You are on page 1of 58






Our work is dedicated to our beloved

Parents, teachers, brothers, sisters
and all of our well wishers.

First of all we would like to great thank our ALMIGHTY

ALLAH for His Blessing, which gave us patience
to do this important research successfully.
Secondly we want to thank our respective course teacher
Mr. Sheraz Ahmed for his co-operation. Despite his busy
schedule, he has helped us a lot to prepare the assignment.
Our whole research was based on his proper guidance and
framework. This study gave us a chance to look into the
operation of a globally successful company-Ford Motors
We also like to thank those web developers who develop the
web sites which help us to make our concern.
Contents Table

1. Executive Summary…………………………………………………Page:1-2

2. Operational Management………………………………………..Page:3-4

3. Operational Managers……………………………………………..Page:4-5

4. Issues for Operational Management ………….………………..Page:-6

5. Ford Motor Company …………………………………………..…Page: 7

6. Operational Strategy……………………………………………… Page:7

a. Introduction to Field ……………………….………………Page:7-15

7. Operational Strategy and Managing Change……………….Page:15

a. Operational Strategy and Competitiveness…… Page: 15-


b. Product Design and Process Selection……………. Page: 16-


c. Process


d. Process Analysis and Process Selection Manufacturing..:


e. Product Development…............................................Page:


f. Total Quality Management……………………………Page:31-


g. Business Re engineering………………………………...Page:33-

8. Supply Chain Management………………………………………..Page:35-


a. Supply Chain Strategy………………………………….Page:35-


b. Just In Time (JIT)…………………………………………..Page:36-


9. Planning and Controlling Supply Chain Design…………………Page: 41

a. Strategic Planning of Ford Motors…………………….Page:41-


b. Customization or Synchronization and Ford………...Page:


c. Aggregate Sale and Sales Forecasting………………Page: 47-


10. Conclusions………………………………………….……………..….Page:48-


11. Recommendations…………………………………………..………Page: 49-


12. References……………………………………………………..….…..Page: 50
Executive Summary

Ford Motor Company (Ford) has been a leader in the auto industry,

however, over the past few decades has continued to lose market

share to foreign competition. U.S. economy combined with rising fuel

prices and increased political pressures regarding global warming,

presents several challenges to Ford and the American auto industry

These current challenges provide exciting opportunities for the auto

company who must reduce cost, get fresh capital, and quickly develop

and produce, new efficient and economic autos, and in the near future

alternative fueled vehicles with hydrogen, electric, or hybrid engines.

The global auto industry will continue to grow with 80% of the global

auto industry's growth from now until 2013 is expected to come from

emerging markets that ford must capture. However, for Ford to

succeed will need to address several internal issues regarding legacy

costs, workers unions in USA, and the development of a wide range of

new vehicles that consumers consider the new "must have vehicles

instead of the large trucks and SUVs.

Looking to the future Ford will have a stronger global presence in these

critical emerging markets China, India, and Latin America. In addition,

Ford will have the knowledge and expertise in efficient and alternative

fuel vehicle technologies required to move the company forward. For

Ford to achieve the vision of being synonymous with alternative

vehicles (low fuel consumption, (fuel celled hydrogen, hybrid, ethanol,

and electric / battery). When consumers think of the innovative

technology in the auto industry they will think of Ford for this to

happen Ford can no longer be a quick follower, but must be an industry

leader in technological advances in the auto industry. Ford must offer a

variety of alternative vehicles that meet consumer demands and

government regulations....
Operations Management

Operations Management is the study of production of goods and

services. The scope of the subject also revolves around the efficient
usage of available resources or the optimum utilization of resources.
The efficiency is measured in terms of meeting customer
requirements on time and maintaining quality of the product or
service that is offered.
The evolution of the subject can be traced back to the days of
Industrial Revolution. When labor-intensive industries started to
shift towards capital-intensive or got mechanized. Also with the
increased study of Economics, topics like Marginal utility and
Marginal production became more and more popular, the
production houses started calculating their efficiencies and arrived
at the points of highest production with the lowest cost.
The major activities of Operations Management include product
creation, development and distribution. Related activities include
managing purchases, inventory control, quality control, storage,
logistics and evaluations. A great deal of focus is on efficiency and
effectiveness of processes. Therefore, operations management
often includes substantial measurement and analysis of internal
The major topics in Operations Management are Operations
Management problems from Basic Operations Management
problems like Inventory Management, Distribution Strategy,
Inventory Control to more advanced Operations Management
Assignment Problems like JIT Production & Purchase, Agile
Manufacturing, Total Quality Management, Logistics Planning,
Returns Management.
Location Strategies
Factor Rating, Center of Gravity, Transportation Model
Layout Strategy
Fix-position layout, Processed Oriented layout, Office layout,
Warehouse layout, Forecasting
A-B-C analysis, Economic Order Quantity (EOQ), Economic
Production Quantity (EPQ), Quantity Discount Models, Just in Time
systems (JIT)
Aggregate Scheduling
Demand Chase, Mixed Strategy
Material Requirement Planning (MRP)
Bills of material, Lot-for-lot
Decision Theory
Decision Trees, Utility
Critical Path, Uncertain Data
Linear Programming
Linear Optimization, Simplex, Transportation Models, Integer
Waiting-Line models
Queues, Single-Channel and Multi-Channel models
Statistical Process Control
Control Charts; X-bar, R-bar, p-bar, C-bar charts; Process Capability
Time Series, Moving Averages, Exponential Smoothing, Trend
Projection, Seasonal Indexes.


At the strategic level (long term), operations managers are responsible
for or associated with making decisions about product development
(what shall we make?), process and layout decisions (how shall we
make it?), site location (where will we make it?), and capacity (how
much do we need?).

At the tactical level (intermediate term), operations management

addresses the issues relevant to efficiently scheduling material and
labor within the constraints of the firm's strategy and making
aggregate planning decisions. Operations managers have a hand in
deciding employee levels (how many workers do we need and when do
we need them?), inventory levels (when should we have materials
delivered and should we use a chase strategy or a level strategy?), and
capacity (how many shifts do we need? Do we need to work overtime
or subcontract some work?).

At the operational level, operations management is concerned with

lower-level (daily/weekly/monthly) planning and control. Operations
managers and their subordinates must make decisions regarding
scheduling (what should we process and when should we process it?),
sequencing (in what order should we process the orders?), loading
(what order to we put on what machine?), and work assignments (to
whom do we assign individual machines or processes?).

Today's operations manager must have knowledge of advanced

operations technology and technical knowledge relevant to his/her
industry, as well as interpersonal skills and knowledge of other
functional areas within the firm.

The scope of operations management as

encompassing these multi-disciplinary areas:
• Supply Chains—management of all aspects of providing goods to
a consumer from extraction of raw materials to end-of-life

• Operations Management/Marketing Interface—determining what

customers' value prior to product development.

• Operations Management/Finance Interface—Capital equipment

and inventories comprise a sizable portion of many firms' assets.

• Service Operations—Coping with inherent service characteristics

such as simultaneous delivery/consumption, performance
measurements, etc.

• Operations Strategy—Consistent and aligned with firm's other

functional strategies.

• Process Design and Improvements—Managing the innovation


Major issues for operations management today are:

• reducing the development and manufacturing time for new
goods and services

• achieving and sustaining high quality while controlling cost

• integrating new technologies and control systems into existing


• obtaining, training, and keeping qualified workers and managers

• working effectively with other functions of the business to

accomplish the goals of the firm

• integrating production and service activities at multiple sites in

decentralized organizations

• working effectively with suppliers at being user-friendly for


• working effectively with new partners formed by strategic


As one can see, all these are critical issues to any firm. No longer is
operations management considered subservient to marketing and
finance; rather, it is a legitimate functional area within most
organizations. Also, operations management can no longer focus on
isolated tasks and processes but must be one of the architects of the
firm's overall business model.

