks into the showroom, test drives a vehicle, and orders it to their specifications. The vehicle would then be built on demand and delivered to the customer’s home in 24 hours.

Ok, maybe 48.