TQM IN FORD MOTOR COMPANY

Subject: MGT330
Section: 01

Submitted by-

Group Name: Fire-ice

Serial no. Name ID

1. MD. RUBEL MIAH 1320935
2. MD. REZWAN 1321506
3. SALEH AHMED 1320666
4. KAZI JEWEL RANA 1322023
5. MD. SHAMIM RAHMAN 1320695

Submitted to-

Sumita Das

Lecturer, School of Business

Independent University, Bangladesh
 Letter of Transmittal
5th August 2015
To
Sumita Das
Lecturer, School of Business
Independent university Bangladesh
Basundhara, Dhaka
Subject: Permission to submit Term paper report on TQM in Ford Motor Company
Dear Sir,
We are delighted to submit our term paper report on TQM in Ford Motor Company. We tried
our best to provide as much as relevant information regarding our topic.
So we, therefore hope that, you will find everything needed to complete the assignment.
Sincerely,
MD. RUBEL MIAH
On behalf of the group

2
Executive summary:
Now, though, Ford's hard-won reputation for quality is being tarnished by a series of
setbacks, from the controversy over deadly rollovers of Ford Explorers equipped with
Firestone tires to costly recalls of several models and delays on the introductions of others.
Indeed, according to recent surveys by Consumer Reports and J. D. Power & Associates,
overall quality and customer satisfaction for Ford cars now lag the competition.

And so, once again, the company is embracing quality as the answer to its problems. This
time, it has seized on Six Sigma, a management tool that is sweeping corporate America. "It
was a good way to get a common language around innovation and marketing," said Jacques
Nasser, Ford's chief executive, who started the Six Sigma program in 1999.

Six Sigma was popularized by John F. Welch Jr. of General Electric in the 1990's. Adopting
it does, however, point to a management problem. Too often, when it comes to management
tools for improving efficiency and worker productivity, companies have to reinvent the
wheel.

Had Ford stuck with Total Quality Management, it might have avoided many of the problems
that have plagued it recently. Instead, as the years rolled by, the concept faded into the
background at Ford as its champions retired and were replaced by executives who had other
priorities.

"U.S. automakers had so much confidence, they felt they had achieved quality and didn't need
to focus on it anymore," said Subir Chowdhury, executive vice president of the American
Supplier Institute, a quality training organization that Ford spun off in the early 1980's. He is
the author of "The Power of Six Sigma" (Dearborn Trade, 2001).

Consistency is the ultimate test of any quality program — and, perhaps, Ford's greatest
failing. Mr. Nasser himself alluded to this problem in an e-mail message distributed
throughout Ford in April. "I have heard people say that it seems as though we have an
initiative of the month," he wrote. "I am concerned about this impression."

Six Sigma, a quality-control method for increasing efficiency and reducing errors to 3.5
defects per million operations, draws on the same customer-focused, analytical methods of its
predecessor. And Ford's initial Six Sigma projects revisit lessons the company learned in the

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1980's, notably the importance of working closely with suppliers on design and
manufacturing and the need to avoid even slight variations in a design or production process.

The experience last year of Chris Davis, 27, an engineer in Ford's Kentucky Truck Plant,
illustrates how such variations can endanger quality. Using Six Sigma statistical tools, Mr.
Davis traced the source of vibrations in 2000 Super Duty F-series trucks and Excursion sport
utility vehicles to subtle design alterations in some parts from previous models. The flaw was
fixed, but had Ford engineers relied on their initial hunch and realigned the front-end
suspension, it would have persisted.

Mr. Davis might have followed much the same procedure had he been working at Ford on a
similar problem in the early 1980's, in the heyday of Total Quality Management, with one big
difference. Then, the driving principle would have been: fix the problem and do not worry
about the cost. This time, following the dictates of Six Sigma, Mr. Davis did a cost-benefit
analysis to determine whether the benefit from the project was worth the effort.

Six Sigma is a lot more structured and profit-oriented than Total Quality Management. Each
project has to improve processes 70 percent and produce $250,000 in cost savings. Individual
projects are then assigned to middle managers like Mr. Davis, known as Black Belts, who
commit to working on quality-improvement projects for two years.