Ford Motor Company

Company Perspectives:
Our vision is to become the world's leading consumer company for
automotive products and services. We are a global family with a proud
heritage passionately committed to providing personal mobility for
people around the world.
Key Dates:
1903: Henry Ford sets up shop in a converted wagon factory.
1908: Ford's Model T is introduced.
1922: Lincoln Motor Company is acquired.
1945: Henry Ford II is appointed company president.
1963: Ford Mustang is released.
1985: Ford Taurus is introduced.
1989: Jaguar Cars Ltd. is acquired.
1999: Swedish automaker Volvo is acquired in a $6.45 billion deal.
2001: The Company takes a $2.1 billion charge to cover the cost of
replacing Firestone tires on its vehicles; William Clay Ford, Jr., is named

Company History:
Introduction to field

As the second-largest automobile company in the world, Ford Motor

Company represents a $164 billion multinational business empire.
Known primarily as a manufacturer of automobiles, Ford also operates
Ford Credit, which generates more than $3 billion in income, and owns
The Hertz Corporation, the largest automobile rental company in the
world. The company manufactures vehicles under the names Ford,
Lincoln, Mercury, Jaguar, Volvo, Land Rover, and Aston Martin. Ford
also maintains controlling interest in Mazda Motor Corporation. Ford's
financial stability was shaken in early years of the new millennium as a
result of slowing sales, quality issues, and a debacle involving
Firestone tires.

Background (General Facts) Ford Motors is one of three leading
automotive manufacturing companies in the United States. Based in
Michigan in 1903 by Henry ford and grew to reach revenue of $150
billion and more than 370,000 employees by 1996. In the 1970's, the
automobile market for the major auto makers - General Motors (GM),
Ford, and Chrysler- was crunched by competition from foreign
manufactures such as Toyota and Honda. In 1999, Ford acquired the
Swedish Volvo model in an attempt to compete in the foreign market
and expand to other regions. Furthermore, Ford launched a full
organization re-engineering business process plan called "Ford 2000"
aiming at reestablishing the company's infrastructure. The process
meant reduction in their Vehicle Centers (VCs) to only five covering the
operations that spanned 200 countries. It also meant cutting
redundancies and requiring Information Technology (IT) to be the
driving force and the link between Ford centers worldwide.

Ford's IT infrastructure

In building Ford's IT infrastructure, the company focused on

implementing a setup that supported the TCP/IP communication
protocol based on the U.S. department of Defense requirements. At
those days, Ford internal network was meant to serve files transfer
unlike most companies that used the network mainly for email
communications. Throughout the 1990's, Ford developed a cost
effective Global Enterprise Network Integration (GENI) process to link
all its locations compromising on the type of the connection and the
cabling in favor of full coverage. During the same time, Ford started
building its Web Farm, which was basically a set of hardware and
software managed by a team for building Ford's public website. The
work started by publishing documents for technical references and
moved to more advanced images from a live auto show. As a result,
the website received 1 million visits a day in less than 2 years after its
official launch. Throughout the end of the 90's, Ford established its
web services by increasing the amount of information published,
building more intelligent and standard web application in 12 weeks
period, purchasing more Netscape browsers for setup on its users'
machines, and creating a B2B server to allow the suppliers secured
access to Ford's Intranet.

In the path towards service cost reduction and bringing more business
through the web, Ford worked closely with its competitors in the U.S.
market GM and Chrysler to establish what came to be known as
"Automotive Network Exchange" (ANX) certificate. The protocols
aimed at providing a unified communications standard through the
Internet to enable suppliers to provide common technology for all
manufacturers. Moreover, Ford focused on making information on its
web site more accessible and useful by deploying a team to manage
the process of adding and updating information based on an analysis
of how humans deal with information. One final aspect of Fords
endeavor was to try to build a model through its infrastructure that
benefited from the model implemented by Dell computers to improve
their supply chain and delivery process. The direct model would not
work well for automotives as it would with computers, as a result Ford
worked on its retailing network remodeling and identifying what would
eventually give it the extra edge in delivery time.

Enterprise Architecture Issues

• Ford's regional expansion to address the competition for market

shares demanded cost management for the infrastructure

• IT infrastructure places limitations on the type of application

development based on the platforms

• Easy access to information and prompt delivery of vital data to

key individuals requires proper knowledge management
Organizations reengineering and process remodeling is
necessary when adapting new technologies to maintain the cost
and increase efficiency

• Supply chain errors and delays can severely affect the progress
of the business and the market value of the corporation Analysis

Infrastructure Upgrade
Since the inception of the Internet in the 1960's, much effort has been
made in standardizing how computers connect to it. In 1982, the
International Organization for Standards (ISO) realized that during that
period many ad hoc networking systems were already using the TCP/IP
protocol for communications and thus adapted it as a standard in its
model for the Internet network. The main driver for IP convergence, at
that period, was the growth in data traffic through wide area networks
(WANs) established by local companies. Furthermore, in 1991, the
Internet was open for commercial use, and that demanded a reduction
in the total cost of operating the network to cope with 1 million
Internet hosts that materialized in only 1-year time.
Telecommunications companies like AT&T understood the potential
and worked on standardizing the network offering voice services over
IP networks that managed the separation between voice and data

At the same time, Ford had launched its plan to update its
infrastructure, and seized the opportunity brought by the global
movement of integrating the voice, fax transmission network with data
transmission and expanded its WAN to include its offices in Europe and
elsewhere. The financial benefits also came from the fact that Ford
adapted the TCP/IP protocol from the beginning and made sure that all
its technical infrastructure upgrades adhere to the standards. This
made the transition of its system to the Internet as cost effective as it
could be.

Web Technologies

Intranets employ the hypertext and multimedia technology used on the

Internet. Prior to 1989, when Tim burners-Lee invented the Web, most
applications used standard development languages such as C and C++
to create desktop applications that were proprietary and dependent on
the platform. For example, applications running on a command-based
operating system such as UNIX would not run under Windows, and
those working for PCs might not work on Apple computers and vice
versa. The invention of HTML (Hyper-Text Markup Language)
introduced a new model for applications that conform to the standards
provided by a single program, the "Web Browser". Unlike standard
applications, the browser brought a unified interface that had a very
fast learning curve. Users seem to require no additional training to
work with web browsers. Furthermore, system administrators did not
have to spend time installing upgrades on users' machines, since the
Intranet client/server architecture facilitated all the updates through
the connection with the web server.

Since Ford established its Intranet, it was aiming at building web

applications through the initial analysis of "Mosaic", the early form of
web browsers. The technical department at Ford used web languages
to create the first web site in 1995. In 1996, the team started building
applications making use of the unified "Netscape" browser that was
deployed on all machines at the company, and working on a standard
template to cut on the development life cycle. There was a substantial
cut in training cost due to the user-friendly interface of web
applications. Furthermore, the speed of development made vital
applications available to different individuals across the company. For
example, the B2B site allowed suppliers remote and secured access to
various sections of Ford's Intranet. In addition, the development team
created an application as a virtual teardown on Ford's website where
Ford's engineers could examine parts of competitors' cars and
evaluate any new technologies. The alternative would have been an
actual trip to a physical location where Ford tears down cars to
examine the parts.

Knowledge Management
While there are many definitions for knowledge, each company might
adapt its own based on how it analysis data and information to acquire
knowledge. The University of Kentucky, for example, defines
knowledge as "a vital organization resource. It is the raw material,
work-in process, and finished good of decision-making. Distinct types
of knowledge used by decision makers include information,
procedures, and heuristics, among others.

Organizations go through different activities to manage the amount of

information they collect to form the knowledge base of the company.
Activities include creating databases of best practices and market
intelligence analysis, gathering filtering and classifying data,
incorporating knowledge into business applications used by
employees, and developing focal points for facilitating knowledge flow
and building skills.

Ford was excited about the traffic it was receiving on the Web site and
everyone was publishing all the material they have on desk on the
Intranet. Nevertheless, there was a growing concern about the
usability and usefulness of the material people were adding. As a
result, Ford created a "Knowledge Domain Team" to build complete
information in nine areas that were identified as vital to the business.
The process Ford took was based on surveys and specialists input in
how people perceive information, and what is considered vital and
what is distracting in the structure of Ford's website. The aim behind
the initiative was to reduce the time individuals spent in searching for
information through proper indexing of the website content, and
making sure that what was important could be accessed in due time,
and what is trivial did not overwhelm the researcher with thousands of

The New Millennium

However, Ford faced major challenges in the early years of the new
millennium. While it continued to lay the groundwork for future growth
by spinning off its Visteon unit, acquiring BMW's Land Rover SUV
business, and purchasing the remaining shares of Hertz that it did not
already own, it was dealt a significant blow when Bridgestone recalled
over 6.5 million Firestone brand tires--tires used as original equipment
on Ford's popular Explorer model, the Mercury Mountaineer, the
Ranger, and some of its F-150 pickups. In the largest recall in
automotive history, Ford was forced to call back over 300,000 vehicles
and replace over 13 million Firestone tires at a cost of $3 billion in
2001 alone. To make matters worse, several deaths had been linked to
faulty tires on the Ford Explorer, and some alleged that Ford had
known about the problem all along and had failed to act.

