Académique Documents
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Rona Sharma
Mumbai University
Management basics
Dr. Trivedi
Introduction
Ford Motor Companys mission and vision statement One Ford: One Team, One Plan,
One Goal focuses on the restructuring that the company has undergone recently in an attempt to
In 1903 Henry Ford started the Ford Motor Company with $28,000 in cash, and changed
the way cars were made, and in the process, the way the world moved. Fords vision was to
make cars available to everyone. With what can be described as one of the companys most
important innovations, Ford debuted the moving assembly line in 1913. This process was one of
the first of its kind, and a precursor to many lean production tools used in manufacturing, to
help the company produce more cars than their competitors, and make cars more affordable to
In 2012, sales of automobiles showed the company $134 billion in revenues worldwide,
with over 2 million cars sold. The company has spent much time, energy and money in
restructuring to improve their balance sheet; efficiency and productivity to provide customers
with the vehicles they want, and help ensure future success. The company employs 171,000
globally and the ONE Ford mission has been created as a four point business plan to restructure
and operate profitably with current demand and a changing model mix, to increase development
of products that the customers want, and to work together as one team.
According to the companys corporate web site, ONE Ford encourages focus, teamwork
and a single global approach, aligning employee efforts toward a common definition of success.
Many of these concepts have been introduced to our team in the operations management class,
and we will attempt to highlight how those concepts are used with the Ford Motor Company.
TQM AND FORD MOTOR COMAPNY 3
Production is the creation of goods and services. (Heizer & Render, 2011) In Ford
Motor Companys case, that production is automobiles, and parts used in making autos.
Operations management for Ford will include the production of cars, the marketing for both the
Ford brand and the different product lines, and the financial and accounting side of the business.
Ford Motor Company operates 77 office and plant locations currently, changing its model
recently to more efficiently align customer demand to cars produced. That process has included
layoffs and plant closures where necessary, focusing on minimizing overcapacity and a more
responsive product worldwide. The company has changed its view of itself, thinking of itself as a
global company, not a regional one. We have reduced the number of global vehicle nameplates
improve that figure to 20 to 25 models globally, according to the company web site.
Often, when we hear the word, productivity we think of labor productivity or the
productivity as, output per hour or output per worker-hour; in which the manufacturing is the
major focus over services because the output is easier to quantify. (Heizer, 2011) The
measurement of productivity at a Ford auto assembly plant is fairly forthright. Its either: a
physical measure, the total number of cars produced in a given period of time (a week, a month,
a year) divided by the number of worker-hours needed to produce them or a monetary measure,
the total dollar value of cars produced in a given period of time divided by the total number of
worker-hours needed to produce them. For example, Ford knows the exact amount of vehicles
that leave each plant, and amount of hours incurred by each employee.
Ford spent much of 2006 through 2009 downsizing their operations and reexamining
production globally, downsizing production by almost 25%. While layoffs and plant closings
TQM AND FORD MOTOR COMAPNY 4
were the first part of the North American restructuring equation, the company also looked at Ford
Credit operations, sold auxiliary companies and found many areas where improvements in
processes could improve efficiency. Dedicating the new mission statement and vision to provide
the cars that customers demanded, with better fuel economy and luxury items that are considered
standard, working together across the spectrum to focus on one goal, the company has seen a
rebound in both brand and sales. Ford has seen 14 straight months of profit from operations, a
return of investment grade stock rating, and the return of the Ford Blue Oval, which the company
Ford has recently seen hiring employees necessary to accommodate the increasing sales
they are experiencing. Our global marketplace has meant that Ford needs more technology
driven professionals, and has begun using social media and other internet tools to hire more
skilled workers for the 21st century. To increase employee commitment to the changes and the
new leaner focus on productivity, Ford uses employee profit sharing for hourly employees and
bonuses for salaried employees. Ford partners with the United Auto Workers union to offer on
the job training, tuition assistance, courses with Dale Carnegie Institute and classes offered
through the partnerships Tech Shop. "Our whole approach is to make sure we deal with reality
and we deal with it in a positive proactive fashion," says Mark Fields, Chief Operating Officer.
Navigating the recent auto crisis and its ensuing restructuring has meant a new Ford Motor
The global product strategy of Ford Motor Company is to provide global markets of
many automobile varieties that are of superior design and quality, environmentally culpable; all
TQM AND FORD MOTOR COMAPNY 5
with valuable feature power. Developing automobiles consumers want and need, including
With the average consumer demanding more luxury, driver assist technologies and
greater safety features, Ford is continually designing and improving features available to
customers. Recent improvements have included inflatable safety belts, cross-traffic alerts, sensor
technology, rearview cameras and more. Modifying these customer demands to the country of
Project Management
In his book, Project Management: Case Studies, author Harold R. Kerzner notes that
Pcubed Inc. is the owner of the project management methodology at Ford Motor
Company. (p. 399). Management methodology includes the following three phases: (Kerzer,
2004)
1. Discover and define Asses the overall health and baseline of the project management process.
3. Deploy and drive Endure solutions are fully implemented across the department.
Implementation, to point out that after a methodical process to select the best project
management software, Ford decided on Microsoft Project (p. 38-39). Not only was it compatible
with Fords project management methodology but it was compatible with their other technology
tools. Ford designed a project methodology and then selected a software package that best fit that
methodology.
