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The New EA Paradigm 1: The Toyota Illustration

New EA Paradigm

I'd like to put some posts together about what I think "The New Paradigm" for Enterprise Architecture is. I will break this up into 5 or 6 blogs that deal with this in terms of Enterprise Architecture expenses vs. assets, cost justification of Enterprise Architecture, providing from stock vs assemble-to-order strategies, mass-customization of EA and some cultural implications of this new paradigm. 

That said, I need to set some context for you. I usually use the Toyota illustration to make the New Paradigm point:

A few years ago, Toyota announced in North America that if you give Toyota the specifications for the automobile you want to take delivery on, they will deliver your automobile, custom to your specifications, in 5 days! Five days is not zero, but it is pretty close to zero as those automobiles these days are pretty complex. When I grew up, I worked on my own car... but when you opened the hood, all that was in there was a four cylinder block and a carburetor. Today, I will buy a car and drive it until either it or I die... and never open the hood! There is so much stuff in there that I can't even find the dip stick anymore! I can't even change my own oil!

How do you think Toyota is delivering custom cars in five days?

  • Do you think they wait until they get your order before they start engineering and manufacturing your car?... Impossible.
  • Do you think they have already manufactured every possible car that anyone will ever order and already have them all in inventory and it takes them five days to find the one you want?... Impossible.

They MUST have something in inventory before they get your order... but it is NOT finished goods. It IS parts. But, those parts have to be engineered such that they can be assembled into more than one finished good. How do you engineer parts that can be assembled into more than one finished good? You have to know the total set of finished goods you have to produce at any given point in time. Then, engineer the parts Toyota-wide (Enterprise-wide) so the parts can be assembled into more than one Toyota. Then, they can pre-fabricate the parts and have them in inventory before they get your order. It takes them five days to connect up the parts in your order with the parts in inventory, pick the parts off the shelf and assemble them into your custom automobile.

Toyota changed the Automobile Manufacturing Industry strategy to an "assemble-to- order" strategy. In fact, they changed the Manufacturing Industry strategy in general to an "assemble-to-order" strategy... because in the Information Age, the customer (every customer) wants a "custom product, mass-produced in quantities of one for immediate delivery." Mass-customization is a pre-requisite for staying in business in the Information Age!

I was in Stockholm at Scania. They manufacture big, semi-trailer trucks. They say "oohhhh yeah, we invented all of this stuff!"

I was in Munich at Volkswagen. They also say "oohhhh yeah, we invented all this stuff."

Actually, I think it was the Japanese that changed the concepts of Manufacturing to an assemble-to-order concept. They decided about 35 or 40 years ago that they wanted to own Manufacturing. It took them 35 or 40 years but they own it! If you want to know how to do it, they will tell you. If you want them to build and run your plant, they will do it. They changed the face of Manufacturing. If you want to get into Manufacturing in the Information Age, you are going to embrace "Mass-Customization" because the customer wants what they want when they want it... that is, custom products, mass- produced in quantities of one for immediate delivery!

There is a lot of room for creativity... and I am sure no one Manufacturer knows everything and therefore I am sure Scania and Volkswagen and every other Manufacturer have invented a lot of stuff... but I think the basic strategy was developed by the Japanese.

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Saturday, 20 April 2024

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