As a result of the tire debacle and several other product recalls, Ford
was ranked last in the industry in terms of quality according to J.D.
Power & Associates. In 2001, the company posted a loss of $5.45
billion. Nasser was ousted in late that year, leaving William Clay Ford,
Jr., at the helm. The task set before him was monumental; he faced
faltering employee morale, major quality issues, sluggish sales, and
intense price wars.

In early 2002, Ford launched a major restructuring effort that included

the closure of five plants, the elimination of 35,000 jobs, over $9 billion
in cost cutting measures, and the shuttering of several car lines
including the Mercury Cougar and the Lincoln Continental. Included in
the plan were efforts to boost the morale of employees. In a speech
quoted in a November 2002 Fortune article.

The company forged ahead in 2002 cutting its losses to $559 million.
Market share continued to fall, however, hovering at 21 percent versus
the 25 percent it held in 1998. In response, Ford sold some non-core
assets and ramped up new product development, launching the Ford
Focus C-MAX in Europe, the Jaguar XJ, the Volvo S40, a new Ford F-150,
the Ford Freestar, and the Mercury Monterey in 2003. Ford anticipated
launching 40 new products in 2004 including the new Mustang and the
Escape Hybrid, the first gasoline/electric SUV. Overall, the company
planned to have 150 new products in the marketplace by mid-decade.

While a turnaround at the Ford Credit subsidiary bolstered the

company's income, automotive operations, especially the international
arm, continued to struggle. James J. Padilla, elected chief operating
officer in 2004, and William Clay Ford, Jr., indeed faced a long road
ahead. Restoring Ford's image and getting the company back on a
successful financial path would no doubt be their focus in the years to

Principal Subsidiaries: Ford Brasil Ltda.; Ford Capital B.V.

(Netherlands); Ford Motor Company (Belgium) N.V.; Ford Espana S.A.;
Ford European Holdings, Inc.; Ford Holdings LLC; Volvo Car Holding
Germany GmbH; Ford Motor Land Development Corporation; The Hertz
Corporation; Ford Global Technologies, LLC; Ford International Capital
Corporation; Jaguar Ltd.; Ford Italia S.p.A.; Ford Mexico Holdings, Inc.;
Ford Motor Company of Canada, Ltd.; Land Rover Holdings; Ford Motor
Company of Southern Africa (Pty) Ltd.; Ford Motor Company of
Australia Ltd.; Ford Deutschland Holding, GmbH; Ford Motor Credit
Company; Ford Credit Canada Ltd.; Ford Motor Service Company; Ford
Motor Vehicle Assurance Company; Ford Trading Company, LLC;
Groupe FMC France SAS; Volvo Cars of North America, LLC.

• Principal Competitors: DaimlerChrysler AG; General Motors

Operation Strategy and
Global Manufacturing Strategy Gives Ford Competitive
Ford Motor Company is the only automotive manufacturer executing a
truly global power train strategy. Beginning with the launch of the new
Ford F-150, we are building a network of flexible engine and
transmission plants that can respond quickly to changing market
needs, while improving quality and manufacturing efficiency. This is
the most dramatic change in power train manufacturing since the
introduction of the assembly l Operations

• Under Ford Motor Company’s global power train strategy, next-

generation engine plants worldwide will use a medium-sized
production model of about 325,000 units annually, enhancing
efficiency and allowing Ford to adapt quickly to changing market

• Cleveland Engine Plant No. 1, re-opening in 2004, will be the first

of these flexible engine plants in North America to come online.

• Flexible techniques are already being put into operation at other

plants, such as the cylinder-head line at Windsor Engine Plant,
which produces the new 5.4-liter, 3-valve Triton™ V-8.

• Manufacturing equipment and plant-floor layouts will be similar

around the world, reducing capital-investment costs.

• Cross shipping of components between plants is possible, easing

launch startups and helping speed products to market.
Three main elements are

3 Ford’s flexible manufacturing strategy for power trains:

4 Common engine architectures; commonized manufacturing


5 Modern, flexible, numerically controlled machine tools (CNC

machines) that can be easily retooled and reprogrammed to
perform new tasks with minimal disruption to production.

Product Design and Process Selection

Product Design

• Design

• Technology

• Safety

• Environment

• Quality


Our world-class designers and engineers create groundbreaking cars,

trucks, SUVs and performance vehicles all over the world.

Ford's technology and manufacturing advances have reduced injuries,
improved vehicle quality and brought vehicles to market more quickly.

Vehicle safety is integral to our heritage. Ford is pioneering new
frontiers in safety with
We are committed to delivering a more sustainable planet through
best-in-class fuel efficiency.


We have a global set of disciplined, standardized processes aimed at

making us the world’s leader in automotive quality.


• Toyota Motor Corporation All-new Ford Focus Electric is the first

fuel-free, rechargeable passenger car from Ford and one of five
new electrified vehicles Ford will deliver by 2013 in North
America and Europe

• Focus Electric will offer a mile-per-gallon equivalent better than

Chevrolet Volt and competitive with other battery electric

• The all-electric Focus is capable of fully recharging in three to

four hours at home using the available wall-mounted 240-volt
charge station – charging in half the time of the Nissan Leaf

• The new Focus Electric offers value charging, powered by

Microsoft, to help owners in the U.S. charge their vehicles at the
cheapest utility rates, lowering the cost of ownership

Focus Electric provides a special version of MyFord Touch™ driver

connect technology especially for electric customers and introduces
MyFord Mobile, a smart phone app and website for monitoring key
vehicle functions and charge settings while mobile

Electric Vehicles will bring about new ways of refueling. Instead of

topping off the tank with gasoline, customers will plug in, and Ford is
working with its supplier partner, Yazaki, to make this a natural and
comfortable experience.

The two companies used internal ergonomic studies to design the

convenience cord, drawing inspiration from hockey sticks, curling irons
and tennis racket handles. While most owners are expected to
recharge the zero-emissions, gas-free Focus Electric at home with an
optional wall-mounted 240V charging station, they also will have the
ability to recharge at remote locations with a standard 120V
convenience cord. Both types of connectors will use an industry-
standard five-point plug fitted with an ergonomic Ford-branded handle
specially designed for comfort and durable daily use. Owners of Focus
Electric will recharge the car’s onboard lithium-ion battery pack by
plugging the convenience plug or charge station plug into the vehicle’s
charge port.

The Ford Focus Electric, which debuts in late 2011, will bring enhanced
recharging flexibility with a 120V convenience cord to allow users to
recharge the all-electric vehicle at remote locations; the convenience
cord will serve as a backup to an optional 240V home charging station.
Focus Electric is one of five new electric vehicles Ford will deliver over
the next three years in North America and Europe; it will be built at the
Ford Michigan Assembly Plant.

When plugged in, the vehicle’s onboard charger converts the AC power
from the electric grid to DC power to charge the liquid-cooled battery
pack. A full recharge is expected to take six to eight hours with a 240V
charge station or more than 12 hours with a 120V convenience cord
set. When fully charged, Focus Electric is expected to deliver up to 100
miles of gas-free driving – more than enough for most U.S. commuters,
who average 40 miles per day.

Like most household electrical plugs, Focus Electric’s cord set

connector has three pins at the end that plug into a standard outlet.
But the similarities stop there. The end that connects with the car has
five pins, including one that communicates with the vehicle about the
type of electrical current (120V or 240V) it is requesting and another
pin that deactivates the current when the user disconnects the plug
from the charge port.