Forecasting
TQM AND FORD MOTOR COMAPNY 6
In a report in 2010, Every Car Listed reported issues and resolutions implemented by
Ford to address issues with Forecasting. In 2009, Ford struggled with developing estimates for
demand on recent model releases. Their problems range from underestimating trim packages in
popularity to the overall shortfall of inventory. The 2010 report included feedback from one Ford
dealer that estimated that at one point, he only had a 30-day supply of inventory. (Every car
listed, 2010) Jim Farley, who is Fords vice president of global marketing stated in response, the
automaker underestimated the demand for its F-150 double-cab, which led to short supply of the
Farley reported that there were multiple impacts to the underestimation. Not only did this
short supply inconvenience the dealers; the miscalculations also directly affect the companys
bottom line.(2010) in response, it is reported that in 2010, Ford began to increase their
campaigning of market acceptance research for up to six months before new models are
released. (2010) these campaigns included gathering information using social media such as
You Tube, Facebook and Twitter. Finally, Ford started a reservation system that provides their
automobile features and trim packages to fulfill output based on current orders. They gather
information months before they start production, which they are using for forecasting.
Quality Management
Heizer and Render identify three important reasons that quality is important: (1)
company reputation, (2) product liability, and (3) global implications (Heizer & Render, 2011, p.
191). These three areas are especially important in the auto industry.
Reputationfor car and truck buyers, brand reputation has as much or more to do with
Product liabilityProduct liability can be extremely expensive for auto makers. The cost of
product recalls can reach into the millions of dollars, and liability in the case of injury or death
even more.
Global implicationsFord is a global company, so the impact of poor quality affects everything
Since 1999, Ford has used Six Sigma as a quality management method. Six Sigma is a
TQM concept designed to reduce defects to help lower costs, save time, and improve customer
satisfaction (Heizer & Render, 2011, p. 195). Statistically, it is a process that falls within 6
standard deviations of the mean. This means 99.9997% accuracy, or 3.4 defects per million.
Quality has risen dramatically as a result, As of 2008, the warranty repair rate for Ford by
utilizing Six Sigma decreased by 60% (Scheid, 2011). According to AutoOnInfo.net, who
compiled Consumer Reports Overall Reliability Rankings from 1975 to 2010, Ford ranked 13th
vehicles that can be produced or as the number that can be warehoused. We will use the first
definition.
There are four terms that relate to capacity: design capacity, effective capacity, utilization,
and efficiency. Design capacity is the maximum number of cars that can be produced in a time
period (lets say that number is 100,000 per year), while effective capacity is the number of cars
that Ford expects to make. They may not wish to make every car that they can, in order to give
time for retooling for new product lines, or to avoid paying overtime and shift premiums (lets
assume they desire 80% effective capacity or 80,000 cars). Utilization amounts to the percentage
of design capacity completion, and efficiency amounts to the percentage of effective capacity
TQM AND FORD MOTOR COMAPNY 8
completed, (if Ford produces 60,000 cars, utilization is 60% and efficiency is 75%). Considering
the billions of dollars invested in facilities around the world, Ford, of course, wishes to maximize
utilization.
Constraints are the bottlenecks; the parts of the process that limit other parts.
Unfortunately, Ford has experienced constraint problems just as the company is taking great
strides in gaining market share and profitability. The Ford India plant in Chennai, India
historically runs at about 80% utilization (producing 160,000 cars with a designed capacity of
200,000), but last year dropped to just 5,700 cars in one monthonly 34% utilization due to
The theory of constraints lays out a five-step process to identify and mitigate
Layout Structure
Heizer and Render define seven types of layout: (Heizer & Render, 2011, p. 345)
3 Warehouse layout tradeoffs between space and the cost of materials handling
Henry Ford is credited with revolutionizing auto manufacturing one hundred years ago
with the introduction of the assembly line, and is still the layout structure in place today at most
manufacturing plants. Ford also employs hundreds of thousands of people in offices that utilize
office layouts for teamwork and collaboration. Individual components, like the Automatic
Human Resources
Ford has locations throughout the world and because of this they have very large Human
Resources department. In the past, there were HR locations at each individual plant. As Ford
grew this type of structure seemed to be ineffective. Employees had different direction
depending on which location they were located. Management realized that Ford was not
managing globally their HR department to the best of its ability and decided that changes had to
be made.
Ford uses many factors to ensure maintenance and reliability of their products. They
focus on vehicle safety with components of design, technology, driver education, and
collaboration. (Ford Motor Company, 2013, p. 344) Their safety processes include their Haddon
Safety Matrix, Safety Design Guidelines (SDGs) and Public Domain Guidelines (PDGs). (p.
347-348) Using the Haddon Safety Matrix, they are able to view factors of maintenance and
reliability including human behavior, vehicle safety, and the environment and components such
as pre-crash, crash, and post-crash. (p. 348) Using the matrix helps create vehicles that can cater
to all factors of maintaining the safety and reliance of their products and those who use them.
TQM AND FORD MOTOR COMAPNY 10
References
Baggonkar, S. (2011, July 15). Ford bumping into capacity constraints. Retrieved
ford-bumping-into-capacity-constraints-111071500096_1.html
Ford Motor Company (2013). Ford sustainability 2012-2013. Retrieved August 11, 2013, from
Heizer, J. H., & Render, B. (2011). Operations management (10th ed.). Upper Saddle River, N.J:
Prentice Hall.
Scheid, H. (2011, May 25). TQM at Ford Motor Company (M. McDonough, Ed.). Retrieved
ford-motor-company/