Ford Motor Company — Flowchart Analysis
Ford Motor Company is one of the largest manufacturing companies in the global marketplace. Fiscally, Ford has had two major recent periods; one of prosperity, one of decline. Period #1, the late 1980s to 19979, showed a steady pattern of growth, about 5-7% per annum. Sales in 1998 were down 6%, up 14% in 1999, giving the decade an average of 5.4% growth and a profit margin slightly above the industry of 7-9%. Costs of goods remained consistent at around 72%, and debt/leverage ratios steady. Since 2000, though, and most especially since 2007, Ford has seen its sales and profits diminish, its international market share decline, and its ability to compete effectively erode. For the primary market segment of Ford, the automotive side, financial and marketing decisions are based on numerous trends: competitive pricing, cost of goods and projections, ability to recap money through subsidiaries (maintenance, Ford Credit, etc.), global vs. U.S. sales, and demographic trends) (Magee, 2004). Unfortunately, over the past decade, Ford has not read the market correctly in its ability to provide the successful vehicles that the public wishes to purchase, with the exception of its number one selling truck worldwide, the Ford F-150 (Wood, 2006, pp. 166-80).
One of the identified gaps in Ford’s operations, causing a costly recall of 500,000 automobiles, was insufficient testing of certain engine components, causing certain engine parts to randomly catch fire. While the fix for these vehicles was relatively simple (1/2 day for most vehicles), the underlying product profile and marketing damage was significant (Crawley and Woodall, 2011).
In the previous assignment, we identified a simple flowchart with a four step process to manage function, feasibility, and safety for vehicles coming out of the assembly line process. Of course, this would not be practical to test every car, but an algorithm should be set up to look at a viable number of vehicles per X. For instance, if the recall affected 500,000 vehicles out of two million, then every 4-5th vehicle should be initially checked, and so on. This is the format discussed previously:
In a generic presentation, the testing process would have been formed from the following stages, as revealed in the chart below:
Testing of functionality
Testing of feasibility
Testing of safety
Bottlenecks – Bottlenecks occur in the manufacturing process when the performance of the system is limited by resources, components, or expertise. In the manufacturing process, it is important to ensure that there are enough materials and components to produce the product — in our case, enough supplies and appropriate mechanical materials to assemble a vehicle. Henry Ford made history with the implementation of machine tooling and assigning a process that would limit bottlenecks. In the modern Ford plant, however, the breakdown surrounded the particular part(s) that were untested prior to assembly. Assuring that these parts are tested and available would, of course, reduce inefficiencies as well as potential bottlenecks in the process. One way Ford developed and instituted a process to reduce bottlenecks was to use a cause-and-effect analysis regarding the wait time for certain decisions. Once this model was analyzed, changes were made and performance increased (Spotlight on Decision Making, 2011).
The Learning Curve — The concept of the learning curve is a way to think about the way an average person — or persons doing a process, learn over time on a given activity. The idea is based upon the notion that repetition increases both skill and retention. Within the business model, using the learning curve as a measurement device ensures more efficiency and profitability. It allows organizations to make more informed decisions, and achieve balance between output and quality. For Ford, then, the implementation of the Quality Control measures within the assembly line process means the time required to complete a single task should decrease with repetition until it is at optimal levels. However, we must also make an assumption that the testing procedures for the appropriate parts have been honed enough so that there is a realistic expectation that the parts have been pretested prior to assembly (Spangler, 2008).
Total Quality Management – A different approach to bottlenecks and other inefficiencies in the business world is TQM or Total Quality Management. In this model, the focus is on identification of the underlying system defects that allow the opportunity for an error to even occur. Then, instead of placing a Band-Aid on a problem that already exists, systems are in place so that errors do not happen in the first place. This approach also takes into consideration the holistic environment of care; the medical personnel, patients, physical environment, and available technology. It also assumes that the quality of products and processes is the responsibility of every person involved in the creation of that product or service. It is not a short-term approach, but rather a longer term way of looking at a set of business needs (Peratec, 1995). In the example of Ford, the TQM approach changes fundamentally both the responsibility and the task of ensuring that all the products that are available for the assembly line have been tested and meet a minimum level of standardization. The workers assembling the vehicles would rightly then assume that all the parts they use had passed inspection at an earlier stage of manufacturing, and that any rejects or inoperative parts or materials would be pulled prior to allowing them on the assembly line.
Spotlight on Decision Making. (2011). Best Practices, LLC. Retrieved from: http://www.best-in-class.com/bestp/domrep.nsf/products/spotlight-on-decision-making-ford-motor-company-armstrong-building-products!OpenDocument
Crawley, J. And Woodall, B. (2011). Ford-F-150 Recall Greatly Expanded. Reuters. Retrieved from: http://www.reuters.com/article/2011/04/14/us-ford-recall-idUSTRE73D3KN20110414
Magee, D. (2004). Ford Tough: Bill Ford and the Battle to Rebuild America’s Automaker. New York: John Wiley.
Peratec. (1995). Total Quality Management: The Key to Business Improvement. London: Chapman and Hall.
Spangler, R. (2008). Learning Curve. Valley Falls, NY: Bold Stroke Books.
Wood, D., et.al. (2008). Global Business Citizenship. M.E. Sharpe.
Quality Control Procedures on every X Vehicle
Assembly Phase — Final Inspection
Tested parts ready for assembly line
Sourcing and Inventory of Materials
Shipment to dealers
Pre-testing of all parts based on statistical algorithm
Assumes testing and vetting of appropriate number of parts prior to allowing forward for assembly — a TQM within TQM
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