THE QUALITY JOURNEY THE QUALITY JOURNEY

OF FORDOF FORD

Adrian VidoAdrian VidoFord Motor CompanyFord Motor Company

Director, Global Manufacturing QualityDirector, Global Manufacturing Quality

ONE FORDONE FORD

ONE TEAMONE TEAM Customers

Business Units

Product DevelopmentProduct Development

Manufacturing and Manufacturing and LaborLabor

PurchasingPurchasing

QualityQuality

SustainabilitySustainability

Information Information TechnologyTechnology

FinanceFinance

Human ResourcesHuman Resources

LegalLegal

Government RelationsGovernment Relations

MarketingMarketing

CommunicationsCommunications

Americas EuropeAsia Pacific and Africa Credit

One Team...One Plan…One Goal…One

Functional Skill

Teams

People Working Together

As a Global Enterprise for

Automotive Leadership

Driving StandardizationContinuous Improvement

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One Team is driven in a global matrix structure – functional skilled teams develop global standards allowing the Business Units to thrive and deliver products and services our

customers desire

ONE PLANONE PLAN• Aggressively restructure to operate profitably

at the current demand and changing model mix

• Accelerate development of new products our customers want and value

• Finance our plan and improve our balance sheet

• Work together effectively as one team

www.one.ford.com

+ + =

Asia Pacific& Africa

Asia Pacific& Africa

AmericasAmericas

Europe

Large

SmallSmallMediumMedium

Profits & Cash

PROFITABLE GROWTH FOR ALL

Profits & Cash

PROFITABLE GROWTH FOR ALL

ONE GOALONE GOAL

FORD MOTOR COMPANY QUALITY AND PRODUCTIVITY IMPROVEMENT PLAN

Project Leader: Alan MulallyProject Leader: Alan Mulally Document Editor: Bennie FowlerDocument Editor: Bennie Fowler Reference Number: FMC_Q&Pv1Reference Number: FMC_Q&Pv1

CBG / Function: CBG / Function: Quality and ProductivityQuality and Productivity Revision Date: Nov 8, 2010Revision Date: Nov 8, 2010

Opportunity Explanation:Deliver Best in World Quality and Productivity by the end of the business planning period

Objectives:An exciting viable Ford delivering profitable growth for all

Dependencies:• Working together effectively as one team• Building the technical & quality competency of all employees across the enterprise; while educating the leadership team

Resources & Team:CBG / Function Leader Quality

Americas M. Fields K. Pittel Eur/Exp & Growth S. Odell K. O’NeillAsia Pacific and Africa J. Hinrichs P. WrightFord Credit M. Bannister C. PrattProduct Development D. Kuzak P. Ellison/ J. ZhouMfg / Labor Affairs J. Fleming A. VidoPurchasing T. Brown D. VellikyQuality & NML B. Fowler M. HardieSustain/ Env/Sfty Engrg S. Cischke J. GilhoolInformation Technology N. Smither S. SmithFinance L. Booth B. SwancuttHR and Corp Svcs F. Fields D. RowleyLegal D. Leitch B. CoughlinGov/Comm Relations Z. Ojakli L. BorderMarketing, Sales & Svc J. Farley G. Dugan/

M. Harper/J. HallCommunications R. Day K. Kinley

Process / Methodology:Utilize problem-solving methodologies i.e. 6-Sigma, Lean, Statistical Methods, G8D, QPIP to drive Operational Excellence throughout the Enterprise and deliver sustainable business results

Target & Metrics:Target & Metrics:

Metric Current 5-yr Target

Deliver Business Plan ResultsDeliver Business Plan Results Quality / CBG BPRQuality / CBG BPR Best-in-World 2013Best-in-World 2013

Deliver CBG Quality TargetsDeliver CBG Quality Targets CBG Business PlanCBG Business Plan Best-in-World 2013Best-in-World 2013

Key Areas of Focus Key Areas of Focus DELIVER OPERATIONAL EXCELLENCE - EVERY TEAM, EVERY DAY DELIVER OPERATIONAL EXCELLENCE - EVERY TEAM, EVERY DAY

PRODUCTPRODUCT Continue defect prevention and reduce TGW, R/1000 and Warranty Continue defect prevention and reduce TGW, R/1000 and Warranty

Spend using global design rules and engineering and manufacturing Spend using global design rules and engineering and manufacturing standards at all times in servicestandards at all times in service

Utilize global transfer function catalog to achieve improved levels of Utilize global transfer function catalog to achieve improved levels of APEAL and Cust SatAPEAL and Cust Sat

Deliver the functional attributes, systems and designs according to the Deliver the functional attributes, systems and designs according to the Ford DNA and Global StandardsFord DNA and Global Standards

