Operational Process Of Ford Motors Management Essay
Company is headquartered in Chungli City Taiwan and company is a partner organisation of Ford Motor Company. Established during 1972, with 3500 employers worldwide. Company mainly deals with production of Mazda and Ford cars. Company has got 25 dealers and 35 suppliers in the year 2008.Ford Lio Ho mainly works on the principle of Production side for Ford production system (FPS) which is similar to the lean approach to accomplish the reduction of waste (Huang,2002).In total companys capital investment of $555,000,000 (http://www.ford.co.uk).
1.1 Main Products and Services
Ford main products are
1.2 Main Customers:
Ford Motors are in globalised and as a global company it has different range of passenger car for different income group of people. Below is details of car models and price range which is varying for different Customers.
Car model Ford Focus and the price ranges between $ 17,000 – 20,000 and the main users are upper middle income group of people.
Car model Mazda 3 and the price ranges between $16,000 – 18,000 and the main users are middle income group of people.
Car model Ford Escape and the price range between $25,000- 35,000 and the main users are high income group of people.
Car model Mazda Tribute and the price ranges between $ 25,000-40,000 and the main users are high income group of people.
Card model Ford Mondeo and the price range between $ 25,000- 38,000 and the main users are high income group of people.
Card model Mazda 5 and the price range between $ 25,000 – 35,000 and the main users are high income group of people.
1.3 Order qualifier for the company:
Order qualifier are the features provided by organisations that enable organisations to sell their products or services in the marketplace (Hill and Hill, 2009). Order Qualifier is the main key feature for the company’s product because all the customers look for characteristics of a product and services before buying any product. Ford Company mainly operates in passenger car segment with different product line. Qualifiers for Ford are products which meet safety regulations, environmental clearances, immediate resolution of customer issues. Main order qualifiers for Ford Motors are comfortableness of the car, user friendly features and the services offered by the company.
1.4 Order Winner of the Company:
Order winner are the features which helps organisations to gain competitive advantage over its competitors (Hill and Hill, 2009). Order winner for Ford involves features such low fuel consumption, longer battery life, low emissions, green consciousness.
Main Order Winners for the company are
How much fuel car consumes
Cars should be Electric
Quick delivery to customers when an order is placed
The order qualifiers and winners depend on customer’s needs.
Operational Process of Ford Motors
Ford has got huge vendor lists for procurement and they have got specific vendor selection technique for specific product. Several supplier selection criteria is being used in the process. Major criteria in case of Ford are quality, supplier reputation and costs. Toyota has got an effective buying team for their process. Supplier are ranked on their performance by Ford which directly helps in vendor selection in the next purchase. After the supplier selection process raw material is procured from the vendor and then a quality check is being performed as well on the components as it has to match up with the standard set up by the firm. Ford performs quality check at every stage of its operational process.
Production line is a manufacturing process which undergoes repetitive actions where every individual product has to pass through similar operational sequence and infrastructure has to be provided to support such processes. These production processes in FORD Motors has been famously recognised as the Ford assembly line which was founded by automobile industry biggest genius Henry Ford. The assembly process starts with the cutting of rolled steel which is later on stamped into the shape of car panel by the press machine. Now the input process is the welding assembly where the different part of the car are assembled with the use of manual and automated labour. In Ford Motors assembly line all the various hardware from nut bolts, chassis ,engine, seating adjustment, windscreen and other individual parts which are put together. Thus The transformational activity of this operational process result in the individual parts of a car being assembled together and ready for the next process. Thus the output is the assembled vehicle.
The input process of this stage is based on the assembled vehicle which is an output of the previous phase. In this process the assembled car has to go through series of check which include quality performance and conformance to environmental guidelines. Once all the individual checks achieved their expected result ,the vehicle is ready to be taken to desired marketplace. Thus the transformational activity is the individual vehicle achieving all expected quality criteria. However if any one of criteria is not satisfied then the vehicle is sent back to the assembly line with a note regarding the issue. Thus after the transformational activity of desired quality criteria the output is the vehicle ready to be sold to the customer through various distribution channels.
Ford Motors is being able to achieve its global domination in automobile industry through its best practiced service offering which includes financial services, maintenance and handling and warranty plans. Ford has a special plan which is named as Ford Extended Service Plans (Ford ESP).In this plan there is premium care, extra care, base care ,power trained care .Each of these plans need a membership fee as an input. The transformational activities are the various offerings such as engine, transmission, brakes, steering, emission , electrical, safety, ford audio and other core maintenance offerings for the customer which will result in a safe and better performing car for the customer and environment. The offerings are dependent on the plan which the user enrols according to the fees.
