Six Sigma Case Study

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Ford is one of the leading automotive manufacturers in the world, in total FOMOCO (Ford Motor Company) sold nearly 5.7 million vehicles globally in 2011, which includes a 16.5% market share in the United States of America. Using the help of an extensive network of suppliers around the world.

In Ford’s 2011-2012 Sustainability Report, it is stated that their automotive supply chain uses 130,000 kinds of parts, 4,400 manufacturing facilities and employs 1 million people in over 60 countries around the globe. The company states, “The breadth, depth and interconnectedness of the automotive supply chain make it challenging to effectively manage business and sustainability issues,”

Ford utilizes the Six Sigma approach “Six Sigma at many organizations simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving toward six standard deviations between the mean and the nearest specification limit) in any process – from manufacturing to transactional and from product to service.” (ISIXSIGMA, 2008) by teaming up with Penske Logistics to create a leaner supply chain. According to Penske’s there were three main goals to the initiative.
• Ford’s logistics network must be centralized
• Improvement of supplier and carrier performance
• Accountability for logistics and finances must be provided in real-time
(Ford to revamps supply chain, 2005)

Consolidated Shipments and Dispatch Centers

Prior to Ford partnering with Penske, all of the automotive companies 20 plants in the United States handled their own logistics. This caused unnecessary costs in the transportation and material-handling sector of the company due to the fact that suppliers...

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...a result Ford is now working collaboratively and more closely with a smaller number of global strategic partners. As of today the automaker has 102 such suppliers – of which, 76 are production companies and 26 are non-production.

The introduction of ABF program has helped Ford create much more commonality between component parts across the globe and two-sided agreements to create competitive cost structures. Around 80% of the parts found in the current generation Ford Focus are common around the world and 75% of the suppliers remain the same no matter where the production location is. Also some 75% of the parts have been pre-sourced, meaning it was not part of a bid process. This has contributed to reducing the emphasis on cost reduction. Overall transparency in product and manufacturing planning and the forecasting area has been achieved to a much greater extent.

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