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Statistics for Business and Economics: Excel/Minitab Enhanced
Heinz Kohler
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Statistics in the News: Chapter 22 Quality Control

Quality Revival, Part 2: Ford Embraces Six Sigma

In the 1980s, when Japanese imports threatened the U.S. auto industry, the Ford Motor Company turned to the management philosophy of W. Edwards Deming (Biography 22.1). The controversial and curmudgeonly octogenarian was recruited to jump-start Ford's quality movement and the results were stunning: After incurring $3 billion in losses during 1979-82, Ford achieved huge successes with its Taurus-Sable line of cars. By 1986, Ford was the most profitable U.S. auto company.

More recently, however, Ford's hard-won quality image became tarnished. Consider the deadly rollovers of Ford Explorers equipped with Firestone tires. Consider costly recalls of several older models and numerous delays in the introduction of new models. Customer surveys reflected the impression that Ford quality was lagging behind the competition.

In 1999, Ford's chief executive, Jacques Nasser, turned to Six Sigma, an approach popularized by General Electric's John F. Welch, Jr., that tolerates no more than 3.5 defects per million operations. Using the new approach, one Ford engineer discovered the source of vibrations in the Super Duty F-series trucks and Excursion sport utility vehicles: a subtle alteration in the design of parts coming from an outside supplier. The conclusion was typical. The supplier had passed a quality test years ago, but the required constant collaboration between Ford and the supplier's design and manufacturing divisions had lapsed. (Apparently, Deming's champions at Ford had retired and new executives had introduced other priorities, such as cutting costs at the expense of quality.)

What is the difference between the old-style Deming and the new Six Sigma approaches?

The Deming approach was defiantly philosophical. It eschewed explicit profit goals and held that systematic never-ending improvements in all processes would eventually and inevitably lead to profit. Thus, one would fix any given problem, regardless of cost. The Six Sigma approach, on the other hand, dictates a careful benefit-cost analysis. It is unashamedly profit-oriented. To be approved, each project must achieve at least $250,000 in net benefits.

Source: Adapted from Andrea Gabor, "Quality Revival, Part 2: Ford Embraces Six Sigma," The New York Times, June 13, 2001, p. C5.

Additional Readings:

Chowdury, Subir. The Power of Six Sigma: An Inspiring Tale of How Six Sigma Is Transforming the Way We Work (Dearborn Trade, 2001). The executive vice president of the American Supplier Institute berates U.S. automakers for overconfidence and the false belief that quality, once achieved, will be automatically maintained.

Hoerl, Roger and Ronald D. Snee. Statistical Thinking: Improving Business Performance(Duxbury Press, 2001).
A quality expert from General Electric's Corporate Research and Development Division and a senior management consultant for Sigma Breakthrough Technologies, Inc. team up to discuss the strategic value of data and statistics within the context of real problems. The authors describe the role of statistical thinking and methods in problem solving and process improvement, including the need for understanding, quantifying, and reducing variation.
"The Quest for Quality," Keeping Tab (#34 of the MINITAB newsletter, March 2001).
Features success stories from 3M, Acadia Polymers, American Express, Lear, New York Air Brake, Toshiba, and more. For this and other issues, visit http://www.minitab.com/resources/keepingtab.

 
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