Ford India Organization Study

ORGANIZATION
STUDY OF
FORD INDIA
PVT LTD

Term 1
Group 2
ORGANIZATION STUDY OF FORD INDIA PVT LTD

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Team Members
Ajosh K 1411212 Niranjan J - 1411252
G. Subramanian 1411225 Shweta Bharti
1411266
K. Siddharth 1411238 Shreyansh Jain -
1411279


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ORGANIZATION STUDY OF
FORD INDIA PVT LTD
Table of Contents
1. A BRIEF HISTORY OF THE FORD MOTOR COMPANY:- ............................. 4
FORD INDIA PVT. LTD. ................................................................................ 5
2. THE ONE FORD CONCEPT ..................................................................... 6
History behind the concept ......................................................................... 6
3. IMPACT OF ONE FORD VISION ............................................................... 7
4. IMPACT OF ONE FORD ON STRATEGY FOR GLOBAL MARKETS ................. 7
5. OUTSOURCING OPERATIONS ................................................................. 9
Modularity and standardization of outputs ............................................... 10
Drawing and enforcing contracts .............................................................. 10
Conditions of uncertainty ......................................................................... 10
6. IMPACT ON THE ENVIRONMENT .......................................................... 10
7. IMPACT ON THE ORGANIZATION STRUCTURE ...................................... 13
8. IMPACT ON THE ORGANIZATION CONTROL ......................................... 13
9. IMPROVEMENT IN KNOWLEDGE MANAGEMENT THROUGH ONE FORD .... 16
Repositories ............................................................................................. 18
Subject Matter Experts .............................................................................. 18
Formalization of Process Improvement: .................................................... 19
10. RESULTS OF ADOPTING ONE FORD .................................................... 19
APPENDIX 1: PROCESS FLOW ..................................................................... 21
APPENDIX 2: TCF ORGANIZATION STRUCTURE ........................................... 23

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APPENDIX 3: FUNCTIONAL STRUCTURE ..................................................... 24
APPENDIX 4: BALANCED SCORECARD ........................................................ 24
APPENDIX 5: STANDARD MANUFACTURING FRAMEWORK OF ONE FORD ..... 25
APPENDIX 6: TIME AND DATA MANAGEMENT ............................................ 26
APPENDIX 7: ISSUE ESCALATION FRAMEWORK ........................................... 27
REFERENCES ............................................................................................. 28

List of Figures

Figure 1: Henry ford, founder of ford motor company ...................................................... 5
Figure 2: global strategy ................................................................................................... 8
Figure 3 outsourcing ........................................................................................................ 9
Figure 4: environment .................................................................................................... 11
Figure 5: boundary spanning .......................................................................................... 12
Figure 6: control systems ............................................................................................... 13
Figure 7: 3 fundamental questions asked by every manager ........................................... 15
Figure 8: knowledge management practices ................................................................... 17
Figure 9: governance process for updating standards .................................................... 19
Figure 10: benefits of one ford ....................................................................................... 20
Figure 11: tcf assembly line process flow ....................................................................... 21
Figure 12: one ford manufacturing framework
5
.............................................................. 26


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GR OUP 2
1. A BRIEF HISTORY OF THE FORD MOTOR COMPANY:-

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Ford Motor Company is one of the largest automobile manufacturers of the world.
Founded by Henry Ford in 1903 at Detroit, Ford introduced the Assembly Line
concept to the world. Today, Ford is the 5
th
largest automaker in the world.

FIGURE 1: HENRY FORD, FOUNDER OF FORD MOTOR COMPANY
Guided by the One Ford plan, Ford believes in achieving complete service to all
markets with a full family of vehicles- small, medium, and large; cars, utilities and
trucks each with the best quality, fuel efficiency, safety, smart design and value.
Ford achieved profits of $7.15 billion from operations in 2013 and hopes to expand
and realign globally with focus on economic development, energy security and
environmental sustainability (source: Annual Report 2013
1
).
For the purposes of this report, the emphasis will be on the Ford India Pvt. Ltd.
Division.
FORD INDIA PVT. LTD.
Ford India Pvt. Ltd. (FIPL) is located in Chengalpet, Chennai and is a completely owned
subsidiary of Ford Motor Company. It is the 8
th
largest car manufacturer in India.
From the year 2001, Ford has come up with a host of models that include Ford Ikon,
Fusion, Fiesta.

