La Consolacion Pasig City

1st semester(2016)

A Report on Ford Motor Company

Submitted to: Mr. AbelitoT. Quiwa, DBA

Submitted by : James Estropia

Zaira Mamba

TQM IN FORD MOTOR COMPANY:

Background of the company:
FORD Motor Company is an American multinational automaker based in Dearborn,
Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated
on June 16, 1903. Ford is the second largest automaker in the U.S. and the fifth-largest in the
world based on annual vehicle sales in 2010. At the end of 2010, Ford was the fifth largest
automaker in Europe. Ford is the eighth-ranked overall American-based company in the 2010
Fortune 500 list, based on global revenues in 2009 of $118.3 billion.
The company manufactures passenger cars, trucks & tractors as well as automotive parts &
accessories. The first commercial car Model T was introduced in 1908. In 1913 the company
introduced the worlds first moving assembly line for cars & in 1914 the company introduced
$5 a day wage to improve labor productivity. By 1923 the company was producing half of
Americas automobiles. As times passed, the company grew more & more. In the flow of
time the companys management style has also changes.

TQM in Ford Motor Company:

Twenty years ago, when an invasion of Japanese imports threatened the American automobile
industry, the Ford Motor Company led a quality revival based on the management philosophy
of W. Edwards Deming, who was controversial then and is out of fashion now.
The results of the movement, known as Total Quality Management, were stunning at Ford.
After racking up $3 billion in losses between 1979 and 1982, Ford hit a series of home runs,
including the aerodynamic Taurus-Sable cars, and by 1986 had become the most profitable
American auto company.
Ford motor company tries to use all the application of TQM to ensure the overall quality of
their product.

Implementation - Ford TQM system

TQM is Revisited
In 1999, Terry Chenault joined Ford, a risk management specialist who along with Phong Vu,
helped to further the TQM methodology through a Consumer Driven Six Sigma Process.
Says Dan Dobbs today of TQM and Ford, It may have been newsworthy in the 1980s but
Ford Motor Company Total Quality Management practices really began with Henry Ford.
Thats true if you look at Toyotas 5S Best Practices in the production of their vehicles, a
methodology decided upon after visiting Henry Fords assembly lines. While TQM at the
Ford assembly lines looked good to Toyota, they found too much waste and went on to
develop their own quality process or 5S.

Concept - Total Quality Management

Focus
on the
custom
er
Involve
manage
ment

Measur
e
quality

Continu
ous
improve
ment

Quality
improve
ment

Six Sigma and Fords Future

Perhaps the newest slogan, Ford Has a Better Idea, is on its way according to Louise
Goeser, VP of Quality, In fact, one and a half points of customer satisfaction drives about
one point more in loyalty and our data shows that customers who are highly satisfied remain
loyal. Upon obtaining our new Ford dealership, last year, my husband and I traveled to
Fords headquarters in Dearborn Michigan to drink the Ford Kool-aid and Six Sigma was
everywhere
from production to teams to management to consumer suggestions. Whether switching
methodologies from TQM to Six Sigma will work for Ford remains to be seen, especially in a
tough economy. However, way back when, as a Chrysler dealer, I do remember Lee Iaccoca
telling us dealers that Ford was richer and GM was bigger, but both needed to Lead,
follow, or get out of the way. Perhaps this is a way for Ford Motor Company Total Quality
Management to improve to a process such as Six Sigma that will involve everyone from the
consumer to top management. As Quality is Job 1 fades to the background at Ford, dont be
fooled, they still want that as any automaker, but through Six Sigma practices, they feel
theyve got a grand hold on the industry's market share.

