Ford Finds Its Way
Quality-minded Mulally leads automaker through troubled times
Editor’s note: As the U.S. auto industry struggles to remain solvent, there’s one company that has bucked the downward trend: Ford Motor Co. Despite the economic downturn, Ford has found a way to control costs, gain market share and increase production.
What’s making the difference? Many say it’s the quality mind of Alan Mulally, president and CEO of Ford since 2006. Recently, Jim Buckman, executive director of the Juran Center at the University of Minnesota’s Carlson School of Management and a senior member of ASQ, interviewed Mulally at Ford’s headquarters in Detroit.
“So, you see what we’re doing here: Every Thursday morning, we do a gigantic PDCA (plan-do-check-act cycle) of the whole global business,” said Alan Mulally, the president and CEO of Ford Motor Co. That sums up Mulally’s approach to business—a focus on quality management.
In the 1970s, Ford Motor Co. asked W. Edwards Deming to reintroduce ideas of continuous improvement and contribute to the company’s quality-based renewal. Those efforts carried the company to success in the 1980s through 2000. Then, suddenly, Ford’s bubble burst as tire blowouts put the company’s reputation in the ditch—along with too many of its SUVs. To get things back on track, Ford needed change.
In 2006, Ford Board Chairman Bill Ford recruited Mulally from Boeing Co. Mulally became the first industry outsider in Ford’s century-plus history to play the lead role. Adding to Ford’s quality lineage, Mulally was a diligent student of the Toyota Production System (TPS) at Boeing and an accomplished executive leader in all things lean. Ford called upon him to use his leadership skills and eye for quality to resurrect Ford.
Perhaps sensing difficult times ahead, Mulally and Ford quickly refinanced the company and created a line of credit that could withstand a downturn. Later, analysts pointed to this move as the reason Ford—unlike General Motors (GM) and Chrysler—did not take a government bailout.
Of course, no amount of credit can restore product quality and reputation with customers as rapidly as Ford has done. The right type of leadership with energy and enthusiasm can spark a change and make a difference. Ford has found that sparkplug in Mulally.
Some key elements of Ford’s resurgence under Mulally’s watch have been a radical simplification, a global management system and weekly PDCAs, all of which, so far, have produced impressive results:
- Ford is gaining market share at a fast clip. It just outsold Toyota in April to reclaim the No. 2 spot in the United States.
- New Ford models have received high marks from J.D. Power and Associates and Consumer Reports.
- The Ford Fusion has become one of the best-selling mid-size sedans in the United States.
- Ford’s cash drain, measured monthly, has been more than cut in half.
- Ford is planning a 25% increase in production at its U.S. plants. GM and Chrysler are more or less shutting down for the summer.
- Rick Wagoner, the CEO of GM, was replaced. The CEO of Chrysler, Robert Nardelli, will be leaving soon.
Upon joining Ford, Mulally’s search for simplicity was radical and immediate. He preserved three brands—Ford, Lincoln and Mercury—and sold off Jaguar, Land Rover and (soon) Volvo. This was preceded and accompanied by a branding and cultural move to “One Ford.” As a result, 76 vehicle models became 13.
Hundreds of key parts, such as ignition switches and door locks, are being standardized across all models. This contributes to long-term customer convenience and the “feel” of a Ford vehicle. It has also freed time and energy of hundreds—perhaps thousands—of engineers around the globe. Billions of dollars are saved in internal costs and parts volume pricing.
Global management system
Ford’s global management system is an extensive, comprehensive and dynamic mechanism that allows for transparency and weekly visibility of most critical operating metrics across the globe. Moreover, leaders know not only their weekly performance to plan, but also that of their peers.
Reporting documents move little squares on grids from green to yellow to red coloration based on tracking performance to plan. Leaders are induced to cooperate and create broad “One Ford” success, but they also feel pressure to find solutions and not let problems linger. Psychologically, they have much on the line, as well as their people’s job security and their own interests.
