Product Recalls by Ford Motor Company - Essay Example

? Reducing the Amount of Product Recalls by Ford Motor Company Reducing the Amount of Product Recalls by Ford Motor Company The current problem facing Ford Motor Company is the increased number of product recalls. Ford is currently recalling 139,917 Escape SUVs in the United States (Jensen, 2013). The main reason for this recall is to fix engine defects that could result in infernos under the hood. It is reported that this is the seventh recall in the year 2013 Escape since it debuted in mid 2012, and the fifth recall involving perilous problems with the company’s 1.6-liter EcoBoost 4-cylinder engine (Jensen, 2013). The company has been forced to recall the cars because part of the engine cylinder overheats and cracks due to stress. This causes oil leakages onto the exposed, hot engine parts and causes fires. National Highway Traffic Safety Administration has reported at least thirteen engines Ford engine fires in the United States and one in Canada caused by cracked cylinder heads. Approximately 11,500 cars that were recalled in July 2012 were splitting and leaking gasoline due to fault fuel lines (Jensen, 2013). In 2013, Ford had recalled almost all Escape models for carpet padding, which interfered with the use of the brake pedal. Other reasons for increased recalls by Ford include fixing engine plugs leak and fixing child locks. The Supply Chain Management tools that can be applied to the problem include sigma-sigma, lean manufacturing, and assembly line balancing. The company expects to reduce the number of car recalls by 87% after applying the three management tools. Keywords: Ford Motor Company, cars, Six-Sigma, defective Background Information The Ford Company recalls problem was retrieved from a business articles. The author of the article was Christopher Jensen. The article is entitled Ford Discloses Two New Recalls for the 2013 Escape and was published on November 27, 2013 by the New York Times news agency. Ford Motor Company is an American International automaker with headquarters in Dearborn, Michigan (Flory, 2013). The company manufactures and sells commercial vehicles under the Ford brand name and luxurious cars under the Lincoln brand. Ford invented strategies for large-scale manufacturing of cars and management of an industrial workforce using elaborately engineered manufacturing sequences characterized by assembly lines. The company’s net income as at the end of December 12, 2012 was US$ 5,665,000 (Flory, 2013). According to Flory (2013), Ford Motor Company is the second-largest automaker in the United States, and the fifth worldwide based on the 2012 vehicle sales. Currently, Ford has more than 90 plants and 213,000 employees. Problem Description The primary problem of Ford Motor Company is how to improve assembly processes in order to reduce the number of car recalls. Car recalls occur because the company manufactures and assembles cars with several defects such as oil leakages, defective braking systems, and unfixed special locks, leading to repeats and repairs. Repeat manufacturing and repairs causes companies to incur additional manufacturing costs, which reduce the company’s profits and increase the losses (Hull, 2011). Additionally, increasing car recalls is scaring away both current and prospective customers, leading to widespread market reduction. The company needs to adopt proper manufacturing, operation and management tools/concepts in order to achieve zero defects and reduce the amount of reworks. Operations and Supply Chain Management Concepts/tools to be used1.5 Six-sigma Six-Sigma is a set of tools and techniques for operations and process improvement; it seeks to improve the quality of the processes by using a set of quality management methods such as statistical methods to create special infrastructure of people within the organization (Desai, 2010). Manufacturing companies that need to improve manufacturing processes and achieve zero defects apply Six-Sigma quality tools. Hull (2011) argues that using six-Sigma methodologies such as DMAIC, Visual Management tools and Cause-and-Effect Diagrams enhances profitability, productivity, and continuous improvement of the processes. Six-Sigma achieves these objectives by striving to meet specifications of products and reduce variability in assembly processes. In the process, capabilities and customer specifications are meet; this guarantees customer efficiency and cost effectiveness. Six-Sigma processes require 99.9999998% of the products manufactured to be statistically free of defects (Desai, 2011). Lean Manufacturing Lean manufacturing is the production practice that considers the cost of resources for any goal in addition to creation of value for consumers and waste elimination (Hull, 2011). The lean manufacturing philosophy is based on preserving customer value with the least possible work. Lean manufacturing implementers concentrate on getting the right products to the right market in the right time and quantity with the objective of achieving perfect workflow. The philosophy recognizes that waste, repeats and repairs are sources of waste that needs to be eliminated at all costs. Thus, waste minimization, flexibility, and dedication to change for the better constitute additional points of focus for lean manufacturing (Hull, 2011). Lean manufacturing aims at making work simple enough to understand, operate, and manage. Assembly Line Balancing Assembly line balancing deals with the allocation of tasks among various workstations in order to optimize a given objective function (Bragg, 2010). Assembly lines consist of tasks whose interchangeable parts can be added to the product in a sequential manner to produce a finished product. Assembly lines allow the assembly of complex products by workers with limited training and experience. The model of assembly line balancing allocates tasks to ensure the precedence relations are not violated and a particular objective function is optimized. Since the amount