Concept - Six Sigma

A Problem Solving Methodology

Decrease
variation and
defect in
process

Improved
through input
and capacity

Reduced cost
of poor quality

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Design and document standard practices for process improvement
Monitor the improvement is sustained
No unexpected and undesirable changes
Develop solution to the problems
Change management
Measure the result if problems be elimanted

Organize potential cause and collect additional data

Determine the cause of the problem

Data collected, compared to the desired state

Develop detailed process

Defne Problem
Develop a vision for six sigma project
Map the quality management process

Contro
l
Improv
e
Analyz
e
Measu
re

Defne

Concept-DMAIC

SWOT Analysis

SWOT Analysis Ford Motor Company

Strength
1. Strong position in US market. Ford is the second largest automaker in US; Ford has
great reputation in its home market and strong commercial vehicle sales that generate
maximum revenue.
2. Sound fnancial performance. Ford was the only big US car company that didnt need
the government bailout and was the frst to get investment status back. The frms proft
margin is high compared to competitors with the highest liquidity ratio.

3. ECOnetic approach. FordsECOnetic initiative is an efort to produce highly fuelefficient engines by improving existing engines rather than new hybrid engines. The
result of this initiative is the Ford Fiesta, currently the lowest emitting mass-produced car
in Europe and Ford Focus ECOnetic that has better fuel consumption than Toyota Prius.
4. ONE Ford approach. Ford has decided to produce single, streamlined global lineup
of its models. The carmaker no longer produces customized vehicles for diferent regions
but focus on designing and engineering the car that fts diferent regional tastes and
regulations. It signifcantly decreases costs for Ford and drives record proftability.
5. Signifcant growth in China. Ford, although not the strongest player in the China has
experienced the signifcant growth in the largest automotive market in the world for the
2012. It grew its sales by 46%, according to Ford press release.
Weaknesses
1. High cost structure. Although One Ford initiative led to substantial cost reduction,
Ford still has a high cost structure, compared to other automobiles manufacturers.
Fords costs are driven by its generous employee compensation and pension plans.
2. Unproftable Europe operations. In 2012, Ford lost $1.75 billion in Europe and plans to
experience losses in the region until 2015. [8]
3. Low Exposure to Asia-Pacifc: Only 15.82% of Fords volume was derived from AsiaPacifc sales in 2011, the fastest growing segment of their business (7.52% growth from
2010 to 2011)
Opportunities
1. Positive attitude towards green vehicles. Cars that are Consumers are aware of the
negative impact of fuel inefficient cars that emit large quantities of CO2 and negatively

afect the environment. Ford has developed electrifcation strategy to reduce the carbon
dioxide (CO2) emissions from its vehicle and make them more efficient.
2. Increasing fuel prices. Fords strong emphasis on engineering fuel-efficient vehicles
(Ford Fiesta and Ford Focus ECOnetic) with flexible fuel and hybrid engines will pay of
due to increasing fuel prices in the world.
3. New emission standards. A new wave for stricter regulations on vehicle emission
standards would positively afect Ford position in automotive industry. Ford invests large
amounts of money to produce fuel-efficient engines and reaped some success with its
ford Fiesta and Ford Focus ECOnetic models.
4. Strategic partnerships. Ford has great experience in creating strategic alliances and
partnerships with other automotive companies. Due to current competitive pressure, all
companies are more likely to enter into such partnerships to drive R&D costs down,
access new markets and gain some new skills.
Threats
1. Decreasing fuel prices. Some analysts forecast that future fuel prices will drop due to
extraction of shale gas. This would negatively afect Ford as it focus on compact fuelefficient hybrid and flexible fuel cars that are less attractive when the fuel price is low.
2. Rising raw material prices. Rising prices for raw metals will lift the costs for auto
manufacturers and result in squeezed profts for the companies.
3. Intense competition. Ford faces more intense competition from other auto
manufacturers more than ever, especially in small cars segment with hybrid engines.
4. Fluctuating exchange rates. Ford, including other largest automotive companies, may
negatively be afected by fluctuating exchange rates as it earns more than half of its

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profts outside the US. The profts may be lower due appreciating dollar against other
currencies.