Focus Electric’s convenience cord will be 25 feet long, making it long

enough to reach the nearest outlet, eliminating the need for an
extension cord. When not in use, the user can spool the cord around a
special oval-shaped holder that also accommodates the cord’s control
box. The spooled cord will have a designated spot in the vehicle’s

Between plugging in and unplugging at home, work or other places,

Focus Electric owners are likely to recharge their vehicles two to four
times each day (nearly 1,500 times a year) compared to once a week
for gassing up (52 times a year). With a Focus Electric owner in contact
with the connector so many times, Ford conducted an ergonomic study
to help determine plug handle design, as well as charge port height
and insertion angle. Study participants – who ranged from petite adult
females to larger adult males, ages 21 to 61 – tested a variety of plug
handle prototypes.

In seeking a blend of tactile toughness, high-tech polish and ergonomic

comfort, the team benchmarked Craftsman® tools and considered the
attributes of such disparate products as Apple® mobile electronics and
OXO Good Grips® kitchen utensils.

The plug handle uses a matte-finished blue rubber that allows for a
comfortable, non-slip grip and the plug head is shielded with a glossy
white hard plastic to protect the electronics. The Ford Blue Oval
trademark helps make the device immediately recognizable.
Ford supplier partner Yazaki conducted extensive and durability tests
on Focus Electric’s cord set connector, including an insertion/extraction
study of 10,000 cycles to assess the durability of the interaction
between the handle and plug. For every thousand insertions, testers
dunked the plug into a sandy salt water solution to add grit to the
connectors and they repeatedly dropped the handle and rolled over it
with a car tire to test its durability. Testers also subjected the cord set
connector to ambient extreme temperature increases.

Process Analysis
Ford Engine Architectures Are the Building Blocks

Ford’s new I-4 family represents a good example of the company’s

approach to modularly designed engine architectures, and shows how
a modern engine can be designed in advance to meet many needs.

Changes in cylinder bore and cylinder head configuration can produce

more than 100 variants of the I-4, each suited to a specific vehicle’s
characteristics. The 2.3-liter engine built at the Dearborn. Engine Plant
is optimized for low-speed torque for the Ford Ranger compact pickup.
Another variation, optimized for quick acceleration and small-car
performance feel, powers the new Mazda6 sedan.

At the upper range, Ford’s modular V-8 and V-10 family of engines is
well established. The modular engine family includes the 4.6-liter and
5.4-liter V-8 engines in both single- and dual-overhead-cam versions,
as well as the 6.8-liter V-10.

Built in both cast iron and all-aluminum versions, redesigned modular

V-8 engines are being introduced this year for six new products: the
all-new 2003 Lincoln Aviator, 2003 Lincoln Navigator, 2003 Mercury
Marauder, 2003 Ford Mustang Cobra, 2003 Mustang Mach I and 2003
Ford Expedition. The newest addition to the V-8 modular family will be
the 3-valve, 5.4-liter Triton engine for the all-new Ford F-150 pickup.

Standardized Facilities Maximize Best Practices, Reduce Costs

Common plant layouts and manufacturing practices are key enablers

for the flexible manufacturing strategy. Ford Motor Company is the
only automotive manufacturer executing a truly global power train
strategy, in which engine plants thousands of miles apart are getting
the same floor plans – the same manufacturing machinery in the same
layouts – in order to standardize production.

New flexible manufacturing process is completed engine plants at

Cleveland, Ohio, and Dagenham and Bridgend in the United Kingdom
will be nearly identical.

Ford’s new global I-4 engine, which just launched production, is being
built at four plants globally, on three continents, and serves as a
baseline for successive manufacturing programs.

Commonality to this level of detail means that Ford’s engineers can

apply best practices from previous installations to each new engine
plant. Commonality also brings plant launches into full production
much more quickly.

One fully operational plant can help a new plant ramping up by

supplying key components – crankshafts, cylinder heads or even
personnel. The Windsor (Ontario) Engine Plant will support
modernization at the Essex (Ontario) and Romeo (Michigan) Engine
Plants in this way, allowing new products to be introduced more
quickly. These changeover savings alone amount to up to 50 percent.

These are the obvious advantages on the product side. A visit to the
Windsor Engine Plant, which makes V-8 engines and has one of the
new flexible manufacturing installations for cylinder heads,
underscored to Bennett that there are significant advantages on the
people side, as well. When necessary, engine plants can simply change
over production with little or no downtime.

Rather than huge engine plants turning out a million or more units a
year, the new strategy relies on flexible medium-sized production
modules, each running at high capacity to produce approximately
325,000 engines per year. Uptime and productivity are both kept high
under this model, and Ford is able to quickly adapt to changing market
demand. Computer-Controlled Machines Adapt to Demand

Ford Motor Company’s newest flexible CNC machine-based processes

can react quickly to changing production needs. The new CNC
machining processes have been installed at the Windsor plant to
manufacture cylinder heads. They also are scheduled for installation at
Ford’s Cleveland Engine Plant No. 1 and Dagenham and Bridgend
engine plants in the UK, in late 2003.

Rather than requiring a complicated process of removing old-style

dedicated milling or boring machines and installing new ones – which
can interrupt production for months – the new machines can be
retooled and reprogrammed internally, with little or no interruption in
production. In many cases, this reprogramming can be accomplished
over a weekend.

New Database Improves Engine Quality

During production, each engine builds a sophisticated “birth history”

that allows plant engineers to track every stage of production –
starting even before major components such as cylinder heads arrive
at the engine plant.

This birth history is recorded on a microchip that travels with the

engine, or data is maintained in a database related to a bar code. Such
data include hundreds of metrics, including torque levels for specific
bolts; crank journal clearances; pressure test results; and the amount
of torque it takes to turn the crankshaft after all parts are bolted

Because parts are routed automatically to available machines along

the production path, each assembly can take one of 1.24 million
possible manufacturing paths. The birth history allows engineers to
trace the precise path taken by any part, so any quality control issue
can be traced back to its source, and affected parts taken out of

If engineers learn that a small run of bolts from a supplier was

substandard, for example, it can track those bolts to the exact engines
in which they were installed, and call for repairs on those individual
vehicles, rather than issuing a broad recall, as was sometimes
necessary in the past. It’s not a needle in a haystack anymore, new
programs leader at the Windsor cylinder-head operation. This has
potential to save thousands of unnecessary replacements, and spare
customers considerable inconvenience.

Standardization Leads to Efficiencies

At the Windsor cylinder-head facility, each production “module” has 43

CNC machines arranged in cells of up to six machines. Cell operators
monitor production at a computer workstation. Another benefit of this
standardization is that each operator knows how to run all of the
machines – they’re all the same – and not only can step in to other
roles, but can trade information, concerns and best practices with

These identical CNC machines can perform any of a number of

functions, depending on need. That means diesel engine cylinder
heads could be manufactured at the same time as two-valve or multi-
valve gasoline engine heads, and each type would route itself to the
machine that was equipped with the proper tooling and programs.

Since the machines are identical, Ford is able to dramatically reduce

the number of spare parts kept on hand. The new plants typically have
one set of shared common spares for each system, rather than each
machine, which results in a huge inventory cost savings.

Every new or reworked cutting tool is measured before it is put into

service, and that measurement is recorded in its memory chip. The
computer-controlled machine reads this data as it loads the tool, and
automatically compensates for any minor variation in tool sizes. A laser
in each CNC verifies tool length every time the tool is used in
production. This assures that if the tool breaks or goes out of
adjustment, the machine doesn’t continue to produce parts.

The degree of quality control that we’re is second-to-none verifying the

quality of build throughout the process. Faults can’t pass down the
line. With this degree of integrity, we can target 100-percent right, first

Ford Motor Company

Process Analysis and Process Selection
(Al Ver, Vice President of Advanced and Manufacturing Engineering,
Ford Motor Company)

“By implementing VIMS, we can now locate exactly which vehicle we

want or need in a matter of seconds. Before we began using VIMS, the
same process could easily take hours.” Knowing what you have and
where it is within the supply chain at any given time should be
straightforward. After all, it doesn't require sophisticated technology
solutions to see when a box is empty or when it’s full.

But consider an enormous manufacturer, such as Ford Motor Company,

which must manage tens of thousands of items, and suddenly the
seemingly simple task of knowing what you have—and where it is—
becomes staggeringly complex. Temporarily misplaced items can stop
a manufacturing process, delay the delivery of products, result in
excess or obsolete inventory and contribute to a loss of productivity.
And as companies implement lean manufacturing processes, the value
of real-time information for every container of inventory flowing
through the supply chain is critical.

