OPERATIONS MANAGEMENT AT FORD

*Please also refer to the Ford Fact Sheet on the BM Website for information about their
various manufacturing processes used at the Broadmeadows plant.
Facilities Design & Layout
- Ford uses a product layout for its manufacturing operations. The manufacturing facility is
arranged so that equipment and workstations are in line to provide a sequence of specialised
tasks. This means that the assembly line can easily be adapted for the various models of cars
that Ford assembles. ie. Falcon Sedan, XR 6, XR8, station wagon & utility, Ford Territory
(4WD)
- 3 300 employees on site working one 8 hour shift. In Paint Shop, two 8 hour shifts operate
- Broadmeadows Facility is divided into 6 main areas:
1. Body Build
2. Paint Shop
3. Trim Lines
4. Final Line
5. Pre Delivery Area
6. Shipping
Applying 5 principles of Facilties Design & Layout to Ford ( PVASL )
Product

- Product definition for each Ford Model. There is precise documentation for all
the desirable features for each model. ie power steering, disk brakes, airbags,
DVD, LPG or Petrol Tanks etc.
- New Ford Models released to appeal to youth market ie. Ford Barra, XT, 4WD

Volume

- 500 to 520 vehicles produced per day

- The volume of cars produced is determined by analysis of recent sales figures
and anticipation of future trends
- Currently all Fords cars on the assembly line are already sold to Ford Dealers.
There is a 3 to 4 month wait for a new Ford.

Activities - Exact specifications needed for each model are determined and included in the
Master Production Schedule (MPS).
- Efficient & lean manufacturing through design of an assembly line to achieve
maximum efficiency. ie. doors removed chassis when in paint shop and then
refitted after to improve paint job on car
- Sequence Modelling where assembly line is organised according to customer
needs. ie. model, colour varies from one car to the next.
Space

- Total Floor Space 133 000 square meters for Body Build, Trim lines & Final
Lines on a total site of 162 hectares
- 55 hectare site next to Ford in Broadmeadows as Business Park for Ford
Suppliers

Layout

- Product Layout used. Series of specialised tasks which can be adapted

according to the model produced.

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Materials Management
- Materials Requirement Planning (MRP) used which is a computer based system which
calculates the necessary supplies, volumes and specifications required for production.
- Just In Time (JIT) method of Inventory control used for supplies. Ford hold only 3
hours of stock on the lines at any one time. This relies on a very tight supply system where
suppliers must meet Fords JIT requirements on a daily basis.
- B2B (business to business) electronic commerce used where Ford utilises electronic data
interchange for ordering of supplies with all their major suppliers.
- 42 forklift trucks carry pallets of stock to work stations
- Close contact with major suppliers located next to Ford Site in Business Park
Management of Quality
- TQM used to emphasise continuous improvement in all production tasks.
- A customer driven operation in which new models are designed according to market forces
- Staff empowerment is strongly emphasised. Natural Work Groups (NWGs) meet for 30 to
45 minutes once a week to discuss a range of work issues ie. Safety, Quality, Delivery,
Customer needs, Morale, their Environment.
- For specific checks carried out on the vehicle see Ford Fact Sheet (Pre-Delivery
Area)
New Technology
- 120 robots used in assembly ($120 000 installation cost each). These robots are preprogrammed to perform specific tasks ie. welding roof, back panels, header panels to main
body of car. These robots perform 80% of spot welding requirements.
- It takes approximately one minute per station to complete each production task.
Ie. fitting the engine into the car. ( 2 minutes for each test in Quality Control )
- Computer Aided Design (CAD) used in the design of new models. Future models now
being planned for the next 5 years.
- Computer Aided Manufacturing (CAM) used at Ford where computers have assisted in the
design of the assembly process and are used to control the flow and sequencing of
production.
- Flexible Manufacturing Systems (FMS) is utilised where Ford has programmed computers
to instruct robots and other machinery to carry out different production tasks according to
the various models which pass by that work station.
- Bar Code system used to fix faulty cars on the production line. This is identified through
CAM.
- The whole assembly facility at Broadmeadows utilises Computer Integrated
Manaufacturing (CIM) that coordinates the various other technologies mentioned into
one integrated system.

