Another Inside Story
by Alexander Serre
FIAT’s Mirafiori production line
Introduction:
Draftex Automotive was a company belonging to the Laird Group. It was a group of a dozen or so automotive manufacturing companies crystallised around the purchase, by Laird, of Renault’s car body seals, fluid handling and antivibration automotive components production units based near Nantes in France.
I was recruited by Draftex President Philippe Couillaud in April 1998 as International Development, Marketing & Communication Director, essentially due to my international sales, marketing, and communication skills as well as my previous OEM and IAM automotive experience at AlliedSignal (Fram filters, Bendix/Jurid braking systems, Autolite/Motorcraft spark plugs, etc.) and at Johnson-Matthey (car catalysts).
In the late 90s, the negotiating power was held by the car manufacturers, and margins were extremely low, indeed sometimes negative.
Renault was logically the group’s largest customer, and one of the main objectives was to reduce this dependency on Renault by half. At that time there was fierce competition with the French automobile parts industry with 4 companies sharing fairly equally the market shares of rubber parts (cooling, antivibration and sealing products) supplying Renault and PSA (Peugeot/Citroen).
My main mission was to find ways of developing market shares at current customers as well as gaining new ones, especially outside of France.
The Challenge:
A major incident occurred onthe production line of the FIAT Multipla in Turin. Quality problems of all the car-body sealing components from our Chartres (France) plant were causing untold problems on FIAT’s Mirafiori production line.
FIAT Multipla
A complete set of sealing components includes seals for the doors, the windows, the engine compartment, the boot, and the sunroof if there is one.
As with most car manufacturers, any incident causing the production line to stop or slow down had financial penalties. In our case, production was not stopped, but unfinished cars were put in special car parks awaiting delivery of approved parts. The cost was per hour and per car. With hundreds of cars running down the production line per day, the bill was significant and constantly growing. The clock is ticking. Every minute counted!
It happened to be our first order with FIAT, and at this rate, it would be our last. The Director of the Sealing division had been tasked with sorting the problem out. However, his intervention was actually making things worse because he and his team spent most of their time blaming FIAT.
One day, during lunch at the canteen, Philippe Couillaud and DP, the CFO, were discussing the problem, mainly from a financial point of view. They were looking for a solution, and after I listened to them for a few minutes, I suggested that maybe I could help. Both turned their heads towards me simultaneously with an inquisitive look. How could he possibly help?
In most conflicts, there are two sides to the story. In this particular case, it was made even more complex due to language problems. A further problem was the character of the young Sealing Division Director.
I proposed that I go to Chartres and speak with the local team, and then fly to Turin to speak with FIAT. We then compare notes. In addition, I suggested that the President could personally contact FIAT propose that someone from HQ intervene to find a solution, showing them the “goodwill” that we wanted to find a solution and that we were taking this issue very seriously.
My proposal was accepted, and the next day I went to the Sealing Division HQ in Chartres.
My arrival was not met with any red-carpet treatment. As seen by the Sealing Division Director and his team, the President was sending an HQ “sales” guy to tell them how to do their jobs. It was perceived as an insult.
As often in these delicate situations, the key is what happens in the first couple of hours.
I was greeted very blandly by the receptionist and asked to wait in the hall. Despite arriving early, I had to wait 10 minutes after the official meeting time before the Director’s secretary came to get me. Just a way of saying that they had more important things to do. It came as no surprise. I was expecting that.
I thanked the secretary and greeted the Director, who was evidently not happy to see me. The body language was very obvious.
What I explained to the Director was that I was not here to judge him, or his team, but simply to try and help find a win-win solution with FIAT. I also explained, in diplomatic terms of course, that I did not share the management style of the President. I also said that we could only be successful if the Director and his team helped me understand the situation and that we find solutions together. As the meeting progressed, the Director’s body language evolved, and I could see that he was interested in my approach.
After several hours of discussion, I was invited to lunch. This meant that I had passed the acid test. Otherwise, it would have been sandwiches.
And for lunch there was a change of plan. Initially, the reservation had been made for 2 people. And the Director had not planned to be present. He finally had the reservation changed to 4 people and invited another one of his managers to join us as well.
This was a good omen, and during lunch, whilst listening to them as they opened up, I also repeated for clarity's sake that I wanted to work in an open and transparent way with them, and that we had to work as a team to solve the problem. We also had to be honest about the situation to save time, because the invoice from FIAT was growing by the hour as more incomplete cars kept rolling off the production line.
Back from lunch, the Director summoned his team to present me and “our” project to solve the FIAT “situation”. He asked everyone to help me, focus all their attention on this issue and roll up their sleeves.
Fairly quickly I had a reasonably clear idea of the problem. The famous “5 whys” helped to get to the heart of the matter. It was basically a misunderstanding concerning certain critical dimensions. Apparently it stemmed from a FIAT change in design request that was not been validated by Draftex because FIAT were not willing to pay for it.
Although Draftex were convinced that they were right, that did not help with the problem. As it turns out, the main problem was more of a cultural one.
Different car sealing products on a car
During the next 2 weeks, the Draftex team and I were shuttling between Chartres and Turin. Choosing our team was a critical part of solving the problem, as FIAT had pointed out that a key obstacle to finding a solution was Draftex’s attitude. It was never their fault. They were always arguing. Virtually no discussions were made face to face but mostly over the phone. Those were before the days of Visio conferences.
