Case Study : Ford

Saturday, July 05, 2008


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	Case Studies: Ford Motor Company

	Decision Support for the Automotive Industry
	"With Powersim's software and consulting expertise, users have the ability to reduce a complex subject to its essence, put it in a learning environment, critique assumptions and create various scenarios. This helps managers focus on what adds the most value." —Vic Leo, Ford Motor Company

	The Challenge
	When Ford Motor Company stopped making vehicles according to the "build it and customers will come" method, it instituted a "demand pull" system where vehicles are made according to customer demand. With so many models and options available, managing the flow of $50 billion in supplies to the assembly lines is a significant task. Every two years, Ford studies this flow of materials to look for opportunities to improve efficiency. Before the last review, Ford had a proposal that contained numerous ideas on how to improve its supplier-to-assembly-line processes. But it couldn't renovate a factory—and disrupt production—to test the proposal. The company needed decision support tools to help it evaluate the situation.
	The Solution
	Models and simulations of factory operations were used to study the effects of the proposal, "In-Line Vehicle Sequencing." Powersim was able to show that the new system would produce significant stability in the manufacturing process because components could be delivered to an assembly plant in a predictable sequence. Therefore, delivery could occur just hours before parts were needed on the assembly line. Powersim's decision support solution also demonstrated the increased chance for incorrect material delivery for more complex vehicles, the ripple effect that production changes have on the entire enterprise, and the benefits of lower inventory due to suppliers' shortened production and delivery cycles.

	The Results
	The Powersim decision support simulation tested multiple options for Ford management in detail, thus avoiding the problem of over-simplification. It also showed what could happen without creating real-life consequences. As a result, Ford implemented the proposal and now forecasts its production needs more accurately, reduces problems such as last-minute changes, and is continuously shortening suppliers' production and delivery cycles. All these improvements led to $800,000 in savings at one plant in the first year. Ford plans to incorporate many of the changes throughout the company and expects to save more than $200 million in production costs over a ten-year period.

Design:TenPearls