Joint Supply Base Improvement PlanJoint Supply Base Improvement PlanPROCESSPROCESSContinuous quality and productivity improvement in all functions centered Continuous quality and productivity improvement in all functions centered

around: around: Creating Value Roadmap (CVR)Creating Value Roadmap (CVR) Global Product Development System (GPDS)Global Product Development System (GPDS) Ford Production System (FPS)Ford Production System (FPS)PEOPLEPEOPLE Full implementation of the Quality & Productivity infrastructure globally Full implementation of the Quality & Productivity infrastructure globally

centered around the Core Engineering Functionscentered around the Core Engineering Functions Training curriculum to promote awareness and understanding of CVR, Training curriculum to promote awareness and understanding of CVR,

GPDS, FPS, OTD and quality operating systems that govern these key GPDS, FPS, OTD and quality operating systems that govern these key processesprocesses

PERCEPTIONPERCEPTION Execute the plan to deliver the Proof PointsExecute the plan to deliver the Proof Points Aggressively Communicate the Plan and Progress Proof Points to All Aggressively Communicate the Plan and Progress Proof Points to All

StakeholdersStakeholders

• Order To Delivery (OTD)Order To Delivery (OTD)• Quality Operating System (QOS)Quality Operating System (QOS)

“Today’s standardization…is the necessary foundation on which tomorrow’s improvement will be based. If you think of “standardization” as the best you know today, but which is to be improved tomorrow-you get somewhere. But if you think of standards as confining, then progress stops.” – Today and Tomorrow 1926

Standardization: The Key To Continuous Improvement

Henry Ford

CONTINUOUS IMPROVEMENT AT FORDCONTINUOUS IMPROVEMENT AT FORD

EVERY FUNCTION HAS A QUALITY & PRODUCTIVITY EVERY FUNCTION HAS A QUALITY & PRODUCTIVITY IMPROVEMENT PLANIMPROVEMENT PLAN

• Functional Senior Leaders commit to establishing measurable standards and model a continuous improvement mindset in their organizations in order to achieve operational excellence

• Quality Functional Leads are skilled technical leaders partnering with functions to Reduce Lead Time, Improve Quality, Reduce Cost while driving culture change towards simplicity and lean thinking

• CEO and Quality Group Vice President co-chair monthly quality meeting where continuous improvement projects and results are reviewed

Sales Decisions

Determine product’s strength/weakness in marketplace.

Determine effective communication to drive customer consideration & sales.

Determine annual revenue & margin plan: Build quantities Pricing (per trim level) Model mix plans Incentive levels Retail/Fleet/Regional mix

Define appropriate methods/processes to achieve targets. Evaluate progress against targets Identify gaps Prioritize gaps Take actions

Determine product/ execution targets that will have greatest impact on: Shopping Purchase Owner satisfaction

Determine optimal platform architecture & derivative product definition/content to: Leverage strengths Produce competitive advantages

Determine optimal product strategy: • Target markets• Target segments• Entry timing • Platform selection• Platform sharing• Commonality

Marketing Decisions Revenue Decisions

Quality Decisions

BoD

OCCE

BPR SAR

QPMASM PMM

Product DecisionsStrategy Decisions

Global Mktg Review EPC

People Decisions

The accuracy & resultant value of the Enterprise decisions is highly dependent on an unbiased and precise knowledge of the marketplace, customer and business key performance drivers PROFIT BEFORE TAXES,

CASH FLOW, MARKET SHARE, COST PERFORMANCE, QUALITY, PEOPLE, SUSTAINABILITY

GOVERNANCEGOVERNANCE

COMPETITIVE NEWSCOMPETITIVE NEWS

AllAllMFG: Decade of Change: Top 10 Ways Your Car Has Changed In 10 Years MFG: Decade of Change: Top 10 Ways Your Car Has Changed In 10 Years The Auto Channel, Jan 5, 2011The Auto Channel, Jan 5, 2011Ten years ago, automakers were touting the number of cup holders in the cabin and the increased off-road capabilities of family Ten years ago, automakers were touting the number of cup holders in the cabin and the increased off-road capabilities of family

haulers. Today, these haulers. Today, these same companies are racing to offer increasingly hands-free mobile communication, eye-popping fuel economy and technologies aimed same companies are racing to offer increasingly hands-free mobile communication, eye-popping fuel economy and technologies aimed

at helping at helping drivers avoid accidents. Many of the changes in automobiles were driven by the ever-evolving ways people use mobile devices and drivers avoid accidents. Many of the changes in automobiles were driven by the ever-evolving ways people use mobile devices and

the Internet to the Internet to consume information, communicate with others and even engage in commerce. Here are the Top 10 ways the industry has changed consume information, communicate with others and even engage in commerce. Here are the Top 10 ways the industry has changed

