OPERATION MANAGEMENT (MBA 231)
CIA 3A
TOPIC
LEAN OPERATIONS TECHNIQUES IN FORD
AUTOMOBILE INDUSTRY
SUBMITTED TO:
Dr Shreekant Deshpande
SUBMITTED BY:
K. Harish – 2027729
MBA PROGRAMME
SCHOOL OF BUSINESS AND MANAGEMENT
CHRIST (DEEMED TO BE UNIVERSITY), BANGALORE
INTRODUCTION:
Any organization's survival depends upon the competitive edge. While Lean is one of the most
effective methodologies for improving efficiency, nearly two-thirds of the Lean implementations
result in failures, and sustainable outcomes are obtained by fewer than one-fifth of those adopted.
The identification, understanding, and implementation of vital Lean techniques such as quality
circle, Just-in-time purchasing, Kanban, etc., are some of the most critical top management tasks.
To build clusters of inter-related and internally coherent Lean principles, the word 'bundle' is
used. Based on reviewed literature and the opinion of the experts, eight important Lean practice
packages were established. The order of execution of packages of Lean practice is essential. The
interrelationship of these practice packages must be able to understand Lean practitioners. This
report aims to develop an interpretive structural modeling approach, a framework for sustainable
Lean implementation.
Lean is an improved version of just-in-time in specific ways (JIT). They use the same attitude to
transformation for all practical purposes. All focus on bringing value to the process and reducing
process redundancy (Na'slund 2008). Both methods are also embedded in the Toyota production
method (TPS) (Na ́slund 2008; Petersen 2002; Vokurka and Davis 1996; Womack and Jones
1994). The center of the Toyota production system is a manufacturing scheme known as JIT
(TPS). The principle of TPS JIT (or Lean Production Theory as it is now called) is based on a
pull-type production method, where only the necessary parts are present (plus a limited number
of additional units approaching for the work in progress) (Matsubara and Pourmohammadi
2009).
In recent decades, intense competitiveness, cost-effective commodity demand, demand for
qualitative on time-in complete fulfillment at the right spot, marketing, economic challenges,
etc., have driven many companies to follow JIT/Lean principles. Around 150 companies in the
automotive sector are currently using Lean Manufacturing in India, but other fields are yet to be
penetrated (Mehta et al., 2012). In India, JIT-based systems have been introduced, and their
product quality improved by companies such as Maruti Udyog Limited (MUL), Eicher, Escorts,
Telco, Ford, Tisco, TVS, etc. (Singh and Garg 2011).
FORD PRODUCTION SYSTEM
Ford launched the Ford 2000 initiative to develop and implement a new development system
called the Ford Production System (FPS). Ford introduced a new Ford Production Framework
initiative called The Ford Production System (Ford 2000) (FPS). The FPS vision is a lean,
flexible and disciplined common manufacturing technique, defined by a system of methods and
processes, engaging efficient and driven groups of people, learning and working together safely,
in the production and distribution of goods that consistently exceed the expectations of
customers in terms of cost quality and time.
FPS will provide a more aligned and capable company through policy deployment, visual
management, process confirmation, time, and data management. It will continuously develop and
potentially create a stronger development atmosphere in the future.
For all production operations, the FPS Continuous Improvement Model is the base. It is a tenstep method aimed at continuously developing systems by standardizing and understanding
them. The model tries to identify input stability, normalize procedures, and check for output
improvements (if necessary).
(Source:Google)
The ten FPS Model Processes for Continuous Development are:

