Subject: Lean Six Sigma

Submitted To:
Mr. Siddharaj Purohit

Submitted By:
Nishant Ranjan Shrivastava

PRN: 20020348007

Reflection on Recent Process Improvements in Ford Motors

Ford Motor Company is an American Multinational automaker. It has introduced

revolutionary products and used Total Quality Management. Ford Motor Company
was ranked seventh in terms of quality among the leading automobile
manufacturers in the world in 2001. In 2003, the results of Initial quality Study by
JDPA, revealed fourth position of Ford which was a remarkable improvement over
this two-year period. Analysts felt that the improvement was the result of a series
of quality initiatives which Ford had taken since late 1999, important among which
was the online Six Sigma implementation. Carrying Out the Six Sigma Approach
To actualize the vision of becoming a consumer products company, Ford Motor
Company implemented Six Sigma in late 1990s with the twin goals of enhancing
vehicle quality and improving the level of customer satisfaction. The initiative was
called ‘Consumer-driven Six Sigma. Ford was the first major automobile company
in the world to adopt the Six Sigma initiative in a big way. Ford found that there
existed about 20,000 opportunities for defects in manufacturing a car. Through Six
Sigma, the company aimed at reducing the defect rate to just one defect for every
14.8 vehicles and thereby enhances customer satisfaction.
Reasons due to which Six Sigma was adopted in Ford Motor Company
• Cost reduction. Ford’s old production process was surprisingly costly. By
introducing Six Sigma, they were no longer using resources that were not
necessary.
• Improving quality. Ford has always been known for their quality products,
but event heir standards slip from time to time. While, for most companies, a
mere 99% quality level is considered acceptable, this lets through a
surprising amount of defect. As much as 20,000 instances of defect. Six
Sigma espouses that only 99.99966% (and up) is ideal. This percentage
limits the number of defects per million to just seven as such, Ford made
some great astonishing strides in quality improvement using Six Sigma.
• Poor customer satisfaction rates. Satisfying customer demand is as critical
to success as leveraging it. Many of these issues link to one another, as
multiple instances of defect are likely to add up to a defective product. This
will inevitably dissatisfy the customer which is why Ford chose to
implement Six Sigma, to streamline their processes, and improve production
issues. All of which adds up to a more productive company and happier
customers.
• Lowering environmental impact by reducing solvent consumption. Six
Sigma is an extremely green philosophy, and Ford uses it to make some
great changes in their environmental awareness. Ford’s consumption of vital
resources proved very costly in the long-term. But by committing to a green
work culture with Six Sigma, they reduced costs, increased quality, and
improved customer satisfaction.
Process Improvements done by Ford in Recent Times:

1. Ford has concentrated on Improving Quality

The company is looking to improve quality with more efficient plants and
production processes and improving communications and relationships with its
worldwide network of suppliers. Ford, which lost $5.5 billion (about $17 per
person in the US) in 2001, has embarked on a five-year restructuring plan that
includes closing several assembly plants and revamping others. The company also
plans to reduce concept to roll-out time so that it can build cars that appeal to
consumers' taste.
Flexible manufacturing, or mass customization is inevitable if manufacturers are to
keep up with consumer's ever-changing demands. Absolutely nothing is
foreseeable, she says, and so production and plants must be able to change with the
times.
Gone are the days of large lots of products, Ford is now looking to be able to cost-
effectively build products in batches with volumes as little as one.
This includes new flexible manufacturing plants that are modularized and
populated with computer numeric controlled machinery that can quickly be
reprogrammed to produce new parts. By mid-decade, half of all the Ford body
shops will be flexible. They will be able to run four significantly different models,
and will have the capability to integrate other unique platforms. This will cut waste
and improve quality.
Manufacturing systems that tie in the plant, process and people can attain new
levels of quality, cutting waste, improving quality and efficiency. Ford did this in
part through virtual manufacturing at the company's revamped Dearborn, MI,
plant. Everything was procreated through virtual software simulation. Ford created
a cyber world that let us look at alternative processes.

