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Current Practices Carried Out By The Company Ford Motor.

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Questions:

1.Identify three important Operation Management (OM) decision areas.

2.Evaluate the Strengths and Weakness of the Company in such a way to show how both can be Synergistically Exploited to Improve the Performance.
 
 

Answers:

1.Introduction

Ford Motor Company was founded in the year 1903 by Henry Ford. It is an American automaker company and considered as fifth largest company all over the world. It deals in the manufacturing of trucks, passenger cars and tractors along with different automobile accessories. In the year 1913, the company has introduced first moving assembly line for cars. Company adopts changes in its business process, procedures and policies as the changes occurred in the business environment. This has facilitated in gaining competitive advantage over other players in the market (Ford.2017).

Total Quality Management at Ford

The company has introduced the concept of Total Quality Management (TQM) at the time when the automobile industry in America is threatened by the invasion of Japanese imports. After incurring losses for three consecutive years from 1979-1982, the company becomes profitable in the year 1986. The company always tries to provide high quality products and services to its customers at reasonable cost in order to attain high level of customer satisfaction. The company makes investment in research and development for the purpose of including new features in its products in order to meet the unmet demands of its customers. At every stage of production, inspection of the product is carried out for the purpose of gaining knowledge that the standard quality of the product is maintained at every stage of production (Oakland, 2014).

After the review of the product in terms of quality, the product is offered to the customers at reasonable prices. The company emphasizes on continuous improvement concept which deals with the fact that improvement has been carried out in a continuous manner in its business operations for the purpose of attaining high level of customer satisfaction. There is an occurrence of changes taking place in the customers’ demands and preferences in a rapid manner due to which the company takes feedback from its customers related to the services and products offered by the company. This helps in gaining information related to the changes that are taking place in customer preferences. This results in bringing required changes in the products and services in order to meet their demands (Oakland, 2003).

 


The company also handles customer objections in an effective manner which helps in gaining high level of customer satisfaction. The company has adopted six sigma concept which helps in finding variations in the overall performance of the company and adopt measures that helps in improving the performance of the company. In order to improve the quality produced by the company, there is an organization of different training sessions and establishment of benchmarks which facilitates in finding the deviation in the actual performance from the benchmark. This helps in improving the performance of the organization (O'Brien, 2012).

The company provides training on one to one basis which helps in upgrading the existing skill set by solving the problems faced by employees while performing different tasks at the organization level. The company measure quality at all aspects of the organization and uses three quality index system for measuring the quality in the organization namely quality leadership initiative, quality operating system and consumer driven six sigma. The company has improved the features of its products by receiving feedback from the customers. Six Sigma helps in measuring the current or actual performance of its products and as per the feedback gained from the customers bring improvement in its features for the purpose of gaining high level of customer satisfaction. The company focuses on building strong relations with its suppliers and reduces the cost by eliminating defects in its products and services (Bohlander and Snell, 2010).

Inventory Management at Ford

For managing the inventory, Ford has adopted a mixture of just in time concept and economic order quantity. The company has made strong relations with the suppliers by working closely with them. It has reduced the level of inventory by adoption of vertical integration for the purpose of purchasing different materials such as mines and smelting operations to develop a finished product. This helps in reducing the inventory and increasing the turnover of the company. Just in time approach facilitates in providing relevant information to all the parties involved in the supply chain related to the number of units of the material required to produce the product (Collins, 2013).

 


Communication of such type of information helps the company as well as its suppliers to deliver right amount of product at a given time. This approach facilitates in reducing the idle inventory by building close working relationship with the parties involved in the supply chain. By the use of economic order quantity model, the company is able to determine the optimum quantity of products that are needed to produce finished product by minimizing the production cost. The management is able to reduce the inventory cost by establishing a minimum amount of product required to produce the finished product. It concerns with the time required to generate, manufacture, ship and organize the product and put in the inventory at the dealers point for the purpose of selling (Fabozzi and Peterson, 2003).

The dealers or suppliers of Ford work closely with the company in order to maintain lowest possible inventories and have sufficient quantity of finished product to meet the demands of customers. In addition to this, the company also access the information related to the inventory levels maintained by its dealers in order to ensure that the company has carrying right amount of inventory in stock to satisfy the needs of its customers (Brigham and Daves, 2012).