To meet these challenges, Ford Motor Company has adopted a wireless

Real Time Locating System (RTLS), which has been implemented at
several of its plants throughout North America and Europe. The
system, from Where Net Corp., the leader of wireless supply chain
visibility solutions, is driven by wireless tags, fixed position antennas,
and Web-enabled software. This industrial information system locates
and tracks inventory using extremely low-power radio frequency tags
and a communications network. Antennas positioned inside and
outside the factory receive tag transmissions and deliver tracking
information to a computer. The system then identifies the location of
the tag within 10 feet of its exact position.

Ford initially implemented its Where Net system in February of 1998,

to track materials within a 250,000 square foot area of its Van Dyke
facility in Sterling Heights, Mich., which produces more than nine
million components annually for Ford cars and trucks. Utilizing the
same local infrastructure of antennas, Ford and Where Net then co-
developed a wireless "call" system known as Where Call to bring parts
to the line as needed. To date, roughly 35 Ford Motor Company
manufacturing plants have begun to use the Where Call technology.
Most recently, Ford implemented a third application of Where Net’s
real-time locating technology—the Vehicle Inventory Management
System (VIMS). The use of VIMS began as a pilot project in June 2000,
at Ford's Michigan Truck Plant, which assembles thousands of vehicles
daily. The pilot was completed in February 2001, and a version of the
technology – called Quick VIMS has been rolled out to all
manufacturing plants in North America.

Where Net Identifies any Specific Automobile Parked in a Lot of

Finding your car in a crowded parking lot can be time-consuming and
frustrating—even if you parked it there yourself. Imagine trying to
locate a particular car in a vast lot filled with two to three thousand
nearly identical vehicles, and you can understand the impetus behind
the development of Where Soft Vehicle, a Where Net-based Vehicle
Inventory Management System (VIMS). This application provides
constant visibility and management of vehicles from final assembly to
shipping, making it easy to instantly locate specific vehicles to fulfill
dealers' custom orders or to identify any automobiles “on hold” for
quality control.

"By implementing VIMS, we can now locate exactly which vehicle we

want or need in a matter of seconds," said Al Ver, Ford Motor Company
vice president of Advanced and Manufacturing Engineering. “Before we
began using VIMS, the same process could easily take hours."

A single vehicle manufacturer may spend more than $1 million dollars

each year locating and managing inventory within its delivery chains. It
is estimated that the integration of VIMS will reduce the time that
vehicles sit on the lot by at least one day.

Where Net RTLS Automates Parts Replenishments

In addition to reliably indicating where inventory parts are located, the
Where Net RTLS also makes it easy for line workers at the plant to
request fresh supplies of materials. Most major automakers have
adopted the paper card-based Japanese Kanban system for bringing
parts to the assembly line.

Where Net and a Ford subsidiary, Ford Global Technologies, jointly

developed a special call functionality that has greatly improved the
efficiency of traditional material replenishment processes and has
enhanced the capabilities of the locating system. Ford now places
Where Call devices at assembly stations. When supply of a specific
part reaches a pre-determined replenishment level, the line worker
presses the Where Call button that sends a signal to re-stock that
particular part so that the line will never run out of parts. This process
eliminates the need for replenishment workers to travel routes to pick
up Kanban cards. The system also eliminates some lag time from the
process, further minimizing line-side inventories.

When the Where Call button is pressed by an operator, a light on the

unit flashes 10 times to confirm the transmission and the timer begins
counting. With multiple parts at some assembly stations, the timer
helps remind workers which tags have been activated and how much
time has elapsed since each call was made. During shift changes, this
is extremely beneficial as it eliminates confusion and potential
overstocking of parts.

Using the same local infrastructure of antennas mounted in the plant

ceiling that pick up the Where Tag pings, the Where Call’s message for
parts is conveyed to the Where Net server, which determines the
location of the call and the part that needs to be replenished. The data
is then passed onto Ford's SMART System, which in turn displays a
message on a touch-screen
computer. The system ensures that drivers never have to leave the
cabs of their lift trucks as they receive the order, pull parts from
inventory, and deliver them to the exact location of the line-side
operator who initiated the Where Call just a few minutes before.

The wireless nature of Where Call offers tremendous flexibility and

helps assure that the line is reliably stocked with materials as needed,
ensuring smooth operation. Ford has achieved some impressive results
through its use of Where Net technology: More efficient use of labor,
implementation cost savings of approximately $200,000 to $500,000
per facility over hardwired
systems, faster installation that allows a facility to be online with the
call system in a matter of weeks, and proven reliability with
performance approaching six sigma ratings.

As a testimony to this technological breakthrough, Ford Motor Co.

awarded the co-development team from Where Net and Ford with the
Henry Ford Technology Award in October 2000. Developing the call
system application has helped Ford engineers to leverage the benefits
of the container locating system in new ways with little additional
investment, because the systems share the same transmitting and
receiving infrastructure. As Ford adds more applications, the costs per
application come down and the savings increase dramatically.


Ford designers have been using computer imaging technology to
digitally create vehicles, cutting back on the time it takes to create
new designs...
- High-resolution animations, life-size presentation screens and virtual
cars that come to life with a click of a mouse.
Faster, sharper and with higher quality, the latest digital design tools
are being utilized by Ford designers to further accelerate future
product development - and reduce costs.

The capability of the advanced design technology has transformed the

Ford team into a powerhouse of digital designers, helping expedite
Ford's product development

That's been a passion - and a vision - of in part, because digital tools

bring more flexibility to the design process. Designers, engineers and
executives around the globe can simultaneously review many different
high-resolution product design iterations - in any color, lighting
condition or setting - without having to invest weeks developing many
clay models.

Ford designers have dramatically decreased development time to

approximately two weeks to complete the same process - a savings of
nearly 70 percent.

The digital design revolution began in 2005 integrating new software

to revolutionize the process from the largely traditional hand modeling
to a more efficient digital process. Although extensive progress has
been made with the new digital procedures, this isn't a story about the
elimination of clay modeling, it's about creating a more cooperative
relationship between traditional and digital design methods.

Beyond Flat Screens

Forget the flat screens; Ford designers are using impressive digital
high-definition (HD) screens, known as powerwalls, to view life-size
digital vehicles with extreme detail.

Several screens have been installed in Ford design studios around the
globe, accelerating the globalization of product development at Ford
Motor Company.
Power walls use HD rear-screen projection to enable review and
refinement of full-scale computer-rendered vehicle designs prior to
fabricating physical properties in foam, clay and fiberglass.

The technology also has made the review process more compelling
and detail-oriented. The photo-realistic computer-rendered images
rotate and show driving dynamics in realistic lighting, from any angle
and in lifelike detail. Colors and reflective surface textures in vehicle
interiors can be changed with a click and exterior views are equally
eye-popping with close-ups.

Early implementation of the current technology was used in the

development of Ford's 2009 model year vehicles including the new
Lincoln MKS luxury sedan.

The centerpiece of Ford's new power wall facilities is the Electronic

Design Presentation Room at Product Development Center in
Dearborn, which features a 60-foot-wide wall that accommodates three
20-foot-wide vehicle or technology projections simultaneously.

"The Electronic Design Presentation Room is the pinnacle of power wall

technology," said Jeff Nowak, chief designer, Digital Core Team. "The
facility provides an effective forum for group discussions and executive
reviews that are difficult to do over a 20-inch computer monitor. The
reviews are more thorough, and we're able to deliver even better
designs as a result."

Bringing Design to Life

Ford's modeling team now includes digital sculptors as well, bringing

sketches from ideation to full-size models using some of the most
advanced software.

To animate designs and allow vehicles to be imported into a variety of

environments, simulating natural sunlight, reflections and real-life
locations, Ford Design uses the software program called Udrive
developed by Bunk speed. This software is unique because with just a
few clicks of the mouse it allows designers to review one of the most
crucial viewpoints of a vehicle - seeing it in motion, with light and
shadow playing across the simulated sheet metal.

