The automotive industry is a highly competitive market where brand loyalty is only as strong as the latest gizmo and horsepower upgrade. The automotive assembly process, perfected by Henry Ford, was based on the simple principle that “customers can order a Model T in any color they wanted as long as it was black.” After the 1920’s the market witnessed new entrants with unheard of automobile features that ended Ford’s golden age. New automakers such as Buick, Chrysler, and Oldsmobile offered customers varying colors and styles that propelled sales. The automotive industry has grown in the United States from 4192 automobiles on the road in 1900 to 204 million in 2003. In an effort to regain brand loyalty Ford has embarked on an ambitious automotive development process known as flexible manufacturing.
In the post 9/11 economy Ford has witnessed five billion dollars in losses per quarter. The company is swimming in debt after their partnership with Mazda and Jaguar and can not afford to lose pace with their competitors. Many Ford plants in the United States witnessed production decreases of 30 percent with increases in overtime. This disparity resulted in payroll cuts and closed plants and finally losses of one billion dollars in 2002. The damage to Ford was disastrous bearing witness to a 75-year market share low: 20. 7%.
Ford CEO Bill Ford was forced to make quick changes to appease the fickle consumer or face severe monetary consequences. The changes Bill Ford instituted were not a band-aid on the company hemorrhage but long-term solutions. In a two-year effort costing over 400 million dollars Ford completely gutted truck factories in Norfolk, VA and Kansas City, MO. The effort was aimed at redesigning around the concept of flexible manufacturing.
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This concept allows factories to respond to customer demand and switch manufacturing platforms in record time and to build different platforms in several factories using the same assembly system. The end-state is a reduction in months of factory downtime and millions of dollars in savings. Monetary savings and increased sales of the Ford F-150 is what will return ford to the black. Flexible manufacturing will be responsible for two billion dollars in savings over a ten-year period by reducing operating costs by 15% and reducing platform changes by 50%. David Savchetz, a Ford plant manager in Kansas City, has seen the benefits of flexible manufacturing first hand and has remarked “we used to be down for three months between models now we ” ve cut that to two weeks.” The key to utilizing flexible manufacturing is standardizing equipment. Corps pieces of equipment such as robotics, painting technologies, and welding systems must work in simultaneously and synchronously.
At the Ford motor plant the process of manufacturing a F-150 begins with metal pallets with an RF tag that contains all the specification of the truck. If the machines making the truck detect an error conflicting with the FR tag the assembly process stops and a worker is called to resolve the issue. If the plant manager gets the word to halt production and begin making a different vehicle because of shifting customer demand only 20 percent of the hardware and software have to be replaced. One of the unexpected benefits Ford has encountered is a 25 percent drop in fasteners and other components needed to make automobiles. Moreover, Flexible manufacturing has had a major increase in parts stock levels. Suppliers receive six days worth of orders from Ford via satellite to ensure that suppliers know what will be assembled in the near future and they know what sequence order each truck will be made in ensuring the right parts arrive on time.
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The system is so accurate Ford says 999/1000 trucks started leave the assembly plant in the order they were received. The goal for Ford is to have three quarters of their 21 North American automotive plants able to perform flexible manufacturing by 2010. Not only does flexible manufacturing plants save Ford millions of dollars but it is also beneficial to employees and managers. Jim Jenkins, the truck body manager at the Kansas City plant, believes that “now you can go from one plant to the next and feel like you ” re in the same shop.” This familiarity increases employee’s ability to transfer plants with minimal loss to productivity. Also, having similar plants decreases maintenance costs and servicing schedules. Machinery replacement also becomes easier because parts are standardized.
Finally, Ford can increase productivity because plants can be used as baselines against each other. Since the plants are standard production outputs and plant expenses can be analyzed to improve efficiency. Ford is not the only automotive manufacturer to implement flexible manufacturing. In the United States, General Motors is also making the switch.
General Motors calls their flexible manufacturing “C – Flex.” Prior to C-Flex GM would spend around $150 million dollars on reworking a plant when a new automobile was introduced. C-Flex is credited with reducing this astronomical amount to a more cost effective $40 million dollars. General Motors is excited about the future of C-Flex when coupled with their desire to launch many new vehicles over the next several years: The savings could be tremendous. Moreover, GM is excited that they can reduce their plant size from 150, 000 to 50, 000 square feet saving even more revenue. GM currently has initiated C-Flex at their assembly plants in Moraine, Ohio and Oklahoma City, Oklahoma. Flexible manufacturing has the ability to put Ford back in the forefront of assembly line technology.
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Henry Ford would be proud of the vision his family has embarked upon. The automotive industry may be based on the fickle nature of the consumer but there is clearly a way to eliminate the waste factor by streamlining manufacturing plants. Flexible manufacturing has already put Ford on the right track. Costs have been decreased by 3. 2 billion dollars and have pushed Ford into the black with profits of 1. 4 billion in 2003.
Ford now has the ability to make nine different vehicles at the same time and can change manufacturing platforms with much less downtime and costs. The Ford line of trucks is poised to take over its foreign competition because they were willing to accept a certain level of risk to achieve a great reward. WORKS CITEDGarsten, Ed. “GM Saves On Flexible Assembly.” The Detroit News Auto Insider. 15 December 2002. 06 December 2004.
McMurray, Scott. “Ford’s F-150: Have It Your Way. ” Business 2. 0.
March 2004, 53. Number of cars: The Physics Factbook Website. 2003. Hypertext books. 3 Dec 2004.