Continual Commission of Change

Confirmation of Startup

Process of results

Process of Support

Time and Management of Data

Basic administration

Kaizen

Work Standardize

Star Points
(Source:Google)
JUST-IN-TIME (JIT):
By strategically planning information to arrive where necessary at the right time, the Just-inTime (JIT) approach attempts to minimize costs and improve workflow. Consequently, inventory
costs can be significantly reduced and the usage of space can be preserved. This approach can, in
some cases, contribute to improved quality of product.
A method popularised by the Japanese industry's efficiency that aims to minimize costs and
boost workflows by arranging supplies to arrive "just in time" at a workstation or facility to be
used (Schermerhorn, 1996, p. G5).
This strategy will reduce product carrying costs, optimize room usage and, in some situations,
increase the efficiency of the performance. One author (and a noted operations management
consultant) claims that "the JIT approach may be the most significant productivity enhancing
innovation in management since the turn of the century" (Schonberger, 1982, p. 24). Although
the praise of JIT by Schonberger may be a little extravagant, there is common consensus that JIT
is a valuable approach to production management.
Another value of this method is that it is easy to achieve buying and production on a small scale
and no sooner than required. Extra vigilance, however, is needed since the arrival of material
must be precise and constantly fine-tuned without the use of backup inventories. In addition, the
material must be of usable consistency and, in the manufacturing process, employees must use
this material appropriately. Schermerhorn suggests that for the JIT development method to
function successfully, a wide variety of special support is needed.
Essential criteria include the following:


High quality supplies;
Supplier network which is manageable;



Geographic focus (short transit times for plants that sell flora to consumer plants);
Effective management of shipping and materials;
Strong commitment to management (Schermerhorn, 1996, p. 481).
KANBAN:
Kanban is a method of inventory management which is used in just-in-time processing. It was
designed by Taiichi Ohno, Toyota's industrial engineer, and takes its name from the coloured
cards that monitor production and order new parts or material shipments when they run out.
In manufacturing, Kanban is an inventory organisation structure that uses visual signs to transfer
inventory across different phases of the production process. Kanban is a device of "pull,"
meaning that it refers to demand rather than anticipating it. Only when old inventory is "pulled"
out of storage is more inventories produced.
FORD'S INNOVATIONS FOR LEAN AND SIX SIGMA TECHNIQUES.
Here are several fields where Ford set the baseline for the upcoming Lean and Six Sigma
techniques.
Standardization: The production process of Ford did not allow for variation or deviation from
professional standards. When Ford knew the right way to do it, the employee who assembled the
car's bumper did so the same way, every day.
High Wages: The bumper-assembly employee and everyone else have got decent pay. Ford
paid his staff well because his methods resulted in significant profits, quadrupling their wages for
20 years.
Wasted Movement: Ford once wrote that farmers were spending 95% of their time on
unproductive operations. He regretted that it was done by hand and that "rarely is a thought given
to logical arrangement." Ford gave the logical arrangement of several thoughts. His factories
were built so that workers could accomplish their assigned tasks with the fewest steps and
movements.
Wasted Materials: The manufacture of cars results in discarded materials. For specific items
that did not go into his vehicles, Ford sought uses.
Welding: Instead of making substantial cast parts that involved machine shaving, Ford welded
smaller pieces together into a whole.
Just-in-Time Manufacturing: Ford understood the value of not producing large amounts of
inventory and handled his supply chain to provide enough supplies on hand to manufacture his
cars depending on demand.
Customer service: Ford smoothed out the distribution service and other places that served the
customer so that cars regularly arrived on time as planned for the customer.
SOME OF THE LIMITATIONS:

Although Ford developed approaches that contributed to Lean methodologies, the variety
was the one field he did not plan for. While groundbreaking, his processes did not allow
for the kinds of variations that modern organizations need.

In short, he was good at designing a Model T. But there were problems where people
needed anything more than a Model T.

The Toyota Production System (TPS) did, however, take Ford's process a step further.
Ohno and other business managers drew on the ideas of Ford and made improvements to
the production process that required further workflow differences without causing
untenable inefficiencies.

Many of that included technological improvements, development in the workflow, and
collaboration between various process teams in the way computers worked.