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Case Studies Pcubed has provided me with the confidence that I am only investing in
activities that are aligned with a common strategy and investment is focused exactly where it
is needed... Bradley Yorke-Biggs Aston Martin About Pcubed Services Industries Client
Successes Careers Contact Us Ford Operational Efficiency Improving Operational
Efficiency through Standardized Executive Governance The Client Ford of Europe, with its
headquarters in Cologne, Germany, is the European division of the Ford Motor Company.
Ford Motor Company is an American multinational corporation and the world's third largest
automaker based on worldwide vehicle sales. The Core Quality office manages several
projects and programs of work such as 6-Sigma Deployment (Process Improvement and
Problem Resolution), Global Quality Improvement Process (GQIP), High Time in Service
(HTIS), and the Executive Governance program. The Quality Office is also responsible for
all Quality Training, Quality Strategy and Communication. The Challenge The preparation
for key quality meetings at European and Global level was becoming inefficient and
increasing the risk of inconsistencies in reporting and information flow. Other key challenges
included: Reporting Integrity- The achievement and subsequent reporting of key quality
metrics is essential for the continuous improvement of Ford Quality but confidence in the
integrity, timeliness and accuracy of the reported data were impacting effective decision
making at the Senior Executive level within the company. Efficiency- Many of the existing
processes required duplicated reporting of the same data into several different forums and a
large amount of manual work to produce or collate the data. Accountability- At Senior
Management meetings the decisions made and assignments set were often not accurately
captured and were therefore not adequately communicated, completed and tracked.
Communications- The operations for reporting Quality progress, strategy and objectives was
fragmented with no holistic overview for communicating to the Executive management and
internal quality organization. Scope- The existing reporting of Quality data omitted sections
of the organization that were impacting the key quality metrics used at an Executive
Management level. The Pcubed Solution Identify- The first step was to assess quickly the
current status or health of the existing Executive Governance Program using a Program
Diagnostic tool. This helped to identify the root causes of program concerns by working
collaboratively with the client and their organization to obtain a comprehensive vision of the
challenges facing the program and the capability of the existing organization to meet these
challenges. Define- The results of this diagnostic assessment enabled Pcubed to assess which
of the collection of best practices combined in our Program Delivery Kit would best support
the delivery of the Executive Governance Program objectives. The tools, documents and
process templates for Program Management that could best be applied to treat the client's
key challenges were considered in synergy with those existing processes in the client
organization to define the Delivery solution. Disciplined Delivery- With the Program scope
set and the approach defined, the Process Solutions were implemented to establish a
foundation for long-term sustainable delivery, providing the client's organization with the
ability to more effectively deliver programs and projects and their accompanying business
change required to achieve organizational strategies PMO Setup- A Program Management
Office (PMO) capability was implemented in the client's organization; centralizing the
Pcubed solution with a dedicated resource in the FOE Core Quality office to provide
visibility and insight into critical business programs, enabling effective decisions and
control. This single point of contact for reporting enabled the development of a holistic
outlook across the organization and the development of a hub for a robust network to
minimize reporting duplication, inefficiency or loss of integrity. PMO Delivery- Program
Planning and Control - 3 month Plans and Forecasts were set to increase efficiency of
reporting and minimize the impact of surprises. Program Risk Management and Issue

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Resolution - Active assessment of potential risks to delivery of the Program objectives

ensured effective mitigating actions were planned into delivery activities and enabled fast,
effective resolution of issues where risks were not contained. Program Change Control Changes to the Program operations or processes were tracked, with lessons learned
documented as feedback to set the Global Best Practices for Ford Quality Reporting.
Benefits Management - Regular reviews were held with the Client and key stakeholders to
ensure the Program was achieving the set objectives and doing so within the cost margins set
by the client organization. Stakeholder Management - Operational forums were established
with the key stakeholders to ensure the Program objectives were aligned to the Company's
Strategic aims and to share Best Practices across the Quality Reporting community.
Dependency Management - Early identification of the meetings, reports and departments codependent on reporting the same Quality data enabled the development of a robust network
to ensure all parties were informed, aligned and were reporting accurately - See more at:
http://www.pcubed.com/industries/casestudies/ford-operationalefficiency#sthash.ACSvTXp7.dpuf

