Ford Wages War On Waste

Automotive Industries,  June, 1999  by Norman Martin

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With its new TCM Center, Ford aims to make its suppliers more efficient using innovative methods. Here's a look inside.

Nothing is closer to the hearts and minds of Ford executives these days than reducing costs. "The customer today wants more for less, and at a minimum the' same for less," asserts Carlos Mazzorin, group vice president for Purchasing and head of Ford of Mexico. In order to do that, he says, every possible opportunity must be explored -- even if it calls for deploying special efficiency teams, dubbed the "Rescue Rangers," to a supplier's plant (see sidebar p.48). Or bringing a "plant blitz" team to bear on Ford's own facilities, if necessary.

"Cost cutting is essential; it's not a discretionary, nice-to-do thing," adds Gurminder Bedi, vice president of Ford's Truck Vehicle Center. And, it has to be done without any takeaways. "There's nothing that disappoints a customer more than when they come back and find a feature they liked no longer there," he says.

Independent studies suggest that there's as much as 30% waste in many manufacturing processes -- often a large and expensive target. But just because that portion of the process is improved by 30%, it doesn't mean the entire piece price will come down by the same amount. "I don't know the change," admits Andy Benedict, director of Ford's new Total Cost Management (TCM) Center. "But we know it's the right thing to do because at the end of the day, time is :money."

Ford continues to hone its cost-cutting tools. Last year the automaker claims it shaved some $2.2 billion out of its total costs, and it's still on the hunt for targets. By far the biggest tool now in use is the TCM Center in Dearborn, Mich. With a 55,000 square-foot complex and garage, it doubles the amount of space previously devoted to TCM in nearby Livonia. And it moves this critical activity to Ford's design, engineering and manufacturing inner sanctum.

The TCM Center dates to 1987, when Ford used a concept called "value management" in conjunction with Mazda to build the Probe coupe. Soon other Ford operations were adopting similar cost-cutting efforts. In 1993, the Value Analysis Center was opened in Livonia, and quickly became the center of the company's total cost management program. Ford now has seven cost management offices worldwide, including Brazil, Australia, Taiwan and the new one in Dearborn.

Ford has refined its idea of cost cutting in recent years. A decade ago, automakers relied heavily on simply hammering suppliers for lower prices. Now, Ford says, it's drawing suppliers into a more collaborative approach.

"This a new way of looking at cost," observes Bob Rossiter, president and COO of Lear in Southfield, Mich. "They (Ford) really do attack the value chain, but it's not about getting after a supplier's profits. It's about trying to find waste in the system."

The best feature, Rossiter says, is the team environment that exists between Ford and its suppliers in this process. "They're sharing lessons learned from other suppliers, and it opens up your mind to new ideas," he notes.

TCM Center Manager Graham Loewy explains that Ford is "trying to drive a use of lean manufacturing techniques," long perfected by Toyota's benchmark production system and made famous by James Womack's analysis of it, The Machine That Changed The World. This and subsequent similar treatises served as practical how-to-guides.

"That was really our inspiration here," Loewy admits. "We were beginning to implement it within the foul' walls of our own production plants. But you really only get the benefits of lean manufacturing if the whole extended enterprise is doing the same."

As a result, he says, Ford is working collaboratively with its strategic suppliers to determine how to implement the process together.

"Clearly, they all don't need help doing this," he says. "But there are other suppliers that seem to benefit. And they want to do it, they're just not sure how to do it. They're the ones that come and ask. We'll help them implement the right-approach tools that suit their particular environment. The last thing I want to do is profess that there's only one way of doing this."

In one case, lean manufacturing techniques moved a wiring harness production process from 27.5 days to seven days with no loss, negligible investment, or change to the design.

While each supplier's situation is unique, there are common themes that are broadly applicable. One is simply evaluating the effectiveness of a piece of equipment. For example, a world-class effectiveness -- machine uptime levels, running at full production -- is 85%.

"We often go in and look at the supplier's piece of equipment," Loewy says, "and find it's probably operating at between 30% and 50%. If you looked at a comparable piece of equipment at Toyota, it's operating at close to 85%, because Toyota is constantly asking. `Is it efficient? Is it available? Are we getting what we expect?'"

Another common problem area is first-time through. This is the capability to produce at line speed without the need for rework or repair. "We don't necessarily see that if you go into a plant where people are producing for a Japanese company. The Japanese have spent time working with the supplier, imparting knowledge to try and help them with that basic manufacturing stability," he says.