For a couple decades now, Ford has enjoyed increasing popularity and market dominance, especially within the U.S. where it made “Quality is Job 1” a household slogan back in the 80s. At that time, the company capitalized on total quality management as it introduced new products in the market, a strategy that helped the company rise to become one of the biggest global brands. Unfortunately, Ford’s position at the top was rather short, due to decreasing levels of customer satisfaction triggered by quality gaffes. According to a 2001 study conducted by J.D Power and Associates, six automakers had substantially improved their quality, subsequently overtaking Ford in overall global ranking.
Ford, of course, didn’t take these developments lightly. To regain former glory, they began overhauling their entire quality processes in 1999. This, of course, was not easy, considering the fact that they had more than 345,000 employees spread across various plants worldwide, who helped the company gain more than $180 billion in annual revenue.
According to the then CEO, Jacques Nasser, the best way to get back to the top is prioritizing customer satisfaction. His sentiments were backed by the company’s vice president of quality, Louise Goeser, who further explained that one and a half points of customer satisfaction translates to one more loyalty point. According to their North American market estimates, that would result in more than $100 million in profit and $2 billion in incremental value.
Employing Six Sigma
Their best bet, according to Phong Vu, Ford’s global truck business quality director, was six sigma. Back in 1999, he was looking for new strategies to speed up quality improvement, so he consulted with Mikel Harry of Six Sigma Academy and benchmarked with a host of companies that were already using the strategy, including GE.
Ford’s top management was more than glad to take up Vu’s suggestions, mostly because six sigma is not only a customer satisfaction tool but also a quality improvement strategy. They went ahead and launched the process in January 2000 through a system they widely refer to as “Consumer-Driven 6-Sigma.” The first phase, according to Nasser, was aimed at addressing customer satisfaction by focusing on the top 25 concerns raised.
To effectually achieve their goals, the process had to be rolled out systematically. They began with the top management group before moving on to the officer group and leadership group, and ultimately spreading it to their plants worldwide. Even the top management, including Nasser, went through a comprehensive training course, followed by staff members who were expected to champion the process: Green Belts, Black Belts, and Master Black Belts. Within the first 18 months, they had purchased a Six Sigma Academy training license worth $6 million and subsequently used it to pass the knowledge on to more than 10,000 employees.
Ford had been selecting projects that met the following conditions:
- Each project should, on average, reduce costs by $250,000.
- Each project should minimize defects by at least 70 percent.
- Each project should improve customer satisfaction.
When projects were identified, Black Belts took up the initiative of using the DMAIC cycle (Define, Measure, Analyze, Improve, and Control), through which they inquired about critical issues, adopted a variety of effective tools, and worked to deliver specific results.
Just like any other major project undertaken by a large corporation, the six sigma process was bound to encounter a few obstacles. In the beginning, for instance, employees were very skeptical about the efficacy of the whole strategy. By being consistent with their implementation, Ford was able to achieve short-term goals and win over the skeptics.
Committing resources, especially employees and funds, had also been a major roadblock for the company. Subjecting more than 10,000 employees, including top management, to weeks of training not only cost them money but also introduced productivity issues.
Since Ford had not implemented the requisite infrastructure to extensively support the six sigma process, they experienced major difficulties in data management. According to Vu, they had to rely on their Black Belts to communicate database needs, consequently facilitating smooth data sharing.
After buying a $6 million training license and investing heavily in software, hardware and time, the results Ford generated from 2000 to 2001 were impressive. In the first year alone, the six sigma process added $52 million to the bottom line. With 1,000 projects completed and 3,000 others awaiting completion, Ford had made tremendous achievements by the second year of six sigma. They had recorded a two point increase in customer satisfaction and $300 million in contributions from closed projects.
Ford’s experience with six sigma is proof that even large companies can be flexible enough to effectually execute a major restructuring project to improve customer approaches and boost product quality.
For additional help or information on using Six Sigma or other QMS software, don’t hesitate to get in touch with QAD CEBOS through firstname.lastname@example.org or (810) 534-2222.