Ford's hope is that Six Sigma will create a uniform approach to solving quality problems that
can be replicated. "Six Sigma is a way of learning across vehicle lines," said Louise Goeser,
Ford's new chief of quality.

While Six Sigma is unapologetically bottom-line oriented, Total Quality Management was
defiantly philosophical and eschewed explicit goals. Deming himself, the curmudgeonly
octogenarian who was recruited in 1981 to help jump-start Ford's quality movement, thought
if a company worked systematically at improving processes, profits would follow.

He also preached the need to anticipate what customers wanted. By contrast, current Six
Sigma projects like fixing Mr. Davis's tire imbalance problem are in the age-old "find and
fix" mode. Although Ford plans to focus its future Six Sigma efforts on improving the design
of its products and processes, for now the vast majority of its projects concentrate on "how to
reduce things gone wrong," said Phong Vu, who heads the company's Six Sigma effort.

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The problem with that, though, said Fred Simon, a veteran of the 1986 Taurus who ran
Lincoln Continental before retiring in 1995, "is that with the find-and-fix mode you're
constantly chasing what has already happened instead of looking at the bigger picture."

Ford has not maintained a consistent collaboration with suppliers, a cornerstone of the 1980's
quality drive. It still offers some technical assistance to its suppliers and collaborates with
them in design work. But, says the president of a leading automotive supplier who survived
the shakeout of the 1980's, "Ford is more demanding on the cost side than the quality side."

Ford acknowledges that its relationship with suppliers is sometimes shaky. "What happens at
a company like Ford is that we're moving forward so fast," said Frank Foley, a former Six
Sigma "project champion" at the Kentucky Truck Plant and now manager of the Wixom
Assembly Plant in Michigan. The plant has a supplier that passed the quality test in the 80's,
he said, "so we don't pay so much attention anymore."

Mr. Vu acknowledges the gap. Over time, he said, "some systems get diluted."

Advocates of Six Sigma at Ford argue that the disciplined nature of Six Sigma will ensure its
long-term success. But culture may prove to be a big obstacle. "Why isn't quality second
nature at Ford?" a veteran Ford engineer asked. "Because cost is king”. For the past 6 or 7
years, there's been a huge emphasis on cost reduction. You walk in in the morning and all the
alligators are circling. You kill the one that is most threatening — and that's cost."

Mr. Nasser attributes some of the company's recent problems, especially the delays in
introducing vehicles, to disruptions caused by the Explorer crisis, not to a lapse in Ford's
quality strategy. "In many ways, we fell short of our own very ambitious levels of
performance," he said. "Looking back at last year, it's amazing we came out as strong as we
did."

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Table of Contents
Letter of Transmittal .............................................................................................................. 2

Executive summary:................................................................................................................... 3

Methodology: ............................................................................................................................. 7

Limitations: ................................................................................................................................ 7

Literature review ........................................................................................................................ 8

TQM (Total quality management): ........................................................................................ 8

Principles of TQM: .................................................................................................................... 9

TQM IN FORD MOTOR COMPANY: .................................................................................. 10

Background of the company: ............................................................................................... 10

Product design & continuous improvement:........................................................................ 11

Problem solving: .................................................................................................................. 11

Employee engagement: ........................................................................................................ 12

Process design: ..................................................................................................................... 13

Services of Ford motor company: ............................................................................................ 14

Ford offers automotive finance through Ford Motor Credit Company: .............................. 14

Product sale related services: ............................................................................................... 14

Extended services plan options: ................................................................................... 15

Ford insurance: ........................................................................................................................ 15

Tqm wheel in services: ........................................................................................................ 16

Conclusion: .............................................................................................................................. 17

Reference: ................................................................................................................................ 17

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Methodology:
Methodology refers to the essential part of the study and the process of collecting
information and arranging it in terms of the relevant issues of the study. It is designed in a
way so that it correspondents to achieve the objectives of the study. The actual information
provided in this report was collected from two different sources, namely primary and
secondary source. The information in the report in connection to the treasury functions were
collected from primary sources while that for sales analysis was gathered from different
published reports within the organization and from the annual reports.

