NUMMI — the site visit, the system, and the lesson

[Part 1] The prize water horizon story reminds me of another lesson I learned. So when I was at UC Berkeley in the industrial engineering operations research department, we did a a site visit to Numi, which was a joint venture between Toyota and, uh, GM, which is called the new United Motor Manufacturing International or something like that, um, happens to be the same exact plant where... which is now Tesla's Fremont plant. Um, they sold it to him after GM's bankruptcy, uh, during two thousand and nine or whatever that was. Um, anyway, um, I We were studying in... this is in the eighties when tow... or when Japan was totally dominant in manufacturing and and basically in economics. And, uh, for some reason, um, Toyota decided to teach GM how to manufacture cars. Um, what we focus on at at, uh, Berkeley or in industrial engineering was robotics. So, uh, GM was investing very, very heavily in robotics to improve productivity and quality. Um, so the the joint venture in in Fremont was to train GM on the Toyota production system, which we have been studying my entire time at Berkeley. And, um, was interesting because Numi had the lowest investment of... in man... in in lowest lowest capital investments and the lowest investment. They had no robots of any plant in the entire GM inventory, and they had the highest quality and the highest productivity of any plant in the entire GM system. Um, and the two elements they had, which are, you know, you can look it up in in Toyota production system, which is actually a book, um, but they had, um, oh, they had key things like, uh, one was the line... anybody in this line could shut the whole line down. They had just in time inventory management system. So in traditional plants, they had big inventories to sort of smooth without production fluctuations and so on. Whereas in in Toyota,

[Part 2] with Toyota, a production system with just in time manufacturing. If you discovered a problem, you just shut the line down and fix it, uh, so they didn't accumulate a bunch of parts with, uh, problems in them. And it was so expensive to refit them often they just let it slide through. So that's why the quality of of Japanese cars are so much better than American cars. They also had, um, and so that's reminds me of the, uh, deepwater horizon where, you know, with with our application, it would have captured these problems in real time so they could deal with them in, you know, in real time or not real time, but very quickly and not let them just build up. And, you know, sort of like living in a ghetto once it starts getting, you So out of control, people just... they kinda give up and hope for the best and just... it's it's terrifying. Everybody knows it's about to blow, but what can you do about it? You know, the costs are so big and the the one problem covers up another problem. It's a nightmare.

[Part 3] The other thing they had was what is called a Kanban system. So, uh, they they used, uh, sort of, uh, three by five kind of, um, paper cards, and that's what they did for inventory tracking. Um, so it had, like, real time tracking or everything had changed, and it's all managed by line staff. It wasn't designed by engineers at the corporate and then applied down here. So it's very, you know, on the ground, real time feedback, continuous process improvement. So that was the Toyota production system, which is why Japan was so much better than than America. Uh, we adopted in the US, and that's what transformed manufacturing in the US is basically, for some reason, too, I decided to give us... give Americans, uh, the answer. Um, and we caught up. But then, of course, then we transfer all the manufacturing off to China. Uh, but it just... it's another related point about how important real time coordination and transparency is for continuously improving systems. And, uh, it's basically creating, you know, uh, and it's also an example of how humans bonded with AI or sort of augmented by AI, uh, can make the whole economy vastly vastly more productive. That's another thing I learned or just by studying economic modeling is all that matters is increasing productivity, growth, and and output. If you can that while reducing the burden on the environment, uh, you know, wealth goes up dramatically. It's just unbelievable how powerful compounding growth is. Um, but the problem is our system... our economy is so fragmented and so, uh, it's sort of feudalistic. It's like the last refuge of of of so... Stalinist, uh, top down controls in American corporations, it seems like. Um, so what we're doing with the universal exchange is creating a global market mechanism to allocate resources and coordinate, which is vastly, vastly more efficient.