3. Lean Management:
3.1Concepts of Lean management: –
According to Womack et al.,1990 and According to Katayama (1996) ,Lean is a production concept which is considered to be counter perceptive and is an alternate to conventional models of manufacturing .Moreover Krajewskiet al., (2010), ” Lean is also an operation system which maximixes the value added activitied by all companies by means of removing waste and further delay from them. In addition to this Slack et al (2010), Lean Management aims to meet the customers demand by delvierying perfect quality with zero percent waste.
The main strategy of Lean Management helps in increasing shareholder value which is worth by means of removing waste, which return consumer fulfilment with excellent quality products and services at right time and at right place with lower prices to the consumers. In other words lean management is good management policy and also a broad management method.(George, 2002; Lead Enterprises Institute, 2009)
Lean is a philosophy of operation, The main purpose of Lean is waste prevention which focuses on valuable customer in a flexible and responsive way to improve in this competitive world of business.(Womack & Jones,1996) . Model of lean production and the conclusion of research is to raise many questions which always concerns the two topic methodical and theoretical topics (Williams and Haslam,1992).Which is especially an issue from managerial view, different issues have been raised between actual impact in this competitiveness(Oliver and Hunter,1998)
As per Womack & Jones (1996) There are five main principles to create a Lean Manufacturing system which are as follows
Specification: What has to be done to make every customer feel satisfied.
Value Stream: Lean begins by knowing that what creates the value for all customers. Create Flow: Prepare Value flow and never delay activity but make batch production aat one time. Get the products through systems:What is required by the customers. Perfect System: Eliminating waste and improving the systems by constant effort.
3.2 Tools of Lean Management
According to (Snee, 2004) ” There are 5 basic steps of Lean Process”.They are
Value stream Mapping
Just in time
Total Quality Management
1. Value Stream Mapping:
TPS first introduced the VSM, which differentiated the difference between value added and non-value added activities. The function of VSM is to spot all sorts of waste in operational processes and remove it .VSM follows step-by-step process, firstly it recognises the VA and then it recognises NVA process. Customer willing to pay is VA and customer who are not willing to pay are NVA (Rother & Shook, 1999; Abdulmalek & Rajgopal, 2007).
VSM is an activity product process, which can be Design flow, the flow follows concept to launch.
Another flow is production flow-This flow follows from Raw material to finished goods and delivering of goods.
Material and information flow-This flow is a integration of both the flows i.e. Design and production flow (Zhao et al., 2001).
2. 5 S’s
In 5 S there is a method in which a particular shared working area is systematically organised and is maintained in a continuous way. If this task is done correctly it will lead to effective improvement on the jobsite by instituting a proper workflow, improving adherence to standards and reducing wastes (Gatlin 2009).5s which is based on the Japanese words like
all are used as platform for developing the systems which is integrated management system by the use of productive maintenance. (Bamber et al., 2000).
Sort:- This term is about understanding, what one needs in any company, and then filtering things which is essential and which is not required removing them.
Set in order: Efficiency of neatness, keep things on tact and appropriately in such a way that whenever there is a requirement it can be reached quickly.
Sweep Daily: It focuses on cleaning and always keeping the site neat and safe.
Standardise: Maintaining cleanliness in a very predictable manner, which could remove all ambiguity.
Sustain:- It’s about discipline ,following sort, set in order,sweep,standardise in continuous basis.(Slack, Chambers and Johnston,2007).
3. Just in time
According to Goetsch (2010), Organisation seeks to get rid of waste in all forms and concentrates on operation systems by producing what is required ,what is in demand and in correct quantity demand.
Just in time is a very effective and very important tool of Lean Management, with reference to production of goods while fulfilling the customer’s needs like quality and time quality. Management decides and tries to remove manufacturing waste by producing right thing at right place, this address all the wastes like work in progress materials, errors, lacking in scheduling of delivered parts (Nahmias,1997).Inventory flow and material flows are typically classified in two ways, pull or Push in terms of Just in time system.
The process of improvement in just in time is all for reducing costs of ordering, leading timekeeping costs, reducing the batch size and work in progress. JIT leads in “pull” operations. JIT itself has many advantages in which organisations and in other hand to stakeholders like suppliers etc. (Hirano, 2009).
