Ford Motor Company’s Transformation through Six Sigma
Ford Motor Company is one of the most successful organizations in the world. It is a leading automobile manufacturer. The company is known for its innovative and dynamic approach to manufacturing. It is named after its founder Henry Ford. Manufacturing concepts such as standardization and assembly lines were pioneered and employed by Henry Ford.
Such concepts of standardization and assembly lines are known by the term “Fordism”. Henry Ford was also famous for paying his employees living wages. A living wage meant that the employees were allowed to purchase the products they manufactured and including products such as Ford’s famous Model T.
Table of Content
- 1 Ford Motor Company’s Transformation through Six Sigma
- 2 Need for Six Sigma in Ford
- 3 Ford’s Six Sigma Approach
- 4 The success of Six Sigma at Ford
Ford was a great visionary and a tactful businessman. He realized that it was necessary to break down complex tasks into simpler steps and procedures. This could be done by using interchangeable parts and specialized tools. The assembly line Ford was a revolutionary achievement in the field of manufacturing. Henry Ford always strived for continuous improvement.
Ford had a penchant to view established modes, breaking them into their core components and, then rebuilding them. Ford’s ideas had many advantages that included a decrease in the costs incurred on production, radical simplification of the complex labor process, and the requirement of a smaller workforce.
Need for Six Sigma in Ford
Ford is famous for its high quality. One of the goals of Ford is, “Quality is Job 1”, because of this it had pledged to incorporate in its culture, the utilization of innovative products and usage of Total Quality Management to accomplish its goals. Even though JD Power and Associates ranked Ford as one of the leading high-quality automakers long before, Ford has come a long way in the last few decades.
Behind Ford’s Six Sigma initiative, there are four core factors:
- Cost Reduction
- Improvement in Quality
- Customer Satisfaction Rates
- Lowering the Impact of Solvent Consumption on the Environment
The older production process at Ford was reasonably expensive. Six Sigma implementation helped it to eliminate redundant activities and eliminate resources that didn’t bring any value thus saving costs.
Improvement in Quality
Even though Ford was and is still known for its quality products and processes, on some occasions its processes too had defects. For many companies, a quality level of 99% might have been an acceptable norm but it’s surprising to know that even this high-quality level allows surprisingly large amounts of defects, and sometimes defects are as high as 20,000 instances defects per million products.
Six Sigma Methodology considers a quality level of 99.99966% or more as the ideal. The number of defects per million is just seven at this quality level. Ford achieved a huge level of success in its quality improvement using Six Sigma.
Customer Satisfaction Rates
A critical success factor for any company is to satisfy the demands of its customers. Quality issues and customer satisfaction link to one another. Multiple instances of defects are likely to get cumulated and might result in defective products, which inevitably lead to customer dissatisfaction. To avoid such situations, Ford decided to implement Six Sigma and streamline their processes to finally help improve production issues and ensure happier customers.
Lowering the Impact of Solvent Consumption on the Environment
Six Sigma is inherently a green and environment-friendly philosophy. Ford made great use of this aspect to incorporate some important changes in the organization’s environmental commitments and awareness. Consumption of vital resources at Ford proved to be not only expensive but also detrimental to the environment.
As a result, the company decided to commit to a Green Work Culture with Six Sigma. Consequentially, the company could manage a reduction in costs, improved quality, and higher levels of customer satisfaction.
Ford’s Six Sigma Approach
In the late 90s, Ford Motor Company implemented a Six Sigma strategy to become a leading and full-fledged consumer products company and not merely be known as an Automobiles manufacturer for the first time. The company also aspired to improve the quality of its products and achieve higher customer satisfaction rates.
This approach of Ford towards achieving its goals was termed as “Consumer Driven Six Sigma”. Ford was the first automobile manufacturer in the world’s history that implemented the Six Sigma methodology in a big way to its business operations.
The biggest challenge that Ford faced at the time of implementation was the then existing 20,000 plus opportunities for defects in its business of manufacturing cars. Even though the company had a strong history of superior quality control and innovation, some defects inevitably occurred.
This self-actualization and revelation helped the company achieve substantial improvements using Six Sigma. The main objective of the company was to reduce their defect level to an extent of a single defect per 14.8 vehicles which they did manage to achieve success. This also helped in achieving Ford’s goal of a high level of customer satisfaction.
Despite the company’s reputation, it faced several obstacles in its journey of Six Sigma implementation. Some of those obstacles were:
Lack of Required Commitment
Just like many other cases, Six Sigma at Ford was viewed with skepticism by many employees that included even the top level and members of senior management. This resulted in a lack of commitment right from the beginning. This eventually proved to be a cause of major concern for Ford’s Six Sigma implementation program. Furthermore, the company faced time constraints that made it difficult to make 350 of its top leaders undergo weeks of training.
In addition to the lack of commitment from many top-level employees, the company faced a difficult time training the employees because it required time and money resources. In addition, the lack of commitment led to a loss of productivity.
Since Ford was new to the Six Sigma Method, it was not well-equipped to follow through with its Six Sigma initiative. Six Sigma depends on vast amounts of data. For Ford, it meant the creation and implementation of new measurement systems to fulfill Six Sigma’s requirements so that it could provide substantial benefit to the organization.
The success of Six Sigma at Ford
Despite the challenges faced by Ford during the implementation of Six Sigma, it was able to eliminate the costs of more than $2.19 billion on the wastages that the organization created earlier over fifteen years. The company solved its problems of wastage by applying techniques of Lean Six Sigma that included a Data-driven Problem Solving Technique which devises solutions to wastage issues.
The company also witnessed staggering impacts on its operations. With its consumers driven Six Sigma approach, the company managed to save over a billion dollars worldwide. It further helped the organization in completing approximately 10,000 improvement projects since the early 2000s.
Ford managed to increase its customers’ satisfaction percentage almost by five points. Six sigma helped Ford in getting rid of some of its deep-rooted problems that included issues such as sub-optimal productivity, poor resource utilization, low customer satisfaction, and the problem of causing environmental hazards.