One of the newest software programs, Hyper Shot, produces real-time

renderings that instantly replicate the effect of light rays on the
vehicle. Using high-dynamic range image technologies to gather
lighting, reflection and shadow properties, Hyper Shot produces
images that look as precise as a photograph. This dramatically speeds
up the rendering process by having the designer focus on the materials
and position of the product, instead of all the technical aspects, such
as lighting it.

Smarter Research

The new digital technology is not only accelerating the design process
but also the way Ford is conducting market research. During the past
year, Ford's market research group has began moving away from using
physical models when conducting consumer clinics and instead
utilizing the precise, high-quality renderings for consumer reviews.

This new process saves time and resources in producing, transporting

and conducting research while offering the added capability to review
more data with consumers. Although physical models are still
necessary for some market research, digital presentations allow
designers to modify designs on-site adapting instantaneously to
consumers' feedback.

Total Quality Management (TQM)

Firms around the world have launched Total Quality Management
(TQM) programs in an attempt to retain or regain competitiveness in
order to achieve customer satisfaction in the face of increasing
competition from around the world in this era of globalization. TQM is
an integrative philosophy of management for continuously improving
the quality of products and processes.

TQM functions on the premise that the quality of the products and
processes is the responsibility of everyone who is involved with the
creation or consumption of the products or services offered by the
organization. In other words, TQM capitalizes on the involvement of
management, workforce, suppliers, and even customers, in order to
meet or exceed customer expectations. Considering the practices of
TQM as discussed in six empirical studies, Cua, McKone, and Schroeder
(2001) identified the nine common TQM practices as cross-functional
product design, process management, supplier quality management,
customer involvement, information and feedback, committed
leadership, strategic planning, cross-functional training, and employee

TQM at Ford Motor Company

Today at Ford Motor Company, their most popular slogan is “Ford Has
a Better Idea.” Back in the 1980s when Ford Motor Company total
quality management practices were vast, the slogan of “Quality Is Job
1” made more sense.

Ford wanted to produce better quality products, a stable work

environment for the workforce, effective management, and
profitability; all by the 1990s, “Quality is Job 1” became “Quality
People, Quality Products.”

What Changed TQM at Ford?

6 Waste and lack of quality on many levels. This is true especially

when you look at the far superior Ford Warranty claim system. As
of 2008, the warranty repair rate for Ford by utilizing Six Sigma
decreased by 60%.

7 The design and engineering analysis process makes it possible

for problems that previously may not have surfaced until
(product) launch, to be caught and corrected in the virtual world
through the DMAIC process.

8 The DMAIC process, or define, measure, analyze, improve, and

control has built an overall strategy for consistency in our teams.

Business Re-engineering

In the area of organization's re-engineering process innovation is the

set of activities that achieve substantial business improvements.
Companies seeking to benefit from process innovation go through the
regime of identifying the processes, the factors for change, developing
the vision, understanding the current process, and building a prototype
for the new organization. History shows that organizations who define
their processes properly will not have problems managing the issues
and developing the change factors. When introducing technology,
business redesign is necessary. The industrial fields have been using
Information Technology to remodel processes, control production, and
manage material for generations. However, it is only recently that
companies recognized that the fusion of IT and business would go
beyond automation to fundamentally reshaping how business
processes are undertaken.

When foreign companies were allowed to compete in the U.S. market,

Ford understood that to succeed in business in a competitive arena it
needed to implement strategies that competitors find difficult to
imitate. As a result, Ford bought Sweden Volvo to enter the European
market, and partially owned Mazda to have a competitive edge with
Japanese cars1. To achieve that it re-engineered its production
development activities and global corporate organization and
processes for dramatic cost reduction. Furthermore, it understood that
expansion requires collaboration and alignment, and thus planned to
establish the IT infrastructure through a WAN that connected all the
offices. In the process of innovation and re-engineering, Ford has set
policies to manage the cost of establishing the network, built models
for continuous implementation, and organized global meetings to align
all parties with the process. Adding to that, when it came to managing
the website, Ford facilitated an awareness campaign for all the
branches to understand that Ford is using the web to collaborate and
research and adapting information technology as a way to maximize
its business value. The goal for Ford was to maintain its leadership in
the market and to do that in the most efficient and cost effective
method that is there.

Operation consulting and Business Re-engineering

In the area of organization's re-engineering process innovation is the

set of activities that achieve substantial business improvements.
Companies seeking to benefit from process innovation go through the
regime of identifying the processes, the factors for change, developing
the vision, understanding the current process, and building a prototype
for the new organization. History shows that organizations who define
their processes properly will not have problems managing the issues
and developing the change factors. When introducing technology,
business redesign is necessary. The industrial fields have been using
Information Technology to remodel processes, control production, and
manage material for generations. However, it is only recently that
companies recognized that the fusion of IT and business would go
beyond automation to fundamentally reshaping how business
processes are undertaken.
When foreign companies were allowed to compete in the U.S. market,
Ford understood that to succeed in business in a competitive arena it
needed to implement strategies that competitors find difficult to
imitate. As a result, Ford bought Sweden Volvo to enter the European
market, and partially owned Mazda to have a competitive edge with
Japanese cars1. To achieve that it re-engineered its production
development activities and global corporate organization and
processes for dramatic cost reduction. Furthermore, it understood that
expansion requires collaboration and alignment, and thus planned to
establish the IT infrastructure through a WAN that connected all the
offices. In the process of innovation and re-engineering, Ford has set
policies to manage the cost of establishing the network, built models
for continuous implementation, and organized global meetings to align
all parties with the process. Adding to that, when it came to managing
the website, Ford facilitated an awareness campaign for all the
branches to understand that Ford is using the web to collaborate and
research and adapting information technology as a way to maximize
its business value. The goal for Ford was to maintain its leadership in
the market and to do that in the most efficient and cost effective
method that is there.

Supply chain management

Supply chain management (SCM) is about coordinating between
suppliers, manufactures, distributors, retailers, and customers. The
basic idea that SCM applications revolve around is providing
information to all those who are involved in making decisions about the
product or goods to manage delivery from the supplier to the
consumer. Studies show that reducing errors in supply chain
distribution, increases revenue, enhances productivity, and reduces
the order-to-fulfillment period.
Ford often compared its supply chain process to that of Dell's, in an
attempt to close the gaps in its own process and reach the level of
success Dell has reached. The difference in the distribution model
between Dell and Ford lies in the middle link of using retail shops.
Since Ford cannot skip retail as a focal distribution point, it worked on
establishing a network of retail shops that it owned. Ford made sure
shops are not affecting each other in terms of sales, and gave them all
a standard look and feel to establish itself in the consumer's market as
a prestigious cars sales retail company. Furthermore, extensive re-
engineering initiatives were undertaken to enhance Ford external
network by eliminating the correlation with smaller suppliers. In that
way, Ford made sure that key suppliers have access to forecasting data
from customers' purchasing trends and production information to
enable a faster order-to-delivery cycle. Ford vision was to create a
model that allowed flexibility, predicable processes and delivered the
product at the right time to the right consumer.

Just-in-time (JIT)

JIT is one of the examples of early-landed future manufacturing

idealism requires continuous collaborated refinements throughout its
supply chain elements. It has been used since 1950s by Japanese
automotive industries and yet none of the most developed countries
would have even considered this methodology until early 1980s.
Researchers tried really hard to explain JIT concept in a short
descriptive sentence and none of them were able to come up with a
single answer that represents everyone’s definitions. Those who were
trying to bring them together were ended up with another new more
complex definition. JIT goes beyond ordinary management theory or a
company’s manufacturing procedures; it comprises production
planning, HRM, material management, distribution, customer services
not only involving individual organization furthermore requires
collaborated cross-companies dedication to continuously refine the
business process of one and another.

Just-in-time manufacturing is a strategy used in the business

manufacturing process to reduce costs by reducing the in-process
inventory level. It is driven by a series of signals that tell the
production line to make the next piece for the product as and when it
is needed. The signals used are usually simple visual signals, such as
the absence or presence of a piece needed in the manufacturing

Just-in-time manufacturing can lead to huge improvements in quality

and efficiency. It can also lead to higher profits and a larger return in
investment. A reorder level is set and new stock is ordered when that
level is reached. There is no overstocking of parts. This saves on space
in the warehouse. Most authors agreed that successful JIT
implementation requires five key elements to be considered.