since 2000; since 2000; infotainment, entertainment, taking out the guesswork, accident avoidance, fuel economy, built-in navigation, creature comforts, infotainment, entertainment, taking out the guesswork, accident avoidance, fuel economy, built-in navigation, creature comforts,

security and paint security and paint colors. Understanding what consumers want and need tomorrow – or even next year – isn’t enough. We have to anticipate needs and colors. Understanding what consumers want and need tomorrow – or even next year – isn’t enough. We have to anticipate needs and

desires farther desires farther out, 10 years down the road and beyond so we can deliver vehicles that will truly fit our customers’ lives.” out, 10 years down the road and beyond so we can deliver vehicles that will truly fit our customers’ lives.” Implications to Ford: Ford must understand new technologies and develop new testing procedures and understand Implications to Ford: Ford must understand new technologies and develop new testing procedures and understand

customer expectations, customer expectations, apply lessons learned and adjust the confirmation system if required.apply lessons learned and adjust the confirmation system if required.

HyundaiHyundai MFG:MFG: Hyundai Opens Russian Plant, Unveils Solaris Hyundai Opens Russian Plant, Unveils Solaris Quality Magazine, September 21, 2010 Quality Magazine, September 21, 2010 From steel stamping to assembly, the Hyundai Motor Manufacturing Rus carries out “full-cycle” manufacturing, being the first From steel stamping to assembly, the Hyundai Motor Manufacturing Rus carries out “full-cycle” manufacturing, being the first

foreign foreign automaker to have such a complete facility in Russia. The presence of a stamping shop will allow Hyundai to produce high-endautomaker to have such a complete facility in Russia. The presence of a stamping shop will allow Hyundai to produce high-endstamped panels while having better control over production costs.stamped panels while having better control over production costs.Implications to Ford: Must continue to be aware as our competitors are expanding their Mfg footprint in Russia at the Implications to Ford: Must continue to be aware as our competitors are expanding their Mfg footprint in Russia at the stamping level to ensure quality control.stamping level to ensure quality control.

CHINACHINAMFG:MFG: Vietnam May Step Into China's Footsteps as Next Manufacturing Hub Vietnam May Step Into China's Footsteps as Next Manufacturing Hub The Quality Magazine, June, 15, 2010The Quality Magazine, June, 15, 2010With rising labor costs and cultural shifts in China pushing manufacturers to look for new sourcing options, many are rediscovering With rising labor costs and cultural shifts in China pushing manufacturers to look for new sourcing options, many are rediscovering Vietnam. Transportation leaders are responding with investment in the developing nation whose business managed to grow last yearVietnam. Transportation leaders are responding with investment in the developing nation whose business managed to grow last yearas others struggled. Vietnam's prime minister reported at last week's World Economic Forum on East Asia that its economy will growas others struggled. Vietnam's prime minister reported at last week's World Economic Forum on East Asia that its economy will grow6.5% to 7% this year after expanding 5.3% in 2009. PIERS Global Intelligence Solutions forecasts increased U.S. imports from6.5% to 7% this year after expanding 5.3% in 2009. PIERS Global Intelligence Solutions forecasts increased U.S. imports fromVietnam of 41.6% and exports of 16.3% this year. Vietnam of 41.6% and exports of 16.3% this year. Implications to Ford: Ford should consider new sourcing options when making decisions relative to APA manufacturingImplications to Ford: Ford should consider new sourcing options when making decisions relative to APA manufacturingfootprint.footprint.

GLOBAL MANUFACTURING QUALITY BUSINESS GLOBAL MANUFACTURING QUALITY BUSINESS ENVIRONMENT SUMMARYENVIRONMENT SUMMARY

We can never lose sight of our competition

FNA- % Green FSAO- % Green

FoE- % Green APA- % Green

G Satisfactory Marginal-Plan to Recover UnsatisfactoryChangeFrom/ToRY Y

R

96%

75%

96%96% 96% 96%97%

87%

2009 2010 2011 2012 2013 2014 2015

PlanForecastActual

98%

72%

93%93% 93% 93%92%

77%

2009 2010 2011 2012 2013 2014 2015

PlanForecastActual

92%

50%

93%92% 93% 93%92%

71%

2009 2010 2011 2012 2013 2014 2015

PlanForecastActual

97%

73%

100%100% 100% 100%96%

91%

2009 2010 2011 2012 2013 2014 2015

PlanForecastActual

GG

GG

CURRENT MODEL VO/SBU

Area Key ActionsStatus

Special Attention / CommentsFNA FSAO FoE APA

ProcessEmphasis on proper usage and quality of 6-Sigma 6 Panel/Global 8D's on high leverage projects while ensuring appropriate levels of MBB/BB/GB's.