The performance can be improved by tracking the changes taking place in the customer demands and make adjustments in the inventory levels in the company. It is required by the company to provide opportunity to a customer to place an order online and integrate all the operations of the business with each other so that the members involved in the supply chain have a knowledge of the inventory which results in providing right amount of products to customers at the right time (Muckstadt. and Sapra, 2010).

Process Design at Ford

The production system at Ford is continuously improving and encompasses a set of principles and processes to create a lean manufacturing environment. The production system of Ford is effective and efficient as it emphasizes on elimination of wastes and defects, and effective work groups that aligned with the global capacity with global market demand and optimizing the production capacity by reducing the total cost and improving the performance of the company. There is a use of different tools and techniques for the purpose of measuring the performance of different manufacturing locations such as SQDCPME Scorecard which emphasizes on the important elements of sustainable business such as safety, quality, delivery, cost, people, maintenance and environment (Brigham and Ehrhardt, 2013).

There is an occurrence of regular review of the scorecard in order to review of the performance of managers and employees in the manufacturing locations. The manufacturing process is integrated with the product development that results in a consistent and reliable process through the implementation of different requirements. The performance can be improved at the manufacturing process by reviewing the quality of the product is maintained at each stage of assembly line. This result in reducing the time required to produce standard quality products at different assembly lines (Wood and Wood, 2003).

The integration of the processes with one another results in enhancing the productivity of the company and thereby increase in its sales and profits. In addition to this, regular meetings are organized in which employees can share their experiences with one another which help in solving the problems faced by them at different stages. This helps in increasing the commitment level of the employees towards the organization (Cogliandro, 2007).

 

2.Strengths and Weaknesses of Ford

The company is considered as the fifth largest automaker company in the world due to which customers are attracted towards the products offered by the company. This has also resulted in making strong brand image among its customers. The main reason behind it is that the company focuses on providing innovative features in the product with high quality at reasonable prices. This has resulted in increasing the loyalty level of the customers towards the company. The company also has a global supply chain that emphasizes on producing standard product at different manufacturing locations that helps in increasing the sales and profits of the company (Smith, 2001).

The company works closely with its suppliers in order to maintain the standard quality of the product at different places. This provides an opportunity for expansion of the business in terms of improved marketing and dealerships through the use of penetration strategy. The company has reduced its costs by adoption of different practices that are considered environment friendly and results in optimum utilization of the resources (Sullivan and Manoogian, 2009).

The company make investments in research and development for the purpose of bring innovative features in its products that attracts large number of customers and thereby results in an increase in the sales and profits of the company. In comparison to competitors such as Toyota, the company incurs high costs in the production of automobiles. Besides this, it has limited production facilities for producing the automobiles in comparison to its competitors (Betz, 2003).

The company has closed down some of its production facilities which resulted in reduced network of production facilities. Ford bring innovation in its products at slower pace as compared to its competitors due to which there is a huge threat from the other players in the market in terms of market share. It is essential for the company to bring innovative features in its products through first mover advantage which helps in providing the innovative products at high prices which customers are ready to pay as it results in achieving high level of customer satisfaction (Bhise, 2016).

It is required by the company to reduce its overall cost of production by maintaining a standard quality which helps in increasing the production capacity of the company. The company also manages its inventory levels in an effective manner which improves the overall efficiency and effectiveness of the employees in the organization (Slack, Chambers, Johnston and Betts, 2009). It is essential for the company to create a communication platform through which employees can share their views and opinions with one another in order to resolving the problems faced by them in order to take quick decisions. This helps in delivering of the right product at right place in a right quantity (Dieter, et al. 2003).

The integration of the processes and departments facilitates in providing accurate and relevant information to the employees at right time in order to meet the changing needs of the customers in an effective manner.  In addition to this, receipt of feedback from customers helps in tracking the changes taking place in their demands and needs and brings innovation in the products in order to meet the unmet needs of the customers in an effective manner. This helps in improving the overall performance of the company (Sullivan and Manoogian, 2009).