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In terms of production the manufacturing facility in Chennai has a capacity exceeding
1.5 lakh cars annualy. As of February 2013, FIPL has 260 dealerships across 138 cities
in 23 states of India
6
.

2. THE ONE FORD CONCEPT
History behind the concept
The year was 2006 when Alan Mulally joined an about to be bankrupt Ford motor
company. The leadership team under him came up with The Way Forward business
Its our Blueprint for Today and the Future
John Fleming, Executive Vice president
4

FIGURE 2: ONE FORD VISION
2


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plan to turn around the massive losses and declining market share that was being
faced by the company. The One Ford Concept arose out of that plan as the Vision for
future of the Ford Motor company. It is shown in the figure below.
The One Ford Plan was all about cutting down operating costs and building in
efficiencies where ever possible. It focused on leveraging the huge talent pool that it
possessed. Prior to introduction of One ford, the various manufacturing facilities and
regional teams were operating in silos with little synergy between them. Reinventing
the wheel for dealing with issues was rampant and this built in a lot of redundancy of
standards and operating practices.
The One ford was primarily introduced to address all these issues. The idea was to
unite all the silos under one common goal and drive results together. Since the
implementation of the One Ford Concept, Ford motor was reemerged from the ashes
to deliver 18 profitable quarters. This report will deal with the impact of this concept
in the Trim, Chassis, & Final Department in Ford India Pvt Ltd.
3. IMPACT OF ONE FORD VISION
1. Global Strategy
2. Outsourcing
3. Environment
4. Organization Structure
5. Organizational Control
6. Knowledge Management
4. IMPACT OF ONE FORD ON STRATEGY FOR GLOBAL MARKETS
Previously Ford was functioning as a "multi-domestic" organization with special focus
on local geography-specific responsiveness rather than product standardization.
Ford's production units across different countries operated in such a way that each
unit specialized in manufacturing car models that were designed for the country in
which it operated. For instance, Ford Figo was a model produced in Ford India
exclusively for the Indian consumers. This strategy of extensive customization of cars

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for different countries resulted in a great number product development platforms for
Ford leading to high development costs. Also, owing to the 'global geographic'
strategy, coordination among different Ford units was insufficient or ineffective. As a
result, issue resolution and productivity were affected. Due to the sheer number of
models, economies of scale could not be leveraged. Further, the learning processes
and culture in these units had evolved to be geography-specific. This meant that the
best practices of Ford companies across the world could not be captured and
implemented locally.

With the advent of One Ford, the vision was to eliminate inefficiencies and realize
huge cost savings and economies of scale. It was decided that Ford would give more
importance to standardization of cars across geographies rather than customizing
N
E
E
D

F
O
R

P
R
O
D
U
C
T

NEED FOR LOCAL RESPONSIVENESS
Global
Product
Transnational
International Multidomestic
FIGURE 2: GLOBAL STRATEGY

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products to suit local needs and tastes. A global product strategy meant that it would
phase out older localized models and focus on building new standardized car models.
By 2014, Ford had reduced the number of product development platforms from 27 to
15 and it is currently targeting as low as 9 platforms. Even though products are
standardized, country-specific customization does happen to meet the emission
norms, driving style and other homologation requirements in different countries
where the cars are sold. Now, each of the manufacturing units of Ford has fewer car
models to handle as a result of which they operate more efficiently. The
responsiveness of the company towards issue resolution has improved. With fewer
models, it is now able to realize economies of scale both in terms of sourcing and
production.
5. OUTSOURCING OPERATIONS
The primary advantages a manufacturing company gains by outsourcing are to avoid
certain costs - such as surrounding or "non-core" business and expenses such as
high taxes, high energy costs, high government regulation, production and excessive
labor costs. In case of a FORD TCF plant, production of many trim and plastic parts
have been outsourced to tier I and tier II suppliers.
The ONE FORD concept has introduced some drastic changes in the outsourcing
operations of FORD. The outsourcing operations of FORD is presented below:

FIGURE 3 OUTSOURCING
Modularity and
Standardization
of Outputs
Drawing and
Enforcing
contracts
Conditions of
Uncertainty

