MANAGEMENT; Quality Revival, Part 2: Ford Embraces Six Sigma

By Andrea Gabor

The New York Times
June 13, 2001

Twenty years ago, when an invasion of Japanese imports threatened the American automobile industry, the Ford Motor Company led a quality revival based on the management philosophy of W. Edwards Deming, who was controversial then and is out of fashion now.

The results of the movement, known as Total Quality Management, were stunning at Ford. After racking up $3 billion in losses between 1979 and 1982, Ford hit a series of home runs, including the aerodynamic Taurus-Sable cars, and by 1986 had become the most profitable American auto company. Now, though, Ford’s hard-won reputation for quality is being tarnished by a series of setbacks, from the controversy over deadly rollovers of Ford Explorers equipped with Firestone tires to costly recalls of several models and delays on the introductions of others. Indeed, according to recent surveys by Consumer Reports and J. D. Power & Associates, overall quality and customer satisfaction for Ford cars now lag the competition.

And so, once again, the company is embracing quality as the answer to its problems. This time, it has seized on Six Sigma, a management tool that is sweeping corporate America. “It was a good way to get a common language around innovation and marketing,” said Jacques Nasser, Ford’s chief executive, who started the Six Sigma program in 1999.

Six Sigma was popularized by John F. Welch Jr. of General Electric in the 1990’s. Adopting it does, however, point to a management problem. Too often, when it comes to management tools for improving efficiency and worker productivity, companies have to reinvent the wheel.

Had Ford stuck with Total Quality Management, it might have avoided many of the problems that have plagued it recently. Instead, as the years rolled by, the concept faded into the background at Ford as its champions retired and were replaced by executives who had other priorities.

“U.S. automakers had so much confidence, they felt they had achieved quality and didn’t need to focus on it anymore,” said Subir Chowdhury, executive vice president of the American Supplier Institute, a quality training organization that Ford spun off in the early 1980’s. He is the author of “The Power of Six Sigma” (Dearborn Trade, 2001).

Consistency is the ultimate test of any quality program — and, perhaps, Ford’s greatest failing. Mr. Nasser himself alluded to this problem in an e-mail message distributed throughout Ford in April. “I have heard people say that it seems as though we have an initiative of the month,” he wrote. “I am concerned about this impression.”

Six Sigma, a quality-control method for increasing efficiency and reducing errors to 3.5 defects per million operations, draws on the same customer-focused, analytical methods of its predecessor. And Ford’s initial Six Sigma projects revisit lessons the company learned in the 1980’s, notably the importance of working closely with suppliers on design and manufacturing and the need to avoid even slight variations in a design or production process.

The experience last year of Chris Davis, 27, an engineer in Ford’s Kentucky Truck Plant, illustrates how such variations can endanger quality. Using Six Sigma statistical tools, Mr. Davis traced the source of vibrations in 2000 Super Duty F-series trucks and Excursion sport utility vehicles to subtle design alterations in some parts from previous models. The flaw was fixed, but had Ford engineers relied on their initial hunch and realigned the front-end suspension, it would have persisted.

Mr. Davis might have followed much the same procedure had he been working at Ford on a similar problem in the early 1980’s, in the heyday of Total Quality Management, with one big difference. Then, the driving principle would have been: fix the problem and do not worry about the cost. This time, following the dictates of Six Sigma, Mr. Davis did a cost-benefit analysis to determine whether the benefit from the project was worth the effort.

Six Sigma is a lot more structured and profit-oriented than Total Quality Management. Each project has to improve processes 70 percent and produce $250,000 in cost savings. Individual projects are then assigned to middle managers like Mr. Davis, known as Black Belts, who commit to working on quality-improvement projects for two years.

Ford’s hope is that Six Sigma will create a uniform approach to solving quality problems that can be replicated. “Six Sigma is a way of learning across vehicle lines,” said Louise Goeser, Ford’s new chief of quality.

While Six Sigma is unapologetically bottom-line oriented, Total Quality Management was defiantly philosophical and eschewed explicit goals. Deming himself, the curmudgeonly octogenarian who was recruited in 1981 to help jump-start Ford’s quality movement, thought if a company worked systematically at improving processes, profits would follow.

He also preached the need to anticipate what customers wanted. By contrast, current Six Sigma projects like fixing Mr. Davis’s tire imbalance problem are in the age-old “find and fix” mode. Although Ford plans to focus its future Six Sigma efforts on improving the design of its products and processes, for now the vast majority of its projects concentrate on “how to reduce things gone wrong,” said Phong Vu, who heads the company’s Six Sigma effort.

The problem with that, though, said Fred Simon, a veteran of the 1986 Taurus who ran Lincoln Continental before retiring in 1995, “is that with the find-and-fix mode you’re constantly chasing what has already happened instead of looking at the bigger picture.”

Ford has not maintained a consistent collaboration with suppliers, a cornerstone of the 1980’s quality drive. It still offers some technical assistance to its suppliers and collaborates with them in design work. But, says the president of a leading automotive supplier who survived the shakeout of the 1980’s, “Ford is more demanding on the cost side than the quality side.”

Ford acknowledges that its relationship with suppliers is sometimes shaky. “What happens at a company like Ford is that we’re moving forward so fast,” said Frank Foley, a former Six Sigma “project champion” at the Kentucky Truck Plant and now manager of the Wixom Assembly Plant in Michigan. The plant has a supplier that passed the quality test in the 80’s, he said, “so we don’t pay so much attention anymore.”

Mr. Vu acknowledges the gap. Over time, he said, “some systems get diluted.”

Advocates of Six Sigma at Ford argue that the disciplined nature of Six Sigma will ensure its long-term success. But culture may prove to be a big obstacle. “Why isn’t quality second nature at Ford?” a veteran Ford engineer asked. “Because cost is king. For the past 6 or 7 years, there’s been a huge emphasis on cost reduction. You walk in in the morning and all the alligators are circling. You kill the one that is most threatening — and that’s cost.”

Mr. Nasser attributes some of the company’s recent problems, especially the delays in introducing vehicles, to disruptions caused by the Explorer crisis, not to a lapse in Ford’s quality strategy. “In many ways, we fell short of our own very ambitious levels of performance,” he said. “Looking back at last year, it’s amazing we came out as strong as we did.”

Copyright 2001 The New York Times Company