Ford's CEO Utilizes Toyota's Gemba for Informed Decision-Making

Ford, a century-old pillar of the automotive industry, is undergoing a transformation to embrace the future of electric vehicles.

The company's CEO, Jim Farley, is inspired by a technique from Toyota, a prominent Japanese competitor, to enhance his decision-making process. In a recent interview on the "Decoder" podcast, Farley emphasized his commitment to firsthand experience by saying, "For every crucial decision, I must witness things up close."

This approach, known as "gemba," is rooted in the Japanese term "genchi genbutsu," which encourages leaders to observe situations directly on-site, rather than relying solely on theoretical models or plans. Farley noted that he was initially captivated by this technique during his early career days at Toyota.

He explained, "One must inspect and identify the actual issues firsthand prior to making substantial decisions."

Although Ford excels in traditional vehicle production, including cars and trucks with internal combustion engines, companies such as Tesla in the United States and BYD in China are pushing the boundaries with innovative methods in electric car production.

This competitive pressure drives Farley to meticulously analyze every facet of production to optimize costs, recognizing that the executive suite often lacks visibility into potential efficient cuts.

"You need to immerse yourself in the situation and engage with engineers and staff to ask, 'What accounts for this wastage? Why persist with a decades-old parts release system?'" Farley stated. Understanding firsthand enables one to make a well-informed decision.

Toyota has long practiced gemba walks, where managers explore production settings to observe operational activities and identify enhancement opportunities, alongside adopting 'kaizen,' or continuous improvement strategies.

Identifying Areas for Improvement

Farley pinpointed a specific necessity for refinement in the EV sector—a wiring loom for the Mustang Mach-E, an SUV—which was notably heavier than its counterpart in Tesla's Model Y.

"Although aesthetically appealing, this wiring loom adds 70 pounds compared to the Model Y, and the extra mass incurs a significant cost—$200 per battery," Farley mentioned, thereby highlighting a potential area for cost-cutting.

Moreover, a subtle comparison between the vehicles revealed to Farley that the Model Y used significantly fewer fasteners than the Mach-E.

"From both manufacturing and economic viewpoints, the count of fasteners reflects the elegance and economy of an engineering solution," Farley articulated.

These insights from real-world examinations led Farley to implement challenging changes to longstanding company practices, despite potential resistance from stakeholders attached to existing methods.

Farley asserted, "To protect the organization's future, decisions must prioritize right over comfort, even if it means not appeasing all parties."