Six Sigma Helps Drive Ford Motor Companys Supply Chain Management
By University Alliance
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As one of the worlds leading automobile manufacturers, Ford Motor Company reported
nearly 5.7 million vehicle sales globally in 2011, including a 16.5% market share in the
United States. Helping to drive the company forward is a massive network of suppliers
stretching across the globe.
According to Fords 2011-12 Sustainability Report, its automotive supply chain includes
130,000 types of parts, 4,400 manufacturing sites and 1 million people in more than 60

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countries. The breadth, depth and interconnectedness of the automotive supply chain make
it challenging to effectively manage business and sustainability issues, the company states.
As part of its efforts to create a lean supply chain, Ford utilized Six Sigma processes by
teaming with Penske Logistics to streamline and improve supply chain operations. There
were three main goals to the initiative, according to Penskes website:

Centralize Fords logistics network

Improve supplier and carrier performance
Provide real-time accountability for logistics and finances

Dispatch Centers and Consolidated Shipments

Before Ford partnered with Penske, the automakers 20 assembly plants in North America
each handled its own logistics. That led to unnecessary costs in transportation and materials
handling as suppliers picked up small loads and carried them from plant to plant in underfilled trucks, according to Penske. To counter such inefficiencies, Penske established 10
order dispatch centers (ODCs) to consolidate shipments to plants, later trimming the number
of ODCs to four to compensate for shipping changes.
Under the new system, Penske noted, the majority of trucks are at 95% capacity when they
carry shipments to and from Fords ODCs and plant inventory has been reduced by 15%.
Procedures and Logistics Technologies
As part of the Six Sigma initiatives, new technology was needed to help streamline
performance. Penske said it used its Logistics Management System, an Internet-based metric
reporting system and order tracking software, among other tools. Drivers now carry PDA
scanners and an electronic log to provide real-time updates, and carriers must have satellite
communications. At Fords ODCs, meanwhile, scanners are used to monitor parts delivery.
Penske said it trained more than 1,500 of Fords suppliers on the new rules and technology.
Implementing Accountability
An important facet of supply chain performance is accountability at every level. In order to
cut costs and boost service for Ford, Penske said it bolstered the car manufacturers bidding
process for carriers, introducing higher specifications on safety, technology, equipment,
driver certification and time management. Fifteen-minute pickup and delivery windows were
established to ensure adherence to performance standards. Carriers also must oversee loading
and unloading to make sure orders are filled correctly and to record any freight damage,
Penske noted.
Recognition for Supply Chain Efforts
Penske said its Six Sigma initiatives helped Ford move to a centralized network, leading to a
reduction in inventory, improved shipping and delivery procedures, and cost savings.
Similar efforts to implement a lean supply chain have brought recognition for Ford and
Penske. The companies were honored in May 2012 with the European Award for Logistics
Excellence, which recognized improvements to the auto companys spare-parts supply chain
in Europe.

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In bestowing the award, the European Logistics Association noted that the Ford-Penske
initiative led to a reduction in the number of miles logged by trucks annually, which cut the
emission of harmful greenhouse gases.
Ford continues to place a premium on strengthening and streamlining its supply chain. As
the Dearborn, Michigan-based automaker notes in its Sustainability Report, Ford and its
suppliers must work jointly to deliver great products, have a strong business and make a
better future.
http://www.usanfranonline.com/resources/supply-chain-management/six-sigma-helps-driveford-motor-companys-supply-chain-management/