Market Segments

Market
Ford Motor

Market
Sports
Car
Segme
nt
Economic
Vehicles

Rally Cars

Market
Sub
Segme
Racing
Cars
nt
Cars
Buses
Trucks

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Market Segmentation approaches-

Geographic
Segmentation
-ford aims to grab the
market of UK as well
as India, China,
Malaysia

Demographic
Segmentation
-FORD FOCUS aims for
young people, ladies
and average income
consumer

Physiographic
Segmentation
-FORD FIESTA comes
at reasonable price

Behavioral
Segmentation
-with the beneft for
safety and fuel
efficiency

Product design & continuous improvement:

Product design is one of the most important things for a company to have satisfied customers.
Ford motor company always tries to provide the best quality product to their customers. They
always come up with something new & advanced. For example- fuel efficiency, high speed,
attractive look, advanced safety system, entertainment facilities etc. Every car goes through
multi-level of inspection before going to the market.

Problem solving:
Ford Motor Company is currently using the 8D problem solving tool. It is a disciplined way
to solve a problem.

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The Ford Motor Company developed the 8D (8 Disciplines) Problem Solving Process, and
published it in their 1987 manual, "Team Oriented Problem Solving (TOPS)." In the mid-90s,
Ford added an additional discipline, D0: Plan. The process is now Ford's global standard, and
is called Global 8D.
Ford created the 8D Process to help teams deal with quality control and safety issues; develop
customized, permanent solutions to problems; and prevent problems from recurring.
Although the 8D Process was initially applied in the manufacturing, engineering, and
aerospace industries; it's useful and relevant in any industry.
Steps in applying this method are1.
2.
3.
4.
5.
6.
7.
8.
9.

Plan
Build the team
Describe the problem
Implement a temporary fix
Identify and Eliminate the Root Cause
Verify the solution
Implement a permanent solution
Prevent the Problem from Recurring
Celebrate team success

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Employee engagement:
Their employees are also their customers, and they can be strong ambassadors for their
products. In Michigan, information sessions called Go Further Employee Events are held to
give employees the opportunity to view, learn about and test drive yet-to-be-released
vehicles. This lets the employees see how our products are meeting the needs of customers,
while providing factual information about the vehicles. Their employees can then promote the
vehicles to their friends and families, which, in turn, can increase sales and help to strengthen
the Ford brand.
Our Employee Resource Groups also conduct a number of events and initiatives each year to
engage our employees, provide product insights and reach out to the community.
The company believes its important to engage their people within the communities in which
they operate. Each year, Ford offer ways for thousands of their employees and retirees to
participate in volunteer programs. They see these programs as not only critical to helping
those in need, but pivotal to inspiring and energizing our employees around volunteerism and
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community service. Through these community initiatives, they support teamwork and build a
sense of shared purpose and commitment.

Process design:
In the process design Ford faces many challenges. Such asModern automotive vehicles use a large number of stamped sheet metal parts in their
construction. Understanding the dynamic behavior of sheet metals during transfer from one
die station to another becomes an urgent task in the tooling design phase to achieve optimum
transfer motion, avoid high cost equipment damage and improve overall production uptime.
To get a better understanding of this critical process and to improve the productivity of the
tooling design and stamping process, Ford looked for external input to complement its own
internal experience and expertise.

Solution to these problems areHaving worked on many previous projects together, Ford selected Altair Product Design to
assist in this process. The newly developed Altair Hyper Die Dynamics (HDD), a unique tool
to analyze sheet metal transfer and dynamic behavior, was implemented within Ford's design
process. By introducing flexible body blank representations and a virtual model of the
stamping press line, Altair Product Design and Ford users could easily conduct a panel
transfer dynamic analysis, visualizing the in-motion blank deflections, accelerations, and
resultant forces.

To fully understand the complex nature of the stamping process, Altair Product Design
created a reduced model representing a single press station along with several types of real
parts to be simulated in order to validate the virtual press model and improve the robustness
of the solution.
Result of this method is15

The implementation of the highly customized software and newly formulated design process
in partnership with Altair Product Design had a number of positive results for Ford: Ford
engineers could successfully predict dynamic panel transfer behavior (displacement, forces,
stresses, etc. faster and crucially more accurately than was previously possible. Material
behavior could be predicted with greater accuracy thus avoiding interference during panel
transfer and reducing part or die damage.