2. Ford became more Customer-Driven

From simplifying the vehicle leasing process to saving customers time on
maintenance to rewarding their loyalty, Ford Motor Company is aiming to make
each part of its ownership experience easier and worry-free, building customer
ranks and revenues over time.
Ford doubled its investment in customer experiences, aiming to increase loyalty to
Ford by further improving customer advocacy through programs that show
appreciation to its long-term customer base. This follows benchmarking and
learning from the world’s top travel, technology and hospitality companies.
The program began rolling out in April and officially launches today with 1 million
active members. FordPass Rewards provides the most comprehensive loyalty
rewards program in the industry. With this program, customers who purchase or
lease a new Ford vehicle will receive points they can use toward complimentary
maintenance, parts, service or a new vehicle at participating Ford dealerships.
Contact center, which will be the prototype for all Ford call centers globally, works
on an “own the call” model. Knowledgeable agents stay with the customer from
first contact until every service and experience matter is resolved, rather than
passing the customer to other departments. The process is a best practice learned
through The Lincoln Motor Company’s contact centers. In addition, phone trees
are replaced by voice-activated calling, helping owners reach customer-service
experts more quickly.
Ford research shows customers like the idea of vehicle service coming to them. It
also appeals to competitive brand owners who would consider Ford solely based
on mobile service. Others said they would be interested in using mobile service for
their current non-Ford vehicle. The pilot currently runs in California and will
expand in May to dealers in Texas, Illinois, New Jersey and Florida. Based on
results, Ford will decide later whether to expand it.

BENEFITS TO FORD MOTOR COMPANY DUE TO SIX SIGMA

IMPLEMENTATION
➢ In Ford Motor Company, Six-Sigma data-driven problem-solving process
has globally eliminated more than $2.19 billion in waste since 2001.
➢ According to 2003 Annual Report, the quality improvement and waste
elimination methodology, has had an increasingly dramatic impact on the
operation of the enterprise. Since the inception of Customer Driven Six
Sigma, Ford has completed more than 9,500 projects savings $1.7 billion
worldwide, including $731 million in 2003.
➢ As per 2002 Annual Report, Six Sigma projects have saved Ford Motor
Company $675 million worldwide since its implementation in 2000.
➢ According to company’s internal customer satisfaction survey, customer
satisfaction has increased to five percentage points.
 ➢ Ford is the world’s largest, most successful American automobile maker.
Ford is known for its innovative technology and dynamic approach in
automobile manufacturing. The company implemented 6- Sigma approach in
the late ’90s. Ford’s approach toward Six Sigma was termed as Customer-
driven Six Sigma. The main goal of the 6- Sigma implementation was to
become a full-fledged customer-driven company instead of being only
known as an automobile maker. This not only improves their product quality
but also increases their customer satisfaction rates.
➢ The customer-driven Six Sigma strategy of the giant motor makers help to
save their billion dollars globally. The customer satisfaction rate of the
company increases its percentage by five points. The company managed to
overcome the deep-rooted problems, viz. Poor use of resources, inadequate
production, environmental unfriendliness, and last but not least low rate of
customer satisfaction.
➢ The company has a balanced scorecard system. This evaluation system
provides reporting tools that offer monthly values against target figures,
year-to-date/year-end values v/s target. The company follows a defined
prioritization system using red/green/yellow evaluations or identifications to
measure the areas where improvement is needed. Like, 1- Green: measures
are on or over the target feature. 2- Yellow: measures are under the target,
but better than last year results. 3- Red metrics are under target. When such
improvement opportunities were discovered, the problem resolution tools
such as Six Sigma were implemented then.

Ford on SIX SIGMA:

The Ford officials selected their improvement opportunity as a Six Sigma Black
Belt project. It was an ideal fit with the company’s strategy that focuses on
effective teamwork. They use DMAIC Model for product improvement.
The Six Sigma team at Ford has learned a lot about what it takes to drive a
successful Six Sigma effort. Beyond all of the training, the commitment of
resources, the accessibility of data and huge sums paid to consultants, Ford has
learned that Six Sigma success hinges primarily on two factors: committed senior
leadership and a dedication to understanding customer needs.

References:
• http://ophelia.sdsu.edu:8080/ford/03-15-2014/microsites/sustainability-
report-2012-13/people-customers-needs.html

• https://uobrep.openrepository.com/bitstream/handle/10547/134955/Steven%
20Thompson%201.pdf?sequence=8&isAllowed=y