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Modularity and standardization of outputs
FORD outsources the productions of many of its parts to various suppliers. The
assembly line operations of FORD consists of Trim, followed by chassis and final.
Most of the fabric and plastic parts are assembled before being brought to the
assembly line. The trim and chassis assembly line consist of components like
Harnesses and controls-other electrical, pedal assembly, insulator ,air duct, heater,
head liner, Weather-strip, horn, stop switch, exhaust, undercover etc. Thus,
production of most of these parts is outsourced. But, the presence of external
suppliers for many parts increases the chances of quality mismatch and randomness.
Thus a system is implemented for standardization of outputs by these suppliers.
Before outsourcing, supplier has to prove itself about capacity and product quality.
This is done through a 27 part certification process called Production Part Approval
Process (PPAP). The focus is to develop the suppliers to meet the global quality
standards of Ford. This also ensures complete standardization of supplier parts
across the globe.
Drawing and enforcing contracts
After the suppliers are chosen through a rigorous process, formulation and
enforcement of contract is done. Contracts are drawn and negotiations are done by 2
different teams. Since we are moving towards global product structure, this team is
also getting globalized with a central reporting structure. Negotiations and contracts
are drawn on a global level. Negotiation is done by a separate procurement team
globally. This results in huge savings by achieving economics of scale
Conditions of uncertainty
There is an element of trust involved when Ford deals with its suppliers. In case of
issue with suppliers, Ford might be directly affected. Also the end components are
not inspected by Ford. These are the two uncertainties involved. Therefore, there has
to be an inventory of buffer stock to deal with this uncertainty.
6. IMPACT ON THE ENVIRONMENT

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Ford India being an automobile manufacturing company, it operates in a complex
environment in which there are many external elements which make up the
organization. It is affected by the many changes happening like change in fuel prices,
shortage of the one of the several production parts that goes into building a car,
changes in vehicle technology and changes in legislations or emission norms.
But this complex environment is relatively stable and does not change every day.
Unlike in a mobile phone manufacturing company where the technology becomes
obsolete every few months, the environment in the car industry is not affected so
much. There is a new model or market driven instability which occurs few times.

We will look at how Ford India
handles environment
instability using the example of
change in fuel prices. The
marketing department
spanning the boundaries monitor the environment for any drastic changes in demand
FIGURE 4: ENVIRONMENT

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M
a
r
k
e
t
i
n
g

Plant operating
Committee
Vehicle Operations
Manufacturing
Engineering
Industrial Engineering
like increase in only petrol price in India. This leads to a shift in demand and
customers now want more diesel vehicles. The team then communicates this to the
decision making strategic head of manufacturing, vehicle operations manufacturing
engineering team (VOME) and the industrial engineering team who function to
cushion the impact of this change. Based on the input, VOME team assess the plant
for any additional facility that may be required to handle the additional number of
diesel cars and Industrial engineering looks at whether additional manpower needs to
be supplemented. These two teams then recommend to the Plant operating
committee consisting of the executive director to review and proceed with the
implementation of the changes. This information flow is shown below.

FIGURE 5: BOUNDARY SPANNING
Apart from this TCF department also has an absentee coverage of 5% as a form of
buffer to protect the production line in case of employee turnover or absenteeism.
This number is dynamic and is reviewed on a monthly basis to keep fine tuning it in
response to any change.

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Control
Systems
Process
Based
Control
Output
Based
Control
Culture
Control
FIGURE 6: CONTROL SYSTEMS
7. IMPACT ON THE ORGANIZATION STRUCTURE
The organization has been divided based on functions as the variety of functions are
quite diverse in a car production facility. Each department performs specialized work
(refer appendix 3). Within each function department, the structure is primarily sub
classified by functional areas with a single reporting structure. Post the
implementation of the One ford concept, TCF department has undergone minor
changes to its organization structure (refer appendix 2). Two functions namely,
Vehicle operations Manufacturing engineering and Industrial Engineering have shifted
to a matrix reporting structure where they have reporting heads both in India and in
the regional level. This structure leverages the knowledge and experience available at
all plants in the region so that issues can be addressed far more efficiently and
quickly. These functions have evolved to a full time integrating role where they handle
the variance and instabilities in the operating environment. During a new car launch,
huge variability gets introduced in the line. These two functions help the production
team to handle all the issues of launch like addition of new facilities, codifying the
manufacturing process for the new model and assessing the manpower required to
build the car.
Another change that has been introduced is that the team leader to team member
ratio has been reduced from 1:25 to 1:13 by adding more team leader positions. This
ratio has been recommended to reduce the high span of control that usually exists in
a setup like this. By reducing the span of control, the One Ford Concept encourages
problem resolution at the lowest level possible. Team leaders will be able to focus
more on the issues at hand as they are looking at smaller team and address them
effectively. They become masters at the area of work and results in
lesser number of issues getting escalated to the management. But on
the flip side this change requires the team leaders to close cooperate
with each other which may not be the result always with more number of
team leaders.
8. IMPACT ON THE ORGANIZATION CONTROL