Services of Ford motor company:

Ford motor company offers so many services to customers to promote their Product. Here are
services:

Ford offers automotive fnance through Ford Motor Credit Company:

Ford Motor Credit Company LLC: Ford Credit, is the financial services arm of Ford Motor
Company, and is headquartered in Dearborn, Michigan. Its business activities are
concentrated primarily in the area of automobile loans in support of its parent company. The
company offers consumer loans and leases to car buyers, as well as business loans and lines
of credit to dealerships selling Ford Motor Company products. The firm also issues
commercial paper and other debt instruments on Ford's behalf.
Ford Credit also owns Lincoln Automotive Financial Services, the arm that finances Lincoln
vehicles.
Ford's FoMoCo parts division sells aftermarket parts under the Motorcraft brand name. It has
spun off its parts division under the name Visteon.

Product sale related services:

Interest-free payment options

Backed by Ford Credit and 100% transferrable
Honored by Ford Dealers throughout the U.S. and Canada
Genuine Parts and Certified Ford Technicians
24-hour roadside assistance and rental vehicle benefits

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Extended services plan options:

There are different levels of coverage to choose from, so you can be confident there's a plan
that will meet your needs

Ford insurance:
Ford Credit offers industry-leading auto insurance designed specifically for your vehicle1,
including:

Experienced, Certified Ford Technicians

Guaranteed workmanship for as long as you own your Ford
Genuine Ford Parts
Fast, accurate claims service
Discounts when you combine auto with home or rental insurance
$100 off collision deductible when repairs are made at participating dealer-owned
body shops2

Ford motor company always gives most priority to their customer.They want to establish
always that are customers really satisfied with their product and services.

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TQM wheel in services: There are some ways that we can establish our customer
satisfaction. These components are related with customer satisfaction.
Employee involvement: Ford motor company always makes sure that employees are
really involved with services. Employees are committed to serve their best.
Continuous improvement: In service sector continuous improvement is most
important thing. There might be some lacking in service but Ford rapidly select those
lacking and try to improve those sites.
Service design: Its another most crucial task to ensure best services. Ford
Companydesigns their services with highly satisfactory options.
Purchasing: To provide best service purchasing is really important. Company tries to
make sure how easily customer can get their services.
Benchmarking: Benchmarking is really important for both manufacturing and
services. Ford has to make sure the standard services to customers compare to other
renowned motor company like Toyota, Hyundai and so on.
These are factors that company has to make sure for customer satisfaction.

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Ford Current Strategies

Ford has a strategy on new key design

Ford is beginning to use Solar energy to power their manufacturing plants
Global Electrification strategy
Ford has a very strong marketing strategy as they market all of their vehicles
differently
Ford is making more hybrid vehicles through the increase use of renewable and
recyclable materials
Ford is developing natural-fiber composites as a potential substitute for the glass
fibers traditionally used in plastic car parts to make them stronger while reducing
vehicle weight

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Ford Future Strategy

Reduce manufacturing expenses by 15-20%

Introduce new small fuel efficient vehicles
Enter Latin American and Asian market with hybrid vehicles
Develop affordable electric car for US market
Increase market share
Manufacturing of new small fuel-efficient vehicle
Entering the Latin American and Asian market with hybrids $ 20
billion
Implementation of electric car in the US market $ 13 billon
Total Cost = $ 40 billion

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Recomendation
1. Pass General Motors and become the highest
2. Become industry leader in the Chinese market
3. Increase total sales in European Auto Industry
4. Continue using auto dealers for distribution and sales and focus in
improving efficiencies with suppliers.
5. Create more strategic and structural IT alignment within the organization.
Involves increasing the communication between IT and the
business, interconnecting business and IT planning and aligning
organizational structure to support the recommended changes.

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Grading Sheet

Hard Copy

30% x _____ = _____

Power Point

25% x _____ = _____

CD

10% x _____ = _____

Presentation Skill (35%)

James Estropia

35% x _____ = _____

Zaira, Mamba

35% x _____ = _____

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