Competition has gone global and the market and industry dynamics have necessitated the need for companies to make concerted efforts streamlined towards ensuring that high quality goods and services are offered in the market at competitive prices. The American business concept and model embraces the fact that improved marketing abilities avails answers to firms planning to be more competitive. This has resulted in the adoption and implementation of several tools and strategies geared towards the aforementioned goals attainment. One of the strategies that have been soundly embraced by a multitude of companies is the ‘lean principles’ that have lead to a paradigm shift towards ‘lean manufacturing’.
Lean Principles in Ford Motor Company
The term lean manufacturing is a common term in many sectors and business areas in the world today. It refers to the manufacturing systems and philosophy that was first developed by Toyota Company when they adopted the key production principles as developed by Henry Ford. This new venture culminated into a great success story demonstrated in the pronounced increments in the levels and quality of service and cost reductions. As can be expected, Business organizations in the future are more likely to make fundamental and steady corporate adjustments to the demands of the changing market environments. Today, lean principles and tools are fully adopted by the Ford Motor company in efforts to stay abreast with stiff competition within the motor industry in every step of an entire process; from customer service to supply chain management. “The most recent evolution of lean is towards a lean value system in that this lean value system encompasses a value-adding network of operations across companies, with the goal of providing a series of contingent value proposition to individual final consumers” (Aberdeen, 2006). While these practices have yielded a lot of success with Ford Motor Company in particular, the ability to realize that success of the firm is dependent on profitable sales, which in turn depend on consumer action. Lean principles must therefore achieve a balance between profits and customer satisfaction. According to Shah and Ward, (27) and Aberdeen, (16), “the percentage of companies that have successfully implemented the ‘lean manufacturing’ initiative is still low”. The major contributing factor towards this phenomenon is the difficulties faced by these companies in understanding the nature and operatives of the ‘lean manufacturing’ initiatives and how best to align their practices in line with the principles and practices of their business (Shah and Ward, 43). The failure to apply standardized principles and processes has been cited as one of the bottlenecks contributing to this.
Steps that have seen success in the adoption of lean manufacturing within the culture of Ford Motor Company include “the close integration of strategy formulation with operational improvements and keen focus on a range of contingent processes away from Lean thinking traditional focus on order fulfillment activities” (Johnson & Wemmerlov, 24). This has helped “yield a seamless transition from the corporate strategy and activities undertaken in order that the strategic intents are attained” (Johnson & Wemmerlov, 24). It has however been determined that standardization and certification of lean has not been easy to institute within its culture in that it touched on the very operating principles of Ford Motor Company.
Lean manufacturing has been the symbol of efficiency and optimal performance since the 1980’s within the Ford family, mainly due to its association with the automotive industry and Toyota. It has been shown to out- perform the traditional production model of large batches on several occasions (Johnson & Wemmerlov, 27). The success stories of companies that have successful managed to reduce the production time, lower inventories, yield better quality services and gain higher profitability through the adoption of lean practices abide in literature. However, there are also a lot of companies that have failed to reap benefits from these new practices due to their failures to align their manufacturing cultures to the principles and philosophies of lean manufacturing.
The ability to reduce the production time and lower the inventories has been the greatest weapon within the Ford Motor company. The analysis on the application of lean manufacturing and lean production processes have broader implications in the production channels Ford Motor company. These applications are based on eleven lean principles such as reducing variability, reducing the cycle time, increasing output flexibility, increasing process transparency, balancing flow improvement with conversion improvement, among others.
Diversification and globalization by Ford Motor Company
In the realization that Motor giants such as Toyota and General Motors were becoming more aggressive in their manufacturing, Ford Motor Company has aggressively embraced diversification and globalization to remain competitive. This is based on the fact that the motor industry remains one of the most competitive markets to date. Continued growth indicators and the availability of disposable income accelerated the demand of more aggressive marketing. The Encyclopedia Britannica (1) explains that “there has been consistent and strong incentive towards a move to related products demonstrated by the production of manufactured tractors and made the famous Ford Trimotor all metal transport airplane in the 1920’s and early 1930’s”. In addition to the above, Ford motor company has extended to the production of agricultural tools and farm machinery that has differentiated it from other core competitors in the motor industry market.
To achieve high levels of globalization, the presence of Ford Motor Company is noted all over the globe. This is evident in their sleek manufactures Ford car models to Ford tractors. The ability to stay afloat during the economic recession demonstrates its diversified portfolio and offshore investments that shielded it from the adverse effects of economic recession.
In summary, an understanding of the effectiveness of lean manufacturing principles within Ford Motor has enabled me to come to grasp with what corporations need to gain competitive advantage. Modern theories must be fused within the very culture of the organization to achieve results. This has been the driving factor within Ford for decades that has made it one of the most successful Motor industries in the world today. These have led to several benefits for the company it its push for globalization, diversification and strive for a large market share.
Aberdeen Group, Critical Success Factors for Lean Implementation Within SMEs, Journal of Manufacturing Technology Management, 2006.Vol. 17, Issue 4. England: Cardiff Business School.
Encyclopedia Britannica. Diversification. 2010. Web.
Johnson, Jack & Wemmerlov, Michel. Efficacy of Lean Metrics in Evaluating the Performance of Manufacturing System. Milwaukee: University of Wisconsin. 2004.
Shah, Ray and Ward, Peter. Lean Manufacturing: Context, Practice Bundles, and Performance Journal of Operations Management, vol. 45, 4-9. New York: McGraw-Hill. 2003.