These pieces are submitted to headquarters, and a two-hour global videoconference each Thursday morning is attended by senior leadership in Dearborn, MI, and leaders from around the world. Each senior leader reports and responds as critical problems are addressed. Leaders are connected via video or are seated at conference tables. Around the edges of the room, there are dozens of chairs for guests.
“The guests are frontline workers,” Mulally said. “We could have our senior vice president of manufacturing bring his line workers from the Michigan truck plant. He introduces each guest at the start of the meeting. At the conclusion of the meeting, I personally go to each guest and ask their opinions and suggestions for improvement.”
The obvious message: United Auto Workers are also a vital part of “One Ford” and not just considered a cost burden.
Beyond today’s turmoil
There’s no doubt that Mulally, 63, values the players around him and the roles they play. He understands his role, too, and recognizes the others who have held his position.
Walking down a hallway at headquarters, while noting historic photographs of the company he leads, Mulally couldn’t temper his enthusiasm. “Can you imagine this job I’ve got?” he asked. “You know, I can barely wait to get out of bed on Thursday mornings and get into our weekly review.”
That’s when you see the look of a young athlete on game day in Mulally, getting ready to lead his team to a win. At the same time, you can see a teacher in him. Not only is Mulally teaching Ford a new way to operate, but he is also teaching a new way to think.
Who knows? Maybe someday Mulally’s gifts as a teacher of quality leadership can be widely shared. Just as he carves out his own place in the executive lineage at Ford, Mulally has become an heir among quality leaders, bringing full life and updated expression to the value-creating ideas of Walter Shewhart.
Could Ford’s nascent global management system become a genuine breakthrough in quality improvement systems such as TPS, Six Sigma and Baldrige?
What more can we learn from leaders like Mulally and then, in turn, develop, educate and inspire others to follow in his path? Mulally’s knowledge and skills are rare but not impossible to acquire.
He has sparked positive change at Ford. Where else can we take that spark?
Member Receives National Award
ASQ member Subir Chowdhury received an Outstanding American by Choice Award from the U.S. Citizenship and Immigration Services agency during a recent naturalization ceremony in Detroit.
The award recognizes the contributions of naturalized U.S. citizens who have demonstrated outstanding professional achievements and leadership, civic participation, responsible citizenship and a commitment to the United States.
Chowdhury, an author and consultant, joins an elite group of past award recipients, including Elaine L. Chao, former secretary of the Department of Labor; Carlos M. Guiterrez, former secretary of the Department of Commerce; and John Shalikashvili, former general and chairman of the Joint Chiefs of Staff, U.S. Army.
This year, two others also received the award: Rep. Anh “Joseph” Cao (R-LA), the first Vietnamese American to serve in Congress; and Peter C. Lemon, a retired Army sergeant and Medal of Honor recipient.
Chowdury has received other honors in past years, including ASQ’s Automotive Division’s William P. Koth Award and ASQ’s first Philip B. Crosby Medal.
ASQ Kicks Off SR Initiative
ASQ rolled out its social responsibility (SR) initiative with an event in Milwaukee in April attended by more than 200 area business leaders.
Highlights included a keynote presentation by photographer Chris Jordan, a speech by Milwaukee’s mayor and the presentation of a $20,000 Community Good Works grant to the Milwaukee Rescue Mission.
ASQ and sponsors for the event, including Northwestern Mutual, Marquette University and Johnson Controls, were on hand to hear about the business case for SR and the role of quality in achieving results.
“As organizations develop further initiatives, quality will provide the tangible methodologies to produce sustainable results while increasing operating efficiencies and cost savings,” said Roberto Saco, ASQ president.
Milwaukee Mayor Tom Barrett reported the progress made by the Metro-Milwaukee Green Initiative, launched earlier this year by the City of Milwaukee, ASQ, Milwaukee County and the Metropolitan Milwaukee Association of Commerce.
Members of the initiative hope to learn best practices in sustainability from SR experts and one another. Barrett said 52 companies and organizations have committed to the initiative.