of work assigned to each operator is almost equal, chances of overworking and overburdening are reduced; overworking and overburdening are the greatest contributor of defectiveness (Hull, 2011). Application of Operations and Supply Chain Management Concepts/tools1.5 Six-sigma Ford Motor Company should emphasize on strong and passionate management leadership and support (Desai, 2010). Hull (2011) contends that proper leadership styles provide all the organizational publics with an opportunity to contribute towards the process of assembly in order to improve results. If Ford Company operates with Six-Sigma quality in the short-term are guaranteed to produce long-term 3.4 DPMO (defect levels that are below 3.4 defects per million opportunities) (Desai, 2010). Six-Sigma can be applied using the two methodologies: DMAIC and DMADV. DMAIC stands for defining, measuring, analyzing, investigating, and controlling. Using the DMAIC six-Sigma methodology, Ford Company should clearly define customer requirements, project goals, and specific processes as illustrated in appendix 3. Measurement of the key aspects and collecting relevant data is critical since it will enable the company to identify vital requirements for motor assembly (Desai, 2010). The company should use the available data and investigate cause-and-effect relationships; this will enable operation managers to identify the causes of defects. Using the available data from analyzing, the company should initiate measures improvement on the current processes and controlling future state processes in order to reduce the number of defective cars. The DMADV project methodology features five phases. These include defining design goals, measuring, and identifying the desired product quality, analyzing to develop alternative designs, designing an improved alternative, verifying, and piloting the designs (Desai, 2010). The most critical phases of DMADV that Ford Company should focus on its projects include verifying and piloting of the cars before releasing them to the market. These phases will enable the company to identify major defects before releasing their cars to the market. Six-Sigma promises to ensure that 99.9999998 percent of the productive are typified by zero defects (Desai, 2010). This implies that if the company manufactures 10,000 cars, the number of defective and effective cars be arrived as follows: Total number of cars=10,000 Percentage of effective cars=99.9999998% Number of zero defective cars=99.9999998/100X10,000=9,999.99998 Therefore, number of defective cars=10,000-9,999.9998=0.00002. The number of cars is just insignificant, implying zero defects. Assuming that Ford Motor Company had applied the Sigma-Sigma previously, the company would have zero defective cars amounting to 139,917x99.99998 percentage=139916.9972 cars. The number of defective cars would be 139,917-139916.9972 =0.00028, which is insignificant. The table below illustrates the long-term benefits of applying Six-Sigma quality tools Sigma level Sigma (with 1.5? shift) DPMO Proportion defective (%) Proportion yield (%) Short-term Cpk Long-term Cpk 1 -0.50 691,461 69.0 31.0 0.330 –0.170 2 0.50 308,537 31.0 69.0 0.670 0.170 3 1.50 66,806 6.70 93.30 1.000 0.50 4 2.50 6,211 0.620 99.380 1.330 0.830 5 3.50 234 0.0230 99.9770 1.670 1.170 6 4.50 3.40 0.000340 99.999660 2.000 1.50 7 5.50 0.018 0.00000190 99.99999810 2.330 1.830 (Source: Desai, 2010) Analysis of the Expected Results150 Implementation of Six-Sigma tools will enable the Ford Motor Company to avoid the costs associated with reworks and repairs. When cars are recalled, the company makes huge refunds to the owners of the cars. Apart from refunds, the company embarks on investing huge resources in rebuilding the cars, changing the engine systems, and remarketing. Additionally, failure to recall all the products in time may attract huge legal fines (Bapuji, 2011). The greatest costs that the company incurs include recovering the image of the company through extensive campaigns to inform the public that the company has improved the defect cars and made quality new cars. Through proper observation of the Six-Sigma tools, Ford will reduce the production expenses by more than 5o percent. Currently, the Ford cars demand has reduced by 30 percent (Flory, 2013). The company will recover the sales if it improves the quality through close of observance of the operation and tools of total quality management. Conclusion Product recalls is expensive businesses due to time and money spent on reworks, repairs and remarketing (Bapuji, 2011). Ford motor company need to apply operational tools in order to reduce the quantity of car recalls. The best manufacturing concepts applicable to Ford Motors include Six-Sigma quality, lean manufacturing, and assembly line balancing. Application of Sigma tools will enable the company achieve zero defects and increase productivity, profitability and efficiency. References Bapuji, H. (2011). Not just China: The rise of recalls in the age of global business. Basingstoke: Palgrave Macmillan. Bragg, S. M. (2010). Cost reduction analysis: Tools and strategies. Hoboken, N.J: Wiley Desai, D. K. (2010). Six sigma. Mumbai [India: Himalaya Pub. House. Flory, J. K. (2013). American cars, 1973-1980: Every model, year by year. Jefferson, N.C: McFarland & Company. Hull, B. (2011). Manufacturing best practices: Optimizing productivity and product quality. Hoboken, N.J: John Wiley & Sons. Jensen, C. (2013, November 26). Ford Discloses Two New Recalls for the 2013. The New York Times. Retrieved from (http://www.nytimes.com/2013/11/27/automobiles/ford-issues-2-more-recalls-for-the-2013-escape.html?ref=fordmotorcompany&_r=0) Appendices Appendix 1 The Normal Distribution Curve that Underlies the Assumptions of Six-Sigma (Source: Desai, 2010) Appendix 2 X-bar chart for quality characteristics (Source: Desai, 2010) Appendix 3 Six-Sigma DMAIC Integration Model Source: (http://www.sixsigmainstitute.com/images/lean%20six%20sigma%20yield%20matrix.png) Read More