Sources of data collection:

 Journals
 Company website
 Blogs

Limitations:
There were some difficulties in obtaining necessary information. Such as-

 Time & cost was a major limitation

 Lack of commitment between members
 Long vacation which resulted a lack of communication & teamwork
 Some rules & regulations of the company which didn’t allow us to get some vital
information

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 Literature review

TQM (Total quality management):

Total Quality Management is a management approach that originated in the 1950s and has
steadily become more popular since the early 1980s. Total Quality is a description of the
culture, attitude and organization of a company that strives to provide customers with
products and services that satisfy their needs. The culture requires quality in all aspects of the
company’s operations, with processes being done right the first time and defects and waste
eradicated from operations.

TQM is a management philosophy that seeks to integrate all organizational functions

(marketing, finance, design, engineering, and production, customer service, etc.) to focus on
meeting customer needs and organizational objectives. TQM views an organization as a
collection of processes. It maintains that organizations must strive to continuously improve
these processes by incorporating the knowledge and experiences of workers. The simple
objective of TQM is “Do the right things, right the first time, every time.” TQM is infinitely
variable and adaptable. Although originally applied to manufacturing operations, and for a
number of years only used in that area, TQM is now becoming recognized as a generic
management tool, just as applicable in service and public sector organizations. There are a
number of evolutionary strands, with different sectors creating their own versions from the
common ancestor. TQM is the foundation for activities, which include:

 Commitment by senior management and all employees

 Meeting customer requirements
 Reducing development cycle times
 Just in time/demand flow manufacturing
 Reducing product and service costs
 Systems to facilitate improvement
 Employee involvement and empowerment

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Principles of TQM:
Total quality management was established on some principles. Which are-

Management Commitment

 Plan (drive, direct)

 Do (deploy, support, participate)
 Check (review)
 Act (recognize, communicate, revise)

Employee Empowerment

 Training
 Suggestion scheme
 Measurement and recognition
 Excellence teams

Fact Based Decision Making

 SPC (statistical process control)

 DOE, FMEA
 The 7 statistical tools
 TOPS (Ford 8D – team-oriented problem solving)

Continuous Improvement

 Systematic measurement and focus on CONQ

 Excellence teams
 Cross-functional process management
 Attain, maintain, improve standards

Customer Focus

 Supplier partnership
 Service relationship with internal customers
 Never compromise quality
 Customer driven standards

Having these characteristics in a company means that the company is following TQM. As
customer demand is always changing, companies always try to keep on improving their
products & services to satisfy the customer. TQM is continuous development tool that helps
to fulfill customer expectations.

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TQM IN FORD MOTOR COMPANY:
Background of the company:
Ford Motor Company is an American automaker & the world’s fifth largest automaker based
on worldwide vehicle sales. The company was founded by Henry Ford on June 16, 1903.

The company manufactures passenger cars, trucks & tractors as well as automotive parts &
accessories. The first commercial car Model T was introduced in 1908. In 1913 the company
introduced the world’s first moving assembly line for cars & in 1914 the company introduced
$5 a day wage to improve labor productivity. By 1923 the company was producing half of
America’s automobiles. As times passed, the company grew more & more. In the flow of
time the company’s management style has also changes.

The company is currently the world’s 5th biggest manufacturer of automobiles which require
a huge amount of production. On the other hand the customer demand is continually
changing. So, in order to fulfill customer’s continuous demand the company is following
TQM.

TQM in Ford Motor Company:

Twenty years ago, when an invasion of Japanese imports threatened the American
automobile industry, the Ford Motor Company led a quality revival based on the management
philosophy of W. Edwards Deming, who was controversial then and is out of fashion now.

The results of the movement, known as Total Quality Management, were stunning at Ford.
After racking up $3 billion in losses between 1979 and 1982, Ford hit a series of home runs,
including the aerodynamic Taurus-Sable cars, and by 1986 had become the most profitable
American auto company.

Ford motor company tries to use all the application of TQM to ensure the overall quality of
their product.

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

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

The Ford Motor Company developed the 8D (8 Disciplines) Problem Solving Process, and
published it in their 1987 manual, "Team Oriented Problem Solving (TOPS)." In the mid-90s,
Ford added an additional discipline, D0: Plan. The process is now Ford's global standard, and
is called Global 8D.