R G G G

Strengthen plant floor measurement system to detect and prevent defects during launch through advanced quality planning and enhancements to current model QOS

G Y G G

Verify implementation and impact of Verify implementation and impact of Manufacturing QPIP infrastructure Manufacturing QPIP infrastructure actionsactions

GG GG RR GG

Deliver targeted improvements to the Deliver targeted improvements to the Assembly / Stamping CM Quality Assembly / Stamping CM Quality Operating SystemOperating System

Y G G G

Deliver targeted improvements to the Deliver targeted improvements to the PTO Plant Quality (QOS, PTC, Launch, PTO Plant Quality (QOS, PTC, Launch, Supplier)Supplier)

G G Y G

Release and begin implementation Release and begin implementation FAP-02-100 Workstation RobustnessFAP-02-100 Workstation Robustness

G R G G

Global ISO9001Global ISO9001 G G G R

PeoplePeople

Heighten knowledge and competency Heighten knowledge and competency of QOS Standards via:of QOS Standards via:

Current ModelCurrent ModelGQIP (help desk, calibration GQIP (help desk, calibration sessions, BB training and Quality sessions, BB training and Quality College)College)

G G G Y

2011 MANUFACTURING QUALITY KEY AREAS OF 2011 MANUFACTURING QUALITY KEY AREAS OF FOCUSFOCUS

G Satisfactory Marginal-Plan to Recover UnsatisfactoryChangeFrom/ToRY Y R

RisksRisks

Current ModelCurrent Model•QPIP Quarterly Self Assessment risks include Leadtime Metrics, Glidepaths, QPIP Quarterly Self Assessment risks include Leadtime Metrics, Glidepaths, Process Capability, VOME Health Charts, PTO Contamination and Pass Through Process Capability, VOME Health Charts, PTO Contamination and Pass Through CharacteristicsCharacteristics

Forward ModelForward Model•Initial communication of YS/YC’s to Manufacturing continues to be a global Initial communication of YS/YC’s to Manufacturing continues to be a global systemic finding.systemic finding.

•Regional resource status of LRCA coaches in FNA & APA impacting ability to Regional resource status of LRCA coaches in FNA & APA impacting ability to adhere to Forward Model coaching plan.adhere to Forward Model coaching plan.

OpportunitiesOpportunitiesCurrent ModelCurrent Model

ManufacturingManufacturing•Ensure execution of the ONE DRIVE process to standard.Ensure execution of the ONE DRIVE process to standard.•Base department containment of emerging quality issuesBase department containment of emerging quality issues•Addressing Launch systemic issuesAddressing Launch systemic issues•Stop Ship global governanceStop Ship global governanceEnterpriseEnterprise•Update BSAQ System for Powertrain applicationUpdate BSAQ System for Powertrain application•Develop and implement a standard Quality Operating System Ocean Freight Develop and implement a standard Quality Operating System Ocean Freight processing.processing.

•Adding Post Assembly Issue to ECB Binning Process: Transportation Damage, Adding Post Assembly Issue to ECB Binning Process: Transportation Damage, Mod Centers, FCSD GoodwillMod Centers, FCSD Goodwill

•Proposal to feed GQRS Management Lease data into EVBProposal to feed GQRS Management Lease data into EVBForward ModelForward Model

•Global plan in place for 2011 to train Forward Model teams on YS/YC Global plan in place for 2011 to train Forward Model teams on YS/YC communication to address systemic issue for FAP 03-111 adherencecommunication to address systemic issue for FAP 03-111 adherence

•Rollout FM Bingo Board tracking progress of GPDS deliverables critical to Rollout FM Bingo Board tracking progress of GPDS deliverables critical to manufacturing quality (<PS>-<PA>)- updated monthlymanufacturing quality (<PS>-<PA>)- updated monthly

6 Sigma6 Sigma•Efforts ongoing to strengthen 6-Sigma infrastructure and documentation within Efforts ongoing to strengthen 6-Sigma infrastructure and documentation within the standard forums.the standard forums.

MANUFACTURING QUALITY RISKS AND OPPORTUNITIESMANUFACTURING QUALITY RISKS AND OPPORTUNITIES

Managing the Quality Managing the Quality PendulumPendulum

• ONE TEAMONE TEAM• Globally optimizing collective strengthensGlobally optimizing collective strengthens• Expected behaviors required to carry out Expected behaviors required to carry out

strategystrategy• ONE PLANONE PLAN

• Cadence Cadence • Transparency…alignment, alternatives, Transparency…alignment, alternatives,

adjustmentsadjustments• Constancy of purposeConstancy of purpose

• ONE GOALONE GOAL• Common and simple definition of successCommon and simple definition of success• Profitable growth for allProfitable growth for all