Because the business with FIAT was at such a low margin, drastic cost-cutting from Draftex's Group CFO had included reducing and even eliminating travel where possible.
I had made a quick “cost of non-conformity” calculation and presented it personally to Philippe Couillaud. Within 5 minutes the travel funds were agreed upon. But I wanted the Director to have a chance of agreeing to them as well, without him knowing that I already had the validation from the President. He finally agreed as well, but the key here was it was seen to be his decision.
The intensive visits made by the Draftex team and myself finally created an excellent working relationship with FIAT. The technical problems were quite quickly solved, but how do we find a solution to supply new seals urgently?
Despite the costs of new moulds that were needed and that neither party wanted to pay, there was an incompressible production delay of several weeks in order to make the new moulds and produce new batches of seals.
I suggested to the Project Manager that we could perhaps work together to find a way to use the thousands of “faulty” products already in Turin.
Because I knew that FIAT would ask us to take them back, and would obviously not pay for them and even try to charge us for getting rid of them (rubber is very difficult to recycle), finding a common solution for the faulty seals was essential.
An acceptable technical compromise was found that led to the onsite adaptation of the faulty seals in Turin, which even included the assistance of personnel from FIAT.
Production was restored. Confidence was restored. Dialogue was restored. And an acceptable modus operandi was installed for future orders together. And the invoices from their side stopped.
Conclusions:
Many success factors contributed to solving an initially complex and expensive conflict, which led to a mutually acceptable win-win situation which saved the face of both parties and that ultimately saved millions of €uros for both companies.
Understand the differences in cultures and management styles.
Understand all sides of the problem. Understand the full picture before entering into negotiations.
Understand the real expectations of all those involved.
Not to underestimate the negative influence of the language barrier. Many people will not admit that they have not understood what you have said, even if you ask them. Asking discreet questions can help determine whether, through their answers, they have understood or not.
Use creativity, empathy, and if necessary, out-of-the-box thinking to find mutually acceptable solutions.
Realise in advance that selling ideas inside a company is often more difficult than selling them to a customer or partner.
Good negotiations are often a result of getting the right balance between diplomacy, resilience, clarity, transparency whilst still being firm on certain points.
Negotiations and informing all parties involved during the talks, needs to be done correctly and in the right order. It is time-consuming but people dislike being put in front of a “fait accompli”.
Know in advance exactly what your internal remit is and what your main objectives are. Clearly understand the limits of the negotiations that you can propose. Internal negotiations should of course be conducted before those with the customer and/or partner. During negotiations, having to constantly have decisions validated by one’s upper management is not only time-consuming but is also likely to devalue the trust that your opposite number has in you, but will also weaken your negotiation strength, especially if most of the propositions are rejected.
Open teamwork is a fundamental internal and external success factor. When a solution is found together, team members cannot be against the idea as they were part of the discussions that led to that solution.
Top-down arrogance or fear management often lead the teams involved to withhold vital information or ideas. This also leads to less successful solutions because ideas are imposed. In the most extreme cases, team members can actually want the solution to fail in order to punish the manager.
When putting together a game plan to solve a problem or negotiate a deal, involve key internal players to maximise their buy-in. Not doing this often leads to buy-in being replaced by resistance when the solutions and/or deals need to be implemented. You often hear, “If you had asked me, I would have told you that …”
Teams will react better to finding a solution when the full picture is explained. Knowing why you are doing something is more motivating than simply being told what to do. It also allows you to understand how your role fits in with that of other team members.
Alongside Kaizen (Continuous Improvement), Kanban (Just-In-Time), Poka-yoke (error-free solutions) and 5S, the 5 Whys is an excellent method derived from the Toyota Production method, to get to the root cause of a problem by simply asking 5 times “… yes but why?”
During a negotiation, it is important to have a clear idea of what the exact outcome is that you want and to orientate the discussion towards that goal without the others getting the feeling that you are manipulating them. Different tactics can be used depending on the situation at hand.
The cost of non-conformity is a useful tool to calculate the impact of errors. Often the cost of errors far outweighs the cost of getting it right the first time. Having said that, loss of (brand) image, a usual consequence of non-conformity, is difficult to evaluate in financial terms.
The ability to create quality relationships quickly yet durably with key players, both internally and externally, is one of the important success factors.
Finding out what each key player “really” wants is critical. Hidden agendas, unspoken truths, incomplete or false information often mask the real reasons behind some difficult to accept demands. Asking the right questions, at the right time and listening to the answers will help greatly in creating win-win solutions.
A negative situation can often be turned into a positive one by using it as an opportunity to prove your and your company’s professionalism and worthiness. It is the chance of showing how good your fire engine and fire team is when a fire breaks out. People are reassured when an efficient fire brigade successfully puts out a fire.
Post-sales support, whether technical or logistical, is often an overlooked aspect of developing new business. Regularly checking the level of customer satisfaction gives early warning signals that a problem exists and prevents the problem from getting out of hand.
Explaining in advance that customer satisfaction is key to you gives customers and partners an insight into what happens if things were to go wrong and shows that you and your company have a medium to long term approach to their business.
Comments