There are other plans to keep momentum behind the SR initiative: ASQ published a monograph of case studies describing how businesses are using quality tools to achieve their SR initiatives, an international SR think tank will be established later this year, and a conference is being planned for 2010 that will feature executive roundtables and mark the release of the new ISO 26000 Guidance on SR voluntary standard.
For more details about these SR activities, visit www.thesro.org.
Who’s Who in Q
Name: Debashis Sarkar.
Residence: Mumbai, India.
Education: Master’s degree in management from BITS, Pilani, India.
Current Job: Sarkar is the head of the organizational excellence group at ICICI Bank—India’s largest private sector bank—and is responsible for driving quality and improvement across its varied businesses.
Previous Jobs In Quality: He was the head of corporate quality at Marico Industries, a regional quality manager at Coca-Cola India and the production manager and technology manager at Unilever India.
Introduction To Quality: In 1991, Sarkar began his career at Cadbury India Ltd. He first worked as a trainee and later a factory quality executive, responsible for driving quality assurance for ice cream products on the shop floor.
ASQ Activities: Sarkar has been a senior member of ASQ since the late 1990s, and he serves as the chairman of the ASQ Automotive Division—Team India.
Recent Honor: Last year, Sarkar received his second Golden Quill Award from ASQ Quality Press.
Published: He is the author of several books, including Quality in Business, Lessons in Six Sigma, 5S for Service Organizations and Offices—A Lean Look at Improvement and Lean for Service Organizations and Offices—A Holistic Approach for Achieving Operational Excellence. Sarkar has also written several articles for magazines and newspapers, and he is a regular columnist for sixsigmaiq.com.
Family: Married to Sudeshna; one daughter, Trisha.
Quality Quote: Quality is about changing the mind-sets of people and enhancing the performance of business.
Panel Proposes Stakeholder Engagement Standard to ISO
The International Organization for Standardization (ISO) Technical Management Board has submitted a proposal to ISO for a new standard to provide guidance on stakeholder engagement.
The proposed standard would guide the process of identifying and engaging with stakeholders, with the intent to provide an informed basis for an organization’s decisions.
As the U.S. member body to ISO, the American National Standards Institute (ANSI) invites all interested stakeholders to submit comments by June 26. Send them to Steven Cornish, ANSI senior director for international policy, at firstname.lastname@example.org. For more details, visit www.ansi.org.
SURVEY SAYS About 30% of ASQ members said they consider themselves loyal to ASQ, a statistically significant increase of 6% from the same survey taken three years ago.
Market Probe analyzed the responses of 423 members and found that members’ overall satisfaction with ASQ increased significantly from 28% in 2006 to 35% this year. Sixty-four percent said they are likely to renew, significantly down from the 70% who said they were likely to renew in 2006.
Overall satisfaction with ASQ sections, forums and divisions has remained stable during the past three years, the survey revealed.
All of these results indicate a significant difference between 2006 and 2009 at the 95% confidence level.
ENTERPRISING ENDEAVORS Tyco Electronics, the engineered electronics parts manufacturer, and the Shafallah Center, an organization that cares for students with mental and physical disabilities in Qatar, have become ASQ enterprise members, joining 20 other organizations at this level of membership. For more details on enterprise memberships, visit www.asq.org/enterprise.
QP ONLINE ON PAPER
Quick Poll Results
Each month, visitors can take a short, informal survey, and we post the results.
Here are the numbers from the most recent Quick Poll:
“Whom do you think should shoulder most of the blame for the recent food-safety crises?”
- Growers and manufacturers 57.5%
- State and federal regulators 22.7%
- Foreign suppliers 13.7%
- Third-party auditors 6%
Visit www.qualityprogress.com for the most recent poll question posted:
“What quality method is most effective at cutting costs and increasing efficiency during difficult economic times?”
- Six Sigma
- Lean Six Sigma
- Total quality management