The Early Days of Ford Motor Company and the Model T

When Henry Ford incorporated the Ford Motor Company in 1903, automobiles were
expensive, custom-made machines purchased as a luxury item by the wealthy. Workers at the
Ford factory in Detroit produced just a few cars a day.
Henry Ford's ambition was to make a motor car for the great
multitude. He wanted to build a high-quality automobile that
would be affordable to everyday people. He believed the way
to do this was to manufacture one model in huge quantities.
Ford and his company ' s engineers designed a car named the
Model T. First offered for sale in 1908, the Model T was
produced like other carsone vehicle at a time. But the
Model T was more sturdy and powerful than other cars. Considered relatively simple to
operate and maintain, the auto offered no factory options, not even a choice of color. The
Model T was also less expensive than most other cars. At an initial price of $950, 10,000
autos were sold the first yearmore than any other model.
Vanadium Steel. Henry Ford searched the world for the best materials he could
find at the cheapest cost. During a car race in Florida , he examined the
wreckage of a French car and noticed that many of its parts were made of a
metal that was lighter but stronger than what was being used in American cars.
No one in the U.S. knew how to make this French steela vanadium alloy. As
part of the preproduction process for the Model T, Ford imported an expert
who helped him build a steel mill. As a result, the only cars in the world to
utilize vanadium steel in the next five years would be French luxury cars and
the Model T.
The Moving Assembly Line
Like parts for other cars of the time, parts for the Model T
were initially purchased made-to-order from other
businesses. Teams of two or three skilled mechanics in the
factory would gather these parts and put them together at a
workstation, using everyday tools. When parts did not fit
together as needed, workers would use files and hammers to
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make them fit.

Have your students take a peek at this process on the following video clip.
Henry Ford realized that a more efficient production process was needed to lower the price
and meet increasing consumer demand for his popular new car. He needed to improve
productivitythe amount of goods and services produced from a given amount of
productive resources. Economists refer to goods and services as output. Henry Ford's output
was the Model T. The productive resources used in productionnatural resources, capital
resources, and human capitalare inputs. Ford's inputs were the steel, workers, and other
resources required to manufacture the car.
Ford looked at other industries and found strategies that he could apply to making the Model
T. Take a look at Interchangeable Parts and the Assembly Line to learn more about two of
the first strategies he adapted.
Using interchangeable parts required making the individual pieces of the car the same every
time. All pieces would fit with all others. Any valve would fit any engine and any engine
would fit any frame. The standardization of parts made it possible to break down assembly
of the Model T into distinct steps. Each worker was trained to do just one step or a very few
steps. Economists refer to this practice as specialization or the division of labor.
Ransom Olds is the first manufacturer to have used interchangeable
parts and the assembly line in the U.S. auto industry. He used these
ideas in the production of the 1901 Curved Dash Oldsmobile, also
referred to as the runabout.
In 1913, the Ford Motor Company established the first moving assembly line ever used for
large-scale manufacturing. On a trip to Chicago, Henry Ford observed meat packers
removing cuts of beef from a carcass as it was passed along by a trolley until nothing was
left. He was inspired to reverse the process for the production of his automobile.
Parts were attached to a moving Model T chassis in order,
from axles at the beginning to bodies at the end of the line.
As vehicles moved past the workers on the line, each
worker would do one task. Some components took longer
to put together and attach than others. Subassemblies were
established for these. For example, each radiator with all its
hose fittings was put together on a separate line feeding
into the main assembly line. The interval between delivery
of the car and its components was carefully timed to
maintain a continuous flow.
Have your students view this video clip to see this moving assembly line in action. (After
clicking on the link, scroll to the bottom of the page and click on "Ford Assembly Line,
1920s," below the car emblems.)
The home for this new production system was the Highland Park Plant near Detroit,
Michigan which Ford opened in 1910. Assembly wound downward in the factory starting on
the fourth floor where body panels were hammered out. On the third floor workers placed
tires on wheels and painted auto bodies. After the assembly was completed on the second
floor, the autos moved down a ramp past the first-floor offices. Test your comprehension of
this lesson in the following activity.
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