Back in 1947 Henry Ford II decided that he needed to know what it cost to build each vehicle and to make sure that Ford was making a profit on that vehicle. If Ford wasn't making a profit then there was little reason to build the vehicle.
For example, asset utilization (normalized for sales volume), days of inventory, cost of scrap, etc. in the factory. Available engineering hours utilized in product design. Managers were then rewarded for making numerical targets using methods developed by staff experts that managers rarely understood. A good way to make many of these numbers was to make products in large batches in order to achieve high asset utilization and low cost per individual step. The total value creation process from end to end -- which had been so clear to Henry Ford -- was gradually lost from view.
Soon Ford executives using the financial measures developed by finance czar J. Edward Lundy were even more rigorous in analyzing the performance of their area of control than GM executives. Robert McNamara and the Whiz Kids were the exemplars. And Ford did regain competitiveness as a GM clone, claiming a stable second place in the auto industry. In addition, by the late 1940s Ford was one of three U.S. auto companies using the same management system in the same town with the same union. With high investment barriers to entry, a remarkable era of stability was put place, lasting nearly forty years until the transplant Japanese factories succeeded in the U.S. in the later 1980s.
Ford CEO Alan Mulally needs to fundamentally rethink the supplier management system. Fundamentally rethink the product development system. And fundamentally rethink the production system from order to raw materials and from raw materials to delivery, with special attention to the information management system. (Much can still be learned from Ford's Mazda subsidiary, which became an able pupil of Toyota after a crisis in 1973.) Above all, fundamentally rethink what mangers do and how they do it in order to regain the gemba consciousness that originally took Ford to world dominance. In brief, Ford needs to remake itself once more, this time in the image of the company that copied Ford's original system: Toyota.
Ford needs refocusing of the remaining brands on what customers really want -- sophisticated, hassle-free transportation in every price range.
While Ford has constantly hired outside consultants to monitor and predict the futuire market they find it hard to forcast an anomally like the price of fuel doubling in price in just a few months because of speculation. When will it happen again? Therefore the autos must find alternate forms of energy to fend off the price os speculation on a commodity that is critical to their continued sales.
The predictions of over capacity where there back in the early 90's but the price of fuel and availabilty of that product is virtually impossible to predict long term.
Trotman, Nasser, Bill Ford, Mark Fields and Al Mullaly have been downsizing the fixed cost of both salaried and hourly labor. Automation, outsourcing and headcount reduction are the three ways to reduce the labor costs.
Also their has been a constant drive to increase the knowledge of their work force. that effort will result in a worker that is more quality and cost conscious than ever before and have the necessary tools at their finger tips to make the porducts that will sell. Education is mandated where the workers must continually take and pass classes in Ford's Technical Education Program. The salaried workers must virtually apply for their job position every year as a part of their employee review. They must design their own education enhancement in concert with the company guidlines and must demonstrate that they have achieved their goals on a quarterly basis.
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Today's Featured Article - Restoration Story: Fordson Major - by Anthony West. George bought his Fordson Major from a an implement sale about 18 years ago for £200.00 (UK). There is no known history regarding its origins or what service it had done, but the following work was undertaken alone to bring it up to show standard. From the engine number, it was found that this Major was produced late 1946. It was almost complete but had various parts that would definitely need replacing.
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