 

Conclusion

It can be concluded that the three operation management decisions that are evaluated for Ford Motor Company includes inventory management, quality management and process design. The company has implemented total quality management and six sigma tools for the purpose of maintaining high quality of products and services offered to the customer. These tools facilitates in evaluation and maintenance of the standard quality at each stage of production. This helps in elimination of the wastage of materials at the manufacturing process. Along with this, it can also be summarized that the company has adopted just in time and economic order quantity approach to maintain low or adequate inventory levels in the organization for the purpose of meeting the requirements of the customers in an effective and efficient manner.

 

References:

Betz, F. 2003. Managing Technological Innovation: Competitive Advantage from Change. John Wiley & Sons.

Bhise, V.D. 2016. Ergonomics in the Automotive Design Process. CRC Press.

Bohlander, G.W. and Snell, S. 2010. Managing Human Resources. Cengage Learning.

Brigham, E.F. and Daves, P.R. 2012. Intermediate Financial Management. Cengage Learning.

Brigham, E.F. and Ehrhardt, M.C. 2013. Financial Management: Theory & Practice. Cengage Learning.

Cogliandro, J.A. 2007. Intelligent Innovation: Four Steps to Achieving a Competitive Edge. J. Ross Publishing.

Collins, D. 2013. Management Fads and Buzzwords: Critical-Practical Perspectives. Routledge.

Dieter, G.E. et al. 2003. Handbook of Workability and Process Design. ASM International.

Fabozzi, F.J. and Peterson, P.P. 2003. Financial Management and Analysis. John Wiley & Sons.

Ford.2017. Our Story. [Online]. Available at: https://corporate.ford.com/history.html [Accessed on: 21 February 2017].

Muckstadt, J.A. and Sapra, A. 2010. Principles of Inventory Management: When You Are Down to Four, Order More. Springer Science & Business Media.

Oakland, J.S. 2003. Total Quality Management: Text with Cases. Routledge.

Oakland, J.S. 2014. Total Quality Management and Operational Excellence: Text with Cases. Routledge.

O'Brien, J.J. 2012. Construction Inspection Handbook: Total Quality Management. Springer Science & Business Media.

Slack, N., Chambers, S., Johnston, R. and Betts, A. 2009, Operations and Process Management - Principles and practice for strategic impact. FT Prentice Hall.

Smith, J.H. 2001. An Introduction to Modern Vehicle Design. Elsevier.

Sullivan, L.P. and Manoogian, J.A. 2009. Unlocking Ford Secrets. Lulu.com.

Wood, J.C. and Wood, M.C. 2003. Henry Ford: Critical Evaluations in Business and Management, Volume 1. Taylor & Francis.

Annarelli, A. and Nonino, F., 2016. Strategic and operational management of organizational resilience: Current state of research and future directions. Omega, 62, pp.1-18.

Azcárate, C., Mallor, F. and Mateo, P., 2017. Tactical and operational management of wind energy systems with storage using a probabilistic forecast of the energy resource. Renewable Energy, 102, pp.445-456.

Caminero, J.A., Van Deun, A. and Fujiwara, P.I., 2013. Guidelines for clinical and operational management of drug-resistant tuberculosis. Paris, France: International Union Against Tuberculosis and Lung Disease, pp.18-19.

Kato, T., Takahashi, H., Sasai, K., Kitagata, G., Kim, H.M. and Kinoshita, T., 2014. Priority-based hierarchical operational management for multiagent-based microgrids. Energies, 7(4), pp.2051-2078.

Osei-Kyei, R. and Chan, A.P., 2017. Perceptions of stakeholders on the critical success factors for operational management of public-private partnership projects. Facilities, 35(1/2).

Pinson, P., 2013. Wind energy: Forecasting challenges for its operational management. Statistical Science, pp.564-585.

Premer, M.I., Froese, R.E., Webster, C.R. and Nagel, L.M., 2016. Vegetation response to logging residue removals in Great Lakes aspen forests: Long-term trends under operational management. Forest Ecology and Management, 382, pp.257-268.

Robinson, R., 2016. An operational management model for a coal mining production unit.

Saunders, A. and Cornett, M.M., 2014. Financial institutions management. McGraw-Hill Education,.

Tsakiris, G., Nalbantis, I., Vangelis, H., Verbeiren, B., Huysmans, M., Tychon, B., Jacquemin, I., Canters, F., Vanderhaegen, S., Engelen, G. and Poelmans, L., 2013. A system-based paradigm of drought analysis for operational management. Water resources management, 27(15), pp.5281-5297.

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