Ford created the 8D Process to help teams deal with quality control and safety issues; develop
customized, permanent solutions to problems; and prevent problems from recurring.
Although the 8D Process was initially applied in the manufacturing, engineering, and
aerospace industries; it's useful and relevant in any industry.

Steps in applying this method are-

0. Plan
1. Build the team
2. Describe the problem
3. Implement a temporary fix
4. Identify and Eliminate the Root Cause
5. Verify the solution
6. Implement a permanent solution
7. Prevent the Problem from Recurring
8. Celebrate team success

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Employee engagement:
Their employees are also their customers, and they can be strong ambassadors for their
products. In Michigan, information sessions called “Go Further Employee Events” are held to
give employees the opportunity to view, learn about and test drive yet-to-be-released
vehicles. This lets the employees see how our products are meeting the needs of customers,
while providing factual information about the vehicles. Their employees can then promote
the vehicles to their friends and families, which, in turn, can increase sales and help to
strengthen the Ford brand.

Our Employee Resource Groups also conduct a number of events and initiatives each year to
engage our employees, provide product insights and reach out to the community.

The company believes it’s important to engage their people within the communities in which
they operate. Each year, Ford offer ways for thousands of their employees and retirees to
participate in volunteer programs. They see these programs as not only critical to helping
those in need, but pivotal to inspiring and energizing our employees around volunteerism and

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community service. Through these community initiatives, they support teamwork and build a
sense of shared purpose and commitment.

Process design:
In the process design Ford faces many challenges. Such as-

Modern automotive vehicles use a large number of stamped sheet metal parts in their
construction. Understanding the dynamic behavior of sheet metals during transfer from one
die station to another becomes an urgent task in the tooling design phase to achieve optimum
transfer motion, avoid high cost equipment damage and improve overall production uptime.

To get a better understanding of this critical process and to improve the productivity of the
tooling design and stamping process, Ford looked for external input to complement its own
internal experience and expertise.

Solution to these problems are-

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

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

Result of this method is-

The implementation of the highly customized software and newly formulated design process
in partnership with Altair Product Design had a number of positive results for Ford: Ford

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engineers could successfully predict dynamic panel transfer behavior (displacement, forces,
stresses, etc. faster and crucially more accurately than was previously possible. Material
behavior could be predicted with greater accuracy thus avoiding interference during panel
transfer and reducing part or die damage.

Services of Ford motor company:

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

Ford offers automotive finance through Ford Motor Credit Company:

Ford Motor Credit Company LLC: Ford Credit, is the financial services arm of Ford Motor
Company, and is headquartered in Dearborn, Michigan. Its business activities are
concentrated primarily in the area of automobile loans in support of its parent company. The
company offers consumer loans and leases to car buyers, as well as business loans and lines
of credit to dealerships selling Ford Motor Company products. The firm also issues
commercial paper and other debt instruments on Ford's behalf.

Ford Credit also owns Lincoln Automotive Financial Services, the arm that finances Lincoln
vehicles.

Ford's FoMoCo parts division sells aftermarket parts under the Motorcraft brand name. It has
spun off its parts division under the name Visteon.

Product sale related services:

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

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Extended services plan options:

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

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

 Experienced, Certified Ford Technicians

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

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

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Tqm wheel in services: There are some ways that we can establish our customer
satisfaction. These components are related with customer satisfaction.

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

These are factors that company has to make sure for customer satisfaction.

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Conclusion:
The secret behind the success Ford Motor Company is definitely influenced by the practice of
TQM. It helped them survive in the market fulfilling by the customer demand. Its continuous
improvement & growth is expected to continue in the future. Not only they become a leading
brand by using TQM, but also became an example for other companies.

Reference:
1. http://corporate.ford.com/microsites/sustainability-report-2013-14/people-workplace-
employees-engagement.html
2. http://www.mindtools.com/pages/article/8d-problem-solving.htm
3. http://www.altairpd.com/CaseStudyDetail.aspx?id=15
4. http://corporate.ford.com/
5. https://credit.ford.com/vehicle-insurance
6. http://www.sec.gov/Archives/edgar/data/38009/000003800915000022/fmcc12312014
10-k.htm

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