Manufacturing Industry Best Practices: Ford’s Culture Shift
Posted by Kipp Bodnar on Tue, Feb 15, 2011 @ 09:30 AM
When Alan Mulally arrived as Ford’s CEO in September 2006, union workers, skeptical of someone from outside the auto industry taking charge of the venerable auto manufacturer, challenged him.
Was he aware, they wanted to know, that an automobile had more than 10,000 parts, and could he comprehend such a complex piece of machinery, let alone oversee manufacturing operations and the supply chain management supporting it?
Mulally replied, that he was aware of the complexity involved in manufacturing an automobile. In fact, in his previous position as CEO of Boeing Airplanes, he oversaw the manufacture of airplanes, which he pointed out, had more than 1 million parts – and, more complex still, unlike cars, airplanes had to stay up in the air – no strings attached.
Culture Shock
To say Mulally faced a hostile culture at Ford, one with its head up its exhaust, is putting it mildly. But, Mulally told his critics, inside and outside the manufacturing company, that he had seen this movie before and he knows how to write a new, happier ending.
At Boeing, Mulally turned a perpetually money-losing aircraft manufacturer into a lean, mean profitable manufacturing machine.
He leveraged manufacturing technology the way no one at the company had before, using just-in-time supply chain management software applications to keep the million-plus parts each airplane needed coming in day by day from suppliers around the world.
More important, as he would ultimately do at Ford, Mulally knew how to change people’s mindsets, how to persuade them to all pull on the same end of the manufacturing rope at the same time. Mulally pointed out, to everyone from senior executives to front line assembly workers, that none of them, including himself, needed to be there. He was, and they were, free to go anytime. So, why would they stay? Because, Mulally explained, they shared a common goal. At Ford, they wanted to build great cars, cars they could be proud of, cars any manufacturer would be envious of.
Mulally also opened up communications at the car manufacturer. The old Ford culture – keep your mouth shut and mind your own business – had to change if improvements were to be had. Improved communications now means problems are unearthed more quickly and solved more quickly.
One Ford
Mulally didn’t just trim communications strategies, he sold off unprofitable car lines, such as Jaguar and Land Rover that took focus away from the core brands, Ford and Lincoln, and were a drag on the bottom line. He saw to it that the manufacturer didn’t build 10 versions of the same car in 10 different markets, they built the same car worldwide, just one Ford.
His first week in office, Mulally had Ford executives bring him all the thin metal support bars used to prop up the hoods of Ford cars. The executives laid nearly 40 types of bars on his desk. Not any more, Mulally said. They’re just metal sticks. One will do, for every car we make, he told his executives.
It’s been a little more than four years since Mulally took the reins at Ford’s legendary manufacturing factories. Despite the worst economic climate in decades, and being the only car manufacturer not to take a federal bailout, Ford has been profitable two years in a row. It’s taken substantial market share away from competitors and sales increased 20 percent, nearly double the rest of the industry. Factory workers will even get a $5,000 bonus this year. "Everybody now knows why they're coming to Ford,” Mulally said of his workforce. “They know why they're coming in in the morning. They know what success looks like."
Photo Credit: JD Hancock