• Waste reduction: this element is aimed to eliminate all non-

value-added tasks. The main problem with traditional production
method is due to the focus on producing large number of items.
With level of competitiveness and flexibility requirements, this is
no longer an appropriate method to be performed.

• Value-adding production oriented: This element bring the

terminology of “pull-system” which allow customer order to
trigger the production process. Pull system requires immediate
respond in order to satisfy customer requirement therefore
avoiding “the goal of producing large batches”. By grouping
products based on their production process similarity,
manufacturer may also add-value to the products by lessening
production complexity, shortening travel and idle time.

• Customer participation in quality improvement: In every

business, customer will have the final say therefore the success
of the business can be determined based on customer
satisfaction. This element heavily emphasis the needs of
customer involvement in product development and delivery.
Customer may also be included in development team to direct
them to the right manufacturing plan.

• Employee empowerment: Empowering employees mean

dividing problem solving and decision making responsibilities
from management level to its individual team directly related
with the task. With careful planning and adequate team work,
this element will increase quality, productivity and flexibility of
the manufacturing process.

• Vendor/supplier integration: Undoubtedly, specialized

suppliers will normally produce a better product since they can
concentrate in a particular thing. By outsourcing to those
suppliers, a company will be able to put all its time and resources
in its core function which in turn will improve the quality of the
final products.

Just in time and ford

Just-in-time manufacturing was first used by Henry Ford of the Ford
Motor Company. Ford only bought materials for his immediate needs in
the manufacturing process. He bought only the amount of material
needed to fit into his plan of production. He planned transportation of
materials so the flow of his product would be smooth. This gave him a
rapid turnover and decreased the amount of money tied up in raw

Ford's just-in-time manufacturing process was adopted by many other

car manufacturers. Toyota in Japan used the process with very
satisfactory results; huge amounts of cash appeared as in-production
inventory was built and then sold. The response time on the factory
floor fell to about a day. Customer satisfaction was higher, as vehicles
could usually be provided within a day or two. Many vehicles were built
to order, which reduced the threat that they would be built and not
sold, thus eliminating another risk to business.

With just-in-time manufacturing, assemblers no longer have a choice of

which parts to use; every part has to fit correctly. This means that
multiple suppliers are usually eliminated from the process and quality
assurance is higher. The parts used are all of the same quality, which
means that line stops for quality checks are almost eradicated, leading
to higher productivity rates. The just-in-time manufacturing philosophy
has been applied to many industries and businesses with very
successful results.

Ford kA in just in time

Production of Ford latest small car, the Ford KA has been a dramatic
improvement compared to Ford previous product, Fiesta (Kochan,
1997). This is a real example of successful JIT implementation with all
its outsourcing strategies. The production target of 1,100 KA cars per
day has been reached only within 8 weeks since the launch date,
compared to 15 weeks required for Fiesta. Ford found that the initial
bottleneck was caused by material handling, assembly time and
inbound logistic. Some of the components in Fiesta are supplied by
various suppliers and these components had to be made, loaded in the
container and scheduled for delivery before finally delivered by trucks.
This common process is found to be inefficient as every part has to be
continuously handled by human and this causes big risks of damages,
misplaced and imperfection in quality, especially for cosmetically
sensitive and fragile parts such as instrument consoles, electrical
wiring and airbags.

With the new developed JIT system supported with sophisticated aerial
tunnels connecting Ford with its suppliers, production lead times can
be minimised, product quality can be improved, responsiveness
towards customer demands can me boosted and the most important
thing is inventory, space requirements, handling and transportation
cost can be dramatically reduced (Kochan, 1997). Ford is now
connected with more than 50 suppliers in Valencia with specifically
designed aerial tunnels. These tunnels are also very useful to transport
bulky and heavy items such as seats and fuel tank. The brain of this
amazing system is DAD (direct automated delivery) which will
integrate the whole processes virtually as one extended manufacturing
warehouse. DAD will enable a smooth manufacturing process by
applying Ford scheduling system so that all the supplied components
being delivered right on time they are needed. In addition, DAD and its
tunnels enable the integration of manufacturing equipment so that the
component being delivered can be immediately installed with the main
body or other components in Ford factor Summary of Ford Valencia
manufacturing system prior JIT implementation:

9 Minimum of 15 weeks to reach full production capacity

10 Required at least 3,000 parts to be assembled for each


11 Very small outsourcing involve for car components

12 All parts from suppliers are delivered on trucks

13 Stock must be kept at certain level to assure the
continuity of production

14 Parts are often damaged during packaging, handling or


15 Spent over $6 million for inefficient delivery system

(250+ trucks per day)

16 80 per cent automation in overall

17 Manual seats and battery placement and this may cause

injury for employee

In a dynamic market trends, pre-JIT system clearly is not responsive

enough as an answer. There are minor inefficiencies throughout the
system which accumulate into serious problem that may cause Ford
being less competitive in the market.



• Ford announced the results of conversion offers that will reduce

the company’s outstanding Automotive debt by more than $1.9
billion, lowering its annualized interest costs by about $180

• Including the conversion offers, the recent $3.6 billion

prepayment on VEBA Note B, and net debt reductions over the
first nine months, Ford has reduced its automotive debt by $12.8
billion this year, lowering its annualized interest costs by nearly
$1 billion. Ford expects to be net cash positive by the end of

• $554 million principal amount of Ford’s 4.25% Senior Convertible

Notes due December 15, 2036 and $1.992 billion principal
amount of its 4.25% Senior Convertible Notes due November 15,
2016 were validly tendered and accepted for conversion
pursuant to Ford’s conversion offers

• Ford will pay $534 million in cash premiums and issue 274
million shares of Ford common stock to convertible note holders.
The shares of Ford common stock to be issued have been
included in Ford’s calculation of diluted earnings per share since
the beginning of 2010

• The conversion offers will result in a fourth quarter 2010 special

item charge of approximately $960million

Planning and Controlling Supply

Chain Design
Strategic Planning of Ford Motor
In just a span of a year the world economy came to a grinding halt

and every market shivered with terror in the wake of a global financial

meltdown that many feared may rival the financial collapse during the

Great Depression. Banking, airline and auto industries were struck.

There were no markets unaffected. In a way it was a good. It got

everyone to rethink the necessity of spending money. It was bad

because global economic contracted forcing massive layoffs, leading to

the highest US unemployment rate since 1983.

Out of the wake the US auto industry was gasping its last breath.

Competition from foreign competitors and lucrative union bargaining

packages had taken its toll on the auto industry. The Big Three were

operating in the red and collapse was imminent unless something

drastic changed. The government step in and offered to help prop up

the three US automakers. General Motors and Chrysler were forced to

accept the offer while Ford decided to go it alone. Ford’s position may

have been arrogant. It may have been fool hearted. It may have

been a strategy used to wrestle away some of the power held by the

unions. In either case, Ford was forced to restructure the company

and made painful concessions to ensure its future. At the same time

unions played a vital role by conceding to Ford’s insistence.

Ford has rebounded unlike GM or Chrysler. Ford recorded a $2B dollar

profit in the first quarter of the 2010. This is the highest profits seen

in 6 years. A greater emphasis on quality, a mixture of industry

coincidences, as well as a savvy marketing strategy has proven to be

recovery map for the auto titan.

Ford has bucked the conventional and has hired a group of smooth

media ad agency to produce a campaign blitz that has made American

rethink American made. Ford is harnessing its new ad strategy that

includes “…its four key pillars -- quality, green, safe .


Ford Sync
Ford SYNC is a factory-installed, fully integrated in-vehicle
communications and entertainment system that allows users to make
hands-free telephone calls and control music and other functions using
voice commands. The system consists of applications and user
interfaces developed by Ford and third-party developers that run on
the Microsoft Windows Embedded Automotive operating syFord
President and CEO Alan Mulally and Microsoft Chairman Bill Gates
announced the partnership between Ford and Microsoft stem.

Mobile phone integration

Voice-activated, hands-free calling

Using the "Push to Talk" button on the steering wheel allows the user
to access anyone on their mobile phone's contact list by voice

Automatic phone book transfer

SYNC will wirelessly transfer the names and numbers in a mobile
phone book automatically.