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The control systems in Ford can be classified as shown in the figure above.
Process Based Control: Being a manufacturing setup, the work done by the production
associate to build a car is highly repetitive. They perform the same job for 8 hours a
day for 6 days a week. The exact sequence of work for every production associate is
codified into an Operators Instruction Sheet (OIS) along with images to help the
associate understand the work better. Quality is built right into every car by codifying
the work so that even when another operator does the same job, the work standard
remains the same.
Output Based Control: Ford uses a balanced scorecard approach (refer appendix 4) to
measure and review its output. There are ERP systems in place to measure the
production downtime, output, quality, scheduling and costing accurately. The metrics
for the scorecard is taken from these systems and reviewed on a weekly and monthly
basis for alignment to the year targets and to the overall vision.

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Culture Control: Culture based control is practiced in Ford through recognition and
rewarding good performance. Also, the production associate yearly incentive package
is linked to the balanced scorecard to incentivize them to work for realizing those
metrics. There is also a quarterly rewards and recognition program where the
production associates are recognized for their good work at an all hands meeting. On
the flip side, practicing linkage of performance incentives to achieve culture may not
work at all times.
New Control practices from One Ford:
Global Standardization
After implementation of One Ford, the manufacturing standards in place in TCF
department have
evolved from plant
specific standards
to global standards
(refer appendix 5)
which is same at all
Ford Plants. By implementing this, the need for reinventing the wheel reduces by
capturing all the best practices in one place and standardizing them. Managers are
coached to ask the 3 fundamental questions for resolving issues as shown below.
This question flow sustains the implemented standards preventing dilution. When the
standard is found insufficient, there is a governance process thats in place which
ensures that the standards are updated and then cascaded globally.

FIGURE 7: 3 FUNDAMENTAL QUESTIONS ASKED BY EVERY
MANAGER

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Time and Data Management
Prior to One ford, the team leaders and engineers had the freedom to design their
work priorities and issues in the 8 hour shift as per their wish. This led to a lot of
overlap between people and collaborative efforts took long as it was difficult to bring
all the stakeholders in one area at the same time due to different priorities. To
address this, a time and data management system (refer appendix 6) has been
implemented which provides a charter for all the activities and the specific times at
which they need to be carried out. For example there is a time towards the end of the
shift where all the team leaders and engineers capture significant happenings and
issues of the shift and prepare for production handover for the next shift for a
smooth transfer. This brings about a lot of cohesiveness and efficiency while leaving
white space in the calendar during which the person may focus on the non-routine
activities.
Issue Escalation:
One-Ford defines an issue escalation framework (refer appendix 7) which talks about
how an issue is escalated upto the management for support when it is critical in
nature. Most issue resolution is expected to happen at the team level where the team
leader and his team work on the minor issues which can be easily resolved. Only a few
issues which need attention are escalated to appropriate levels. At the last level, a Six
Sigma project is commissioned with global subject matter experts and championed by
a leader from the top management.
9. IMPROVEMENT IN KNOWLEDGE MANAGEMENT THROUGH
ONE FORD
Knowledge management is important for organizations to deal with change, to
improve on its processes and to compete better utilizing the knowledge available
globally. As Ford deals with a work environment which involves tasks which are high
on analyzability and low on variety, Knowledge Management plays a crucial role in

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improving the efficiency of the Organization. Hence, Ford being a highly mechanistic
organization involves codifying and formalizing the knowledge that is already
available.

FIGURE 8: KNOWLEDGE MANAGEMENT PRACTICES
Previously, knowledge management practices were only country-specific or region
specific with lesser involvement of knowledge available around the globe. Ford has
moved the knowledge sharing practice on a global platform.
One Ford Concepts impact on Knowledge management can be broadly dealt in 3
perspectives:
1. Repositories
2. Subject Matter Experts
Data Repositories
Subject Matter
Experts
Formalization of
Process
Improvement

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3. Formalization of Process Improvements

