Ford Motor Company: Total Quality Management

PRESENTED BY :SAHIL REYAZ

Introduction
• Employing Total Quality Management (TQM) is
considered one of the most successful choices that the
management of a company might make. Many
companies have decided to use TQM to improve their
productivity and increase customer satisfaction. One
well-known organization that relies on TQM is Ford
Motor Company. The presentation offers an analysis of
Ford’s main competitors as well as the company’s
implementation of TQM, along with challenges
accompanying this process and the results that have
been achieved.
The Company
FORD MOTOR COMPANY
• The organization selected for the research is Ford Motor
Company, one of the most popular and renowned car
manufacturers in the world. The company was
incorporated in 1903, having only twelve investors and
1,000 shares. In the more than 100 years of its existence,
Ford has evolved significantly and currently offers some
of the best products in the vehicle market.
• Ford is the second-largest U.S.-based automaker (behind
General Motors) and the fifth-largest in the world (behind
Toyota, Volkswagen, Hyundai and General Motors) based
on 2015 vehicle production.
Its Major Competitors
• While many important players populate the car industry, two
are closest to Ford in popularity. Global giants Toyota and
General Motors are considered Ford’s greatest rivals . Data
available for the period from October 1, 2016, to September
30, 2017, indicate that Toyota and General Motors sold more
vehicles than Ford during that time. Also, competitors’ earnings
per share and price-to-earnings ratio were higher than those of
Ford. Despite these statistics, Ford pays sustainable dividends
to its stakeholders, and the company’s profits and
competitiveness remain stable. Thus, even though General
Motors and Toyota prevail in some areas, Ford Motor
Company has a secure future that is based on successful
management decisions.
four core factors behind Ford’s Six Sigma initiative
• 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.
IMPLEMENTING THE SIX SIGMA

• To achieve Nasser's vision of becoming a consumer

products company and gain the coveted increase in
customer satisfaction, Ford turned to Six Sigma. The
program, pioneered by Motorola and made famous by
Jack Welch's General Electric, utilizes many of the same
tools as TQM, QS-9000 and other quality initiatives.
• Training for success: Once the top leadership at Ford had
been trained. Leadership training was followed by training
for the people who would become the backbone of the Six
Sigma process
SIX SIGMA

• Ford selects Six Sigma projects based on three main

criteria: They must relate to customer satisfaction, the
results must reduce defects by at least 70 percent, and
each project should average $250,000 in cost savings.
On average, Ford projects have exceeded the cost-
reduction goal.
• Once projects have been identified and assigned, the
Black Belts begin to work through the DMAIC cycle.
The Ford DMAIC cycle:

• Define. During this first stage, Black Belts work to

identify the customers involved and what matters to them
• Measure. The second stage requires Black Belts to
develop process measures, called "Y's," which enable
them to evaluate the performance of the process.
• Analyze. The third stage forces Black Belts to prioritize
the input variables that cause variation in process
performance, analyze data to determine the root causes
of problems and opportunities for improvement, and
validate process input variables with data
• Improve. At this point, Black Belts generate solutions to
the problem and select the one that best addresses the
root cause. They also face the sometimes-difficult
dilemma of properly implementing the best solution
• Control. The final stage institutionalizes the
improvement and implements the ongoing control. The
goal is to sustain the gains that have been made.
Implementation Challenges
• The first roadblock couldn't be overcome with money; only
time and success would prove Six Sigma's value to Ford's
employees
• Commitment of resources, primarily people, also proved
difficult. Even for Ford, sending its top-level management,
senior managers and top 350 leaders through weeks of
training in a relatively short amount of time taxes
resources. Add to that the training of the nearly 10,000
others in the organization during the last two years and the
issues of time, money and productivity collide.
CHALLENGES

• The major roadblock centers on data, which Six Sigma

devours. "When we began, I don't think that Ford's
infrastructure was set up to fully run Six Sigma," recalls
Stock. "Six Sigma requires a lot of data, and the internal
measures that we need to take for our projects
sometimes aren't there. A big obstacle is obtaining the
necessary data to complete your project. We had to go
out and create measurement systems.
RESULTS

• Ford’s use of Six Sigma methodology, while it did provide

some road bumps, enabled them to eliminate more than
$2.19 billion in waste over the last decade and a half.
They solved this problem by applying Lean Six Sigma
techniques, such as a data-driven problem-solving
process, to devise solutions to waste issues. Moreover,
the company’s methodologies for quality improvement
and waste elimination saw a staggering impact on the
company’s operations.