But, in short, they found a way to make high-quality, low-cost goods that satisfied the
customer's changing desires.
EMERGING TRENDS OF LEAN MANUFACTURING:
For years, the idea of lean manufacturing has been there. The aim is to reduce waste to make it
more effective. To increase efficiency simultaneously, Lean Six Sigma merges lean
manufacturing principles with Six Sigma methods, another conventional approach for process
improvement. But technology and the transformation of business models are changing
manufacturing, pushing individuals to keep up with the industry.
Five emerging trends of lean manufacturing to understand how it is relevant today.
1. Lean Labor:
Manufacturers face thin profit margins and intense demand. This makes it vital to maximize
labor capital and align them with the most significant corporate goals and priorities. And
through' lean labor,' they will do it. To plan the right mix of people and skills for each shift,
companies use scheduling applications. While minimizing labor costs, this increases gross
production. It decreases the need for overtime costs, in particular, thus improving productivity.
The concentrate on the value stream complements this; this brings all facets of the enterprise
with calculation techniques and aims to reduce waste while dedicating individuals to the things
that matter.
2. Green Manufacturing:
If it's resource waste or idle time, Lean already has the aim of eliminating waste. This makes lean
processing a natural fit for green production. Lean manufacturing introduces a systemic and
continuous approach to minimize waste in all ways, balancing this aim against market goals like
a benefit. Lean manufacturing supports changes that both eliminate overproduction, surplus
inventory and rework.
3. 3-D Printing:
A natural fit for lean manufacturing is 3-D printing. While 3-D printing isn't anything modern, it
gets attention because of how much time, labor, and money it can save everybody. 3-D printing
benefits include easier prototyping, shorter lead times, customized goods that are inexpensive
and quickly produced, better accuracy and performance. Locally-made goods reduce shipping
risks and possible distribution delays. 3-D printing will allow companies to tap into new
opportunities for consumers at reasonably low costs.
4. The Internet of Things:
Internet of Things (IoT) applies to all the machines around us, including the machinery on the
factory floor and sensors around the manufacturing facility, the integrated network. By the year
2020, the IoT is expected to be a $50 billion market. Researchers at Georgia Tech claim it will
become a nineteen trillion dollar economy, one of the leading industries being manufacturing.
The internet of things could allow increased productivity and efficiency while tighter integrating
the supply chain. Deeper integration with vendors means that corporations will understand that
right now, the parts they purchased are literally under review.
It improves protection and lowers downtime. Real-time information makes it easier to refine
processes more rapidly. Businesses gain much greater process management, much quicker
learning about faults and out-of-spec techniques. Lean custom output can be made possible by
the IoT.
5. The Expansion Outside of Manufacturing:
Lean principles in engineering are also being implemented in several different industries. In
hospitals, IT, retail, and the public sector, lean manufacturing principles are being implemented.
Anywhere and everywhere, it is applied because the concepts are genuinely universal. This is
because "lean" is now used as a management framework.
Lean manufacturing is a perfect addition to several market priorities. A host of emerging
technologies serve only to improve their speed, efficiency, and effectiveness.
ORGANISATIONAL CHALLENGES:
It is challenging to incorporate a lean manufacturing method. On the organizational and enabling
system side, there are many obstacles to it, and, still, now, they contribute to a variety of
conflicts, uncertainty, and controversies. Difficulties are similarly significant even in
organizations beginning the lean deployment process (Landmann et al., 2009). Based on the
research of Dal Forno (2014) and Jagdish et al. (2014), limiting theories were formed about the
barriers and problems associated with the implementation of Lean Manufacturing, which will be
tested for relevance in its context by the research described below. It is not an easy feat to
implement Lean Production, and there are many issues, and problems identified the challenges
faced by businesses during implementation. In terms of understanding and applying the theory in
their operations, about 10 percent or fewer firms attempting to adopt Lean Manufacturing
practices are successful.
Also, an informal study of lean manufacturing companies found that only 30 percent of them
have succeeded in transforming the production climate, and 70 percent have gone through drastic
experiences that make them abandoning the ideology and returning to their previous market
practices (Portioli-Staudacher et Tantardini, 2012).
Organizations need to include people at all corporate ranks, including top/senior leadership,
intermediate level, and institutional level, to adopt the Lean Manufacturing concept (Dal Forno
et al. 2014). It is also necessary for top/senior managers to function based on a set of strategic
directives and priorities that can help achieve the current lean framework. Staff needs to be
mindful of the directions and improvements to be introduced, enabling all players to embrace
and sustain the process (Portioli-Staudacher et Tantardini, 2012).
LIMITING HYPOTHESES: The key challenges and issues associated with Lean
Manufacturing's application revolve around the following topics: Top/senior management