4. Total Quality Management:
According to Talha.M,2004,TQM is defined by different ways by different authors. In general it means that the quest of excellence,by creating the system and prevent errors and to increase the customer satisfaction by delivering the services effectively.”TQM is always people driven” (Talha.M,2004)
Errors or defects when occurs in one part of production it will effect the whole operation process which will surely create other errors.TQM improves the flexibity,effectiveness and competitiveness in business world. All the employees of an organisation should work properly so that the production line should be successful. Still today many companies think that quality control tool will rectify their quality issues, however it’s not the way.
This tool six sigma was developed at Motorola Company, A engineer named Bill smith in his mid 1980.Six sigma effectively improves the area when improvement cannot be identified and when it cannot be implemented. An organisation can clearly identify and can also improve the process by eliminating all the activities, which are non-value, added, Six sigma can also be said as a business strategy which can improve customers satisfaction and can effectively improve process. Six sigma is also well known for its effective development tool for leadership. Six sigma is commonly used as continuing business policy rather than using it to improve quality of products. Six sigma is also known as broad management system (Arnheiter & maleyeff, 2005 )
3.3 Operational Benefits Of Lean Management
Designing and Making of products requires less time.
It increases process capability
Cycle time becomes fasters to deliver the order
Reduced Lean time.
Increase in quality.
3.5 Development of Lean management -Next 5 years.
Lean is applied in all companies or organisations, The main application of lean is almost seen in many organisations, to meet customer requirement, we will have to agile manufacturing system and should synchronise lean, Lean is more oriented towards cost effectiveness and streamlining of the process. of mean Customers demand is very completive ad more. The main functions or Lean is the differences which becomes more narrow (Kidd, 1994; Shah and Wars (200)
4.Implementing Lean Management:-
Ford Motors has successfully implemented Lean in the assembly unit. In implementing Seiri, Ford Motor ensures that the tools are kept in proper place after use. By regularly following Seiton approaches, efforts are taken to put all the equipments used in place according to their preferred storage destination. Such practices are needed so that these necessary items can be used in work the next day by workers without wasting to search for such necessities. In Seiso, the assembly is kept clean through the shift and even after the shift. Through Seiketsu, vendor quality is measured through the feedback of workers in the assembly line regarding the quality of the raw materials. Through Seiketsu, Ford intends to sustain the momentum gained through such practice and any mismatch is to be immediately reported.
Value Stream Mapping
Value stream mapping is intended to spot processes which are value and ones which are non-value added. Value stream has two portions to it, one is downstream and the other is upstream. Thus if the downstream is a customer complaint regarding any part or performance of the car. The complaint is transmitted to the shop floor, where the issues are rectified and sent to the customer, this forms the downstream.
Just in Time
A successful implementation of the just in time approach. The removal of manufacturing waste is very important both in terms of cost and space. Thus a just in time approach should be followed to ensure that manufacturing and process wastes are regularly identified and removed.
Challenges in the implementation of Lean Management in Ford Motors
Ford Motors is applying lean management philosophy in a good manner. However the basic question that still exist that why Toyota has achieved a higher performance as compared to other automobile giants i.e. FORD Motors, General Motors and Chrysler as the latter is losing market share even after applying the concept of lean management for more than ten years. One of the major issue that could be considered is the commitment from the top management. On the other hand lack of effective lean leadership could also be the reason as effective lean leadership can provide and transform the knowledge among workforce about the basic concept of lean management. As lean philosophy demands for the elimination of waste and 5s also leads to waste elimination as housekeeping aspects and if employee are not well trained by their leaders then the whole process efficiency dips. Apart from this the other major issue is training of employees and changing their attitude in a manner that they should use standard operation procedure in their daily working activities. Value stream mapping concept requires the elimination of non value added activities from the process and the key to identify the non value added activities is employee attitude towards his work and his training.
There are some other challenges which are coming in Ford Motors way to achieve maximum efficiency is tackling with the gap of lean philosophy as some authors have criticised lean management as they quoted that it lacks human contingency, difficulty in coping with variability etc.
Today many organisations implement Lean Management The main implementation of the concept of lean management in many companies are for short term benefits .However Lean management is orientated for Long term benefits. This benefits can only be achieved by using the lean management tools like VSM,5 S’s,JIT, TQM,Waste Minimisation, Six sigma all this has to be implemented .Monitoring how this tools are working ,if necessary any improved has been done then it should be done on continuous basis, which should be ongoing till the time it get perfection.