Uninterrupted connections
Pushing the "Telephone" button on the steering wheel will
automatically transfer a current telephone call to the SYNC system
without having to hang up and call again.

Support for advanced calling features

SYNC displays the same features as the mobile phone used, such as
caller ID, call waiting, conference calling, a caller log, a list of contacts,
a signal strength icon, and a phone battery charge icon.
Ring tone support
SYNC will play personal ring tones assigned to identify specific callers.

Audible SMS messages

SYNC can convert SMS messages to audio and read them out loud. This
feature is carrier dependent. Currently Sprint does not support this
feature. Verizon sells very few phones with this feature, but the feature
is supported by the LG Cosmos and Motorola Droid X.


Digital music player support

SYNC can connect to many popular digital music players via Bluetooth
or USB connection. Users can browse through music collections by
genre, album, artist, and song title using simple voice commands.

Instant voice recognition

Allows users to avoid programming or reading aloud of scripts for SYNC
to recognize their voice.

Multilingual intelligence
SYNC is fluent in American English, French, and Spanish.

911 Assist
The 911 Assist† application places a direct call to a local 911
emergency operator in the event of a serious accident with an air bag
deployment. Before initiating the emergency 911 call, SYNC will
provide a 10-second window to allow the driver or passenger to decide
whether to cancel the call. If not manually cancelled within the 10-
second window, SYNC will place the emergency call. A pre-recorded
message will play when the call is answered, and occupants in the
vehicle will then be able to communicate directly with the 911 operator
AppLink allows BlackBerry, iPhone, and Android based phones to run
approved applications using the car's steering wheel buttons,
radiohead, and/or voice commands. The first set of announced
applications included Pandora, Stitcher (podcast aggregator), and
OpenBeak (twitter reader). AppLink will work only on Generation II
SYNC (Model Year 2011 and later). Traffic, Directions and Information is
a application that provides the user with traffic alerts, turn-by-turn
directions and information about topic such as weather, sports, news
and 411 business search. Ford announced on May 27, 2009 that the
Traffic, Directions and Information application would be free for three
years to the original owner of 2010 model year SYNC equipped
vehicles.The information for Traffic Alerts and Turn-By-Turn Directions
are provided by Microsoft subsidiary INRIX.

Vehicle Health Reports†

Vehicle Health Reports† After setting their personal preferences online,
users can access free car reports at any time using SYNC. This feature
will be released with SYNC version 2.0. All current SYNC owners will
have access to upgrade to this version.

Ford Work Solutions

The Ford Work Solution is a collection of technologies debuted in April
2009. Ford Work Solutions is marketed towards professionals who buy
the Ford F150, F-Series Super Duty, E-Series van and Transit Connect.
Magnetti Marelli developed the in-dash computer that enables and is
unique to trucks equipped with Ford Work Solutions. The applications
included in the Ford Work Solution are Crew Chief, Garmin Nav, Crew
Chief, Mobile Office and Tool Link.
Crew Chief
The Crew Chief application provides real time vehicle location and
maintenance tracking. Crew Chief can monitor numerous diagnostic
functions including tire pressure and the check engine light. Users can
also create alerts to monitor things like excessive idling, unauthorized
vehicle usage or lack of seat belt usage. Ford developed Crew Chief
with partner Microlise.

Garmin Nav
The Garmin Nav application provides capabilities including destination
routing and locating points of interest.

The LogMeIn application allows the user to remotely access an office
computer using a data connection provided by Sprint. The user can
open applications on the remote computer, make updates and print
documents using a Ford-certified, Bluetooth enabled keyboard and

Tool Link
Tool Link is an application that enables a user to take physical
inventory of objects present in the truck bed using radio-frequency
identification (RFID) tags. A user attaches RFID tags to an object,
allowing the SYNC system to detect the object's presence or absence
and noting the object's status on the in-dash computer display.

Users can create "job lists" of objects to verify that tools needed for a
certain job are present in the truck before heading to a job site. At the
end of the job, the system can inventory items in the truck to ensure
that no tools are left on the job site.

"SYNC" is a registered trademark of Ford Motor Company. Normally

Ford does not apply the brand of its suppliers to the parts or systems
the suppliers manufacture for Ford. However, the vehicle interior
badges for cars equipped with the SYNC system include both the SYNC
and Microsoft brands.

Exclusivity agreement with Microsoft

Ford had exclusive use of the Microsoft Auto embedded operating
system that powered the early versions of SYNC until the exclusivity
agreement expired in November, 2008. The Ford developed user
interface elements and Ford developed applications remain exclusive
to Ford group vehicles and are not available to other manufacturers
using Windows Embedded Automotive for the basis of their in-vehicle
infotainment systems.

Aggregate Sales and Sales Forecosting

Ford Posts $2.1 Billion Profit, Boosts 2010

Ford Motor Co. posted first-quarter earnings of $2.1 billion, beating
analysts’ estimates, and boosted its full-year outlook as it reaped the
benefits of a recovering auto market and higher prices for cars and

Ford Profit Rises to $2.6 Billion on Pricier Cars

Ford Motor Co. reported second- quarter net income of $2.6 billion,
completing its most profitable first half in more than a decade, as car
buyers pay more for its new models.

Ford earned $4.7 billion in the year’s first six months, its largest first-
half profit since 1998, and posted its fifth straight profitable quarter.
Excluding some items, profit was 68 cents a share, topping the 41-cent
average estimate of 12 analysts compiled by Bloomberg. The second-
largest U.S. automaker earned $2.26 billion a year earlier, helped by
an accounting gain.

Ford lifts production forecast due to increase

in demand for 2010 Fusion
While its nothing to get up and shout about, Ford said that it will be
building more vehicles in North America in the second quarter than it
had originally planned. The move comes as the Dearborn automaker
sees an increase in demand for the 2010 Ford Fusion. Pipas wouldn’t
disclose any actual figures but the numbers are expected to be
announced as a part of Ford’s first-quarter financial report due
tomorrow. Earlier last month, Ford said that it will produce 425,000
cars and trucks in North America from April through June. That is a
41.9 percent drop for the same period in 2008.

Ford is forecast to take over Toyota's No. 2

ranking in sales
18 Ford Motor Co. could replace Toyota Motor Corp. as the second-
biggest seller of autos in the United States this year as the string
of massive recalls for acceleration and braking problems starts to
take its toll on the Japanese automaker.

19 General Motors Co., Ford and Honda will pick up most of Toyota's
lost sales,

20 Toyota's "whole existence is based on the perception in the eyes

of the consumer of high quality, high reliability and safe vehicles.
If that goes away, they are like everyone else.

Ford is an example of how traditional organizations can mature to
adapt what is current and maximizes the business value. The process
that Ford went through necessitated the continuous support from
management. In addition, it depended on alignment between those
involved as a key for success. The correlation was not restricted to
internal staff; it extended to cover competitors to reach mutual
benefits, to work with suppliers to maintain similar grounds and
adequate infrastructure, and to create training programs to educate all
on the vision and organization's objectives.

Ford technical progress came at a time where the Internet was yet to
reach its full potential. The introduction of Fiber-optic cables in the late
90's and the substantial increase in bandwidth would have helped Ford
and cut on the cost in endured connecting its own offices.
Furthermore, the ISP services that provided hosting servers were
limited to only few players, which explained why Ford preferred to
manage its own web server and maintain the overhead of the 24 hours
uptime and backup.

From this case study, I understood the level of commitment large firms
have to maintaining their position in the market. These companies
know the revolving nature of business in the sense of how easy it is to
fall back if they did not keep up with the change. The Ford process also
shows the need for quick and resourceful thinking when faced with
situations that might seem to be unfavorable. The way Ford ventured
into the foreign market by acquiring local manufacturers was a
strategic decision that did not only enabled Ford to merge with
different technologies, but it also saved it the additional cost of
establishing production centers in Japan and Europe.


• Maintaining leadership in the market requires innovative

organizations willing to reengineer to succeed.

• IT fusion with the business means restructuring and remodeling

to understand the role IT would play to meet the business

• Planning and modeling is vital when coordinating work with large


• Constructing websites is not about content; it is about

understanding what adds value and how humans interact with

• Knowledge management is a plan that companies need to

develop as part of their initial business process modeling

• It is not wrong for large firms to try to adapt to successful

processes implemented by other firms.