resistance, lack of support for middle management, lack of involvement of top/senior
management, lack of communication between management and employees, lack of employee
empowerment, operational resistance to implementation, lack of perseverance, absence of
qualified consultants and coaches, challenge using the device, absence of manager and employee
qualifications, cultural differences
MANAGERIAL IMPLICATIONS:
The operations management (OM) of Ford Motor Corporation was reformed along with massive
organizational changes. Under CEO Alan Mulally's One Ford strategy, Ford's operations
management became more successful in approaching the ten strategic decision areas. As one of
the leading companies in the global automotive industry, Ford maintains operational
management strategies that deal with several competitive situations dependent on diverse market
contexts. As such, Ford must ensure flexibility and quality in its global organization in the ten
strategic managerial implications of operations management.
Design of Goods and Services: Ford's objective is to achieve global continuity in operations
management in this strategic decision field. The One Ford mission requires such continuity in
products and services. This situation adds to the financial performance of Ford and its capacity to
maximize the loyalty of customers.
Quality Management: Satisfaction with quality requirements is the primary challenge in this
strategic judgment field of operations management. Ford Motor Company does so by standard
practices of quality assurance. To ensure consistency, the company also performs random batch
checks on its products. Quality measurement often requires details that Ford obtains by market
analysis to determine the quality requirements of consumers.
Process and Capacity Design: This operations strategy strategic decision area advances
manufacturing priorities. The assembly line approach was invented by Ford, which optimizes
output power. Also, by building new facilities for its manufacturing network and supply chain,
Ford strengthens its capacity.
Location Strategy: In this strategic operations management decision area, Ford Motor Company
aims to ensure its facility locations' strategic advantages. Regional manufacturing plants, such as
the Ford factories in Germany, are involved in its strategy. Dealership positions, on the other
hand, are based on market size.
Layout Design and Strategy:
The goal is to maximize workflows and resources in this
strategic decision area of operations management. Ford serves this goal by integrating
manufacturing systems, such as through the use of robotics in manufacturing plants.
Job Design and Human Resources: In this strategic decision field of operations management,
Ford can optimize human capital productivity and effectiveness. To promote HR ability and
employee retention, Ford has a variety of initiatives. In its policies, the business maintains
quality improvement and staff development.
Supply Chain Management:
This operations management strategic decision area is
concentrated on streamlining and cost-effectiveness.in the supply chain. The supply chain for
Ford is global and includes manufacturing facilities operated by the company and third parties.
The company-owned facilities, such.as those in Michigan's Ford River Rouge Complex, result
from Ford's policy of backward vertical integration. Ford is empowered by this policy to monitor
the availability of some of the products needed to manufacture its cars.
Inventory Management: Ford's inventory management supports just-in-time processing
strategies that include constant tracking to change the inventory and optimize its costs. However,
Ford's real asset control performance often leads to market-based inventory decisions in this
strategic decision area of operations management. There are different problems in various
industries, so Ford has different inventory management strategies in other markets.
Scheduling: The short-term and intermediate schedules of processes and services are
considered.in operations management's strategic decision field. Via automatic scheduling in its
manufacturing.plants, and semi-automated scheduling in its departments, such as.corporate
offices and.branch offices, Ford solves these issues.
Maintenance: This operations management.strategic decision region's objective is to retain
good business processes to accommodate demand. By integrating techniques for HR, IT,
manufacturing, and other sectors and repair teams for facilities and other properties, Ford tackles
this purpose.
PRODUCTIVITY.AT.FORD MOTOR.COMPANY:
Ford.Motor Company's operations management.addresses efficiency targets.for the.ten
strategic.decision areas. A wide range of efficiency steps are used as the organization has
numerous processes and goods. Any of the requirements for productivity for Ford are as follows:

Amount of service workers a day done (aftersales service productivity)

Number of rolled out vehicles every day (manufacturing productivity)

Number of processed applications every day (Ford Motor Credit Company productivity)
CONCLUSION:
Just in Time's evolution into "lean operations."
The JIT concept has developed from a manufacturing-focused management approach to
various management concepts applied to any organization. "Lean operations" is the concept
that, especially in service environments, is replacing JIT. 'Lean operations' captures the actual
significance and influence of how a culture focused on quality growth and promoting valueadded activities overall learning to the marketplace's strategic benefit. For any organization,
lean operations is a management strategy to achieve higher efficiency, higher productivity,
enhanced level of execution, greater flexibility to evolving markets, and increased customer
satisfaction.
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