Report on an operational problem from the real world with a focus in Essay

Report on an operational problem from the real world with a focus in FINANCE - Essay Example The company has been forced to recall the cars because part of the engine cylinder overheats and cracks due to stress. This causes oil leakages onto the exposed, hot engine parts and causes fires. National Highway Traffic Safety Administration has reported at least thirteen engines Ford engine fires in the United States and one in Canada caused by cracked cylinder heads. Approximately 11,500 cars that were recalled in July 2012 were splitting and leaking gasoline due to fault fuel lines (Jensen, 2013). In 2013, Ford had recalled almost all Escape models for carpet padding, which interfered with the use of the brake pedal. Other reasons for increased recalls by Ford include fixing engine plugs leak and fixing child locks. The Supply Chain Management tools that can be applied to the problem include sigma-sigma, lean manufacturing, and assembly line balancing. The company expects to reduce the number of car recalls by 87% after applying the three management tools. Keywords: Ford Motor C ompany, cars, Six-Sigma, defective Background Information The Ford Company recalls problem was retrieved from a business articles. The author of the article was Christopher Jensen. The article is entitled Ford Discloses Two New Recalls for the 2013 Escape and was published on November 27, 2013 by the New York Times news agency. Ford Motor Company is an American International automaker with headquarters in Dearborn, Michigan (Flory, 2013). The company manufactures and sells commercial vehicles under the Ford brand name and luxurious cars under the Lincoln brand. Ford invented strategies for large-scale manufacturing of cars and management of an industrial workforce using elaborately engineered manufacturing sequences characterized by assembly lines. The company’s net income as at the end of December 12, 2012 was US$ 5,665,000 (Flory, 2013). According to Flory (2013), Ford Motor Company is the second-largest automaker in the United States, and the fifth worldwide based on the 2 012 vehicle sales. Currently, Ford has more than 90 plants and 213,000 employees. Problem Description The primary problem of Ford Motor Company is how to improve assembly processes in order to reduce the number of car recalls. Car recalls occur because the company manufactures and assembles cars with several defects such as oil leakages, defective braking systems, and unfixed special locks, leading to repeats and repairs. Repeat manufacturing and repairs causes companies to incur additional manufacturing costs, which reduce the company’s profits and increase the losses (Hull, 2011). Additionally, increasing car recalls is scaring away both current and prospective customers, leading to widespread market reduction. The company needs to adopt proper manufacturing, operation and management tools/concepts in order to achieve zero defects and reduce the amount of reworks. Operations and Supply Chain Management Concepts/tools to be used1.5 Six-sigma Six-Sigma is a set of tools and t echniques for operations and process improvement; it seeks to improve the quality of the processes by using a set of quality management methods such as statistical methods to create special infrastructure of people within the organization (Desai, 2010). Manufacturing companies that need to improve manufacturing processes and achieve zero defects apply Six-Sigma quality tools. Hull (2011) argues that using six-Sigma methodologies such as