Ford Motor Company is an American Multinational automaker. It has introduced revolutionary products and used Total Quality Management to achieve its vision of “Quality Is Job 1”. According to JD Power and Associates (JDPA), 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.
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Reasons due to which Six Sigma was adopted in Ford Motor Company
- Cost Reduction
- Quality Improvement
- Improve Customer Satisfaction
- Reduce solvent consumption to lower the environment impact
Roadblocks in Implementing Six Sigma
- Commitment of the human resources proved to be a major difficulty and cause of concern. For Ford to send its top-level management, senior managers and top 350 leaders through weeks of training was challenging due to time constraint and skeptical approach of employees.
- The issues of time, money and productivity made training of employees difficult and challenging.
- Other major roadblock was to obtain the necessary data to complete the Six Sigma Project. Ford did not have infrastructure to fully run the Six Sigma Initiative. Six Sigma requires a lot of data and internal measures and Ford had to create measurement systems.
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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.
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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.
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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.
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.
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