Repositories
Repositories are basically the collection of all project details done before. Previously
capturing of knowledge was tacit and the knowledge banks was maintained only on a
country level. Reinventing the wheel was the case when dealing with quality issues.
But now all the quality improvement projects like six sigma projects are clearly
documented in a central Global database maintained by a dedicated team sitting in
the United States. The quality of the documentation done is controlled by the respect
project champion who is at a leadership level. The documentation in these
repositories provides a means for quick access as the issues are segregated and
documented corresponding to the nature and type of issue.
For example: Ecosport was first launched in Brazil before being manufactured in
India. The team at Brazil have clearly documented all the issues that were faced
during launch. When the launch of the model Ecosport was going on in India, the
launch team looked at this databank to address most of the common issues. This
helped in dealing with issues much faster and it resulted in the fastest car model
launch in Ford Indias history.
Subject Matter Experts
In addition to codification of issues, Ford also has various subject matter experts
available globally, who provide valuable inputs in critical situations such as
occurrence of issues of high severity. Prior to One Ford these SMEs tended to work
only in a particular country or region. Their global network was nearly non- existent.
Taking the example of Ecosport launch, the Subject Matter expert (SME) team flew to
the India to help with launch of the Ecosport. Ford works to develop SMEs in various
areas of car manufacturing and utilizes the knowledge transfer mechanism for better
benefits. The SMEs around the world also have a virtual Communities of Practice
software to network online.

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Formalization of Process Improvement:
One Ford concept in Ford stresses on continuous improvement as the driving motto is
There is always a better way to do things. To make sure that the best practices of
every plant are cascaded throughout the globe, there is a governance process now in
place that ensures that these practices are captured and implemented in every plant
as a standard. This synergy did not exist previously when close to the 80+ plants that
Ford operates had a varied set of standards which resulted in excess and dilution of
intentions. This formalization of processes also provides a means for ensuring the
quality of the product as output at each phase is monitored and compared to the
established standards. The below schematic shows the governance process followed
for updating or recommending standards.

10. RESULTS OF ADOPTING ONE FORD
Some of the benefits reaped have been listed below

Plant
Governance
Council
Regional
Governance
Council
Global
Governance
Council
Voting to
accept new
Standard
FIGURE 9: GOVERNANCE PROCESS FOR UPDATING STANDARDS

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FIGURE 10: BENEFITS OF ONE FORD

Post adoption of the One Ford Concept, Ford India had its fastest launch of a new
model in its history with the Ecosport
Better quality of cars are churned out compared to the existing models
Lower repairs / 1000 cars at the customer end
Lowest Things Gone Wrong (TGW) / 1000 cars based on the customer feedback
surveys amongst all other Ford cars in India.


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APPENDIX 1: PROCESS FLOW
The manufacturing process flow in Trim Chassis and Final Department.

FIGURE 11: TCF ASSEMBLY LINE PROCESS FLOW

The above figure is an illustration of the process sequence in the TCF line. It can be
inferred that this is an assembly line technology where one phase of an operation has to
be completed before the subsequent process. In car manufacturing, there is high task
variety from blanking of sheets to welding of car body to maintaining robotic and
electronic equipment. There is also a high level of task analyzability. Therefore, this is a

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nearly stable environment. All these processes can be taught through training and people
handling tasks are specialists due to exposure to the repetitive nature of work.


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APPENDIX 2: TCF ORGANIZATION STRUCTURE

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APPENDIX 3: FUNCTIONAL STRUCTURE
Since the task variability is quite high in manufacturing of automobiles from welding of
car bodies to maintaining robots, the division is done based on the functions. Within each
function, there is economy of scale and task specialization. This is shown below.

APPENDIX 4: BALANCED SCORECARD


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APPENDIX 5: STANDARD MANUFACTURING FRAMEWORK OF ONE
FORD


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FIGURE 12: ONE FORD MANUFACTURING FRAMEWORK
5

APPENDIX 6: TIME AND DATA MANAGEMENT


Page 27
APPENDIX 7: ISSUE ESCALATION FRAMEWORK


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REFERENCES
1. http://corporate.ford.com/annual-report-2013/index
2. http://corporate.ford.com/doc/one_ford.pdf
3. http://corporate.ford.com/innovation/innovation-detail/one-ford
4. http://www.at.ford.com/news/cn/Pages/Ford%20Production%20System%20drives%
20success%20at%20Ford%20Motor%20Company.aspx
5. http://www.at.ford.com/news/Plants/Pages/Global-Ford-Production-System-
Introduction0917-279.aspx
6. http://www.india.ford.com/about/media/newsroom?article=1248999183689
7. Other data has been obtained during interactions with various stakeholders in TCF
department of Ford India for the Project

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