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 / Summer 2013 / Issue 71(originally published by Booz & Company)


Building a Flywheel Business

In anticipation of the Toyota visit, the Georgetown plant manager sought to temporarily cut inventory by nearly 70 percent, to a mere 10-day supply. He rented nearby warehouse space and hauled away any inventory he thought he could function without until after the plant tour. Later, he visited a seat supplier in Japan and learned that even 10 days was excessive by Toyota standards: The supplier held so little inventory that it did not even require forklifts to move materials around.

Perhaps Toyota saw a diamond in the rough, or maybe JCI just got lucky—but shortly after the JCI plant visit, Toyota announced that it would build an assembly plant in Georgetown. Over the coming year, Toyota visited JCI regularly, and the Georgetown plant attempted to showcase new improvements every time. Plant leaders started by creating a welding cell staffed by cross-trained workers. Next they attacked die change times, reducing them to half an hour on their own and eventually to a mere 17 minutes with the help of a Toyota kaizen expert. By the time Toyota production began ramping up in 1988, the dedicated Toyota seat assembly area within the Georgetown plant operated with a mere 7.5 days of inventory, and by 1989 at full scale it held less than a day’s worth.

Over the next four years, Georgetown was the only Toyota supplier among the corporation’s entire U.S. supply base to receive an award every year and was selected as one of four “showcase suppliers” to demonstrate the potential of the Toyota production system to other U.S. companies. Equally important, the lessons of Georgetown had spread across other JCI Automotive Seating group plants—including the additional dozen seat plants serving vehicle manufacturers in the United States. At this moment, JCI had completed the first turn of the flywheel; it had developed the capabilities to be a world-class seating manufacturer in the emerging “just-in-time” environment.

The company then sought to become a full partner in design through delivery. Chrysler appeared to be the logical customer to fuel this second rotation of the flywheel. Although it had acquired the American Motors Corporation—and the indomitable Jeep brand—in 1987, Chrysler remained subscale in comparison to its U.S. competitors, and was looking to outsource engineering as well as manufacturing. In 1989, JCI jumped at the chance to take responsibility for the entire seat system in Chrysler’s new Neon model. The innovative compact car designed under Lee Iacocca’s guiding hand proved to be a huge commercial success for Chrysler—and for JCI, which now had the momentum to build its design capability.

JCI’s next step was to establish deeper relationships with the Detroit Three and other automotive manufacturers by creating dedicated “customer business teams.” These new cross-functional groups sought to expand their scope of responsibilities for their respective automotive customers. For example, by 1992, JCI had more than 500 product engineers—having started with only a handful at the time of their acquisitions in the 1980s. While the individual teams focused on serving the specific needs of their respective OEMs, a common R&D group sought to leverage the company’s growing expertise across vehicle programs by designing materials and components that could be incorporated into many different designs.

In 1994, JCI opened a new research and development center capable of doing its own prototype testing, expanding its design capabilities even further. Independent of the OEMs, the company also began examining car customer views regarding seating. Through sophisticated conjoint analysis, JCI developed deep consumer insight into preferences among features, such as motorized versus manual adjustments and seat heaters. Rather than simply accepting design guidance from the customer’s vehicle program manager, the customer business teams came armed with data to help them make the inevitable design trade-offs that influenced the entire car. The second revolution of the flywheel was complete.

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