Team Members

Ajosh K – 1411212 Niranjan J - 1411252

G. Subramanian – 1411225 Shweta Bharti –

1411266

K. Siddharth – 1411238 Shreyansh Jain -

1411279

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Table of Contents

1. A BRIEF HISTORY OF THE FORD MOTOR COMPANY:-................3

FORD INDIA PVT. LTD..................................................................3

2. THE ONE FORD CONCEPT.......................................................4History behind the concept.......................................................................4

3. IMPACT OF ONE FORD VISION................................................5

4. IMPACT OF ONE FORD ON STRATEGY FOR GLOBAL MARKETS...5

5. OUTSOURCING OPERATIONS..................................................6Modularity and standardization of outputs................................................6Drawing and enforcing contracts..............................................................7Conditions of uncertainty..........................................................................7

6. IMPACT ON THE ENVIRONMENT..............................................7

7. IMPACT ON THE ORGANIZATION STRUCTURE...........................8

8. IMPACT ON THE ORGANIZATION CONTROL..............................9

9. IMPROVEMENT IN KNOWLEDGE MANAGEMENT THROUGH ONE FORD 11Repositories............................................................................................12Subject Matter Experts............................................................................12Formalization of Process Improvement:..................................................12

10. RESULTS OF ADOPTING ONE FORD......................................13

APPENDIX 1: PROCESS FLOW....................................................14

APPENDIX 2: TCF ORGANIZATION STRUCTURE...........................15

APPENDIX 3: FUNCTIONAL STRUCTURE......................................16

APPENDIX 4: BALANCED SCORECARD........................................16

APPENDIX 5: STANDARD MANUFACTURING FRAMEWORK OF ONE FORD 17

APPENDIX 6: TIME AND DATA MANAGEMENT..............................17

APPENDIX 7: ISSUE ESCALATION FRAMEWORK...........................18

REFERENCES............................................................................19

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List of Figures

Figure 1: Henry ford, founder of ford motor company....................................................3Figure 2: global strategy.................................................................................................5Figure 3 outsourcing.......................................................................................................6Figure 4: environment.....................................................................................................7Figure 5: boundary spanning..........................................................................................8Figure 6: control systems................................................................................................9Figure 7: 3 fundamental questions asked by every manager.......................................10Figure 8: knowledge management practices................................................................11Figure 9: governance process for updating standards..................................................12Figure 10: benefits of one ford......................................................................................13Figure 11: tcf assembly line process flow.....................................................................14Figure 12: one ford manufacturing framework5............................................................17

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1. A BRIEF HISTORY OF THE FORD MOTOR COMPANY:-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 5th 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 20131).

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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 8th largest car manufacturer in India. From the year 2001, Ford has come up with a host of models that include

Ford Ikon, Fusion, Fiesta.

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 India6.

2. THE ONE FORD CONCEPT

History behind the conceptThe 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 plan to turn around the massive losses and declining market share that

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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 VISION1. Global Strategy2. Outsourcing3. Environment4. Organization Structure5. Organizational Control6. 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 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.

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E

E

D

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 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 OPERATIONSThe 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.

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D

FIGURE 2: GLOBAL STRATEGY

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 outputsFORD 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 contractsAfter 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

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Modularity and

Standardization of

Outputs

Drawing and Enforcing contracts

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 ENVIRONMENTFord 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 like increase in only petrol price in India. This leads to a shift in demand and customers now want more

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FIGURE 4: ENVIRONMENT

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.

7. IMPACT ON THE ORGANIZATION STRUCTUREThe 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

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Mark

eti

ng

Plant operating Committee

Vehicle Operations Manufacturing Engineering

Industrial Engineering

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

The control systems in Ford can be classified as shown in the figure above.

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Control

Systems

Process

Based Contr

ol

Output

Based Contr

ol

Culture

Control

FIGURE 6: CONTROL SYSTEMS

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 Operator’s 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.

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 that’s in place which ensures that the standards are updated and then cascaded globally.

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FIGURE 7: 3 FUNDAMENTAL QUESTIONS ASKED BY EVERY MANAGER

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

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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 Concept’s impact on Knowledge management can be broadly dealt in 3 perspectives:

1. Repositories2. Subject Matter Experts3. Formalization of Process Improvements

RepositoriesRepositories 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

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Data Repositories

Subject Matter Experts

Formalization of Process

Improvement

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 India’s history.

Subject Matter ExpertsIn 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.

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.

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

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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Plant Governan

ce Council

Regional Governan

ce Council

Global Governan

ce Council

Voting to accept

new Standard

FIGURE 9: GOVERNANCE PROCESS FOR UPDATING STANDARDS

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

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FIGURE 11: TCF ASSEMBLY LINE PROCESS FLOW

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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 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

APPENDIX 3: FUNCTIONAL STRUCTURESince 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 FRAMEWORK5

APPENDIX 6: TIME AND DATA MANAGEMENT

APPENDIX 7: ISSUE ESCALATION FRAMEWORK

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REFERENCES1. 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

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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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