Ford's Global Quality Operating System Delivers World-Class Quality

Quality has been a central focus of Ford's efforts to deliver the products customers want and return our operations to profitability. High quality is critical to Ford's drive to stabilize and grow U.S. retail market share, as well as our efforts to expand sales in other markets. According to Company research, quality, durability and dependability are some of the top factors consumers consider when purchasing a vehicle.

Quality has been on the rise at Ford for several years. However, 2007 and 2008 were record years in quality achievements. In June 2007, J.D. Power and Associates recognized Ford as having the most top-quality vehicles in the industry based on initial quality, or problems per 100 vehicles as reported by customers after having driven their new vehicles for three months. In the first quarter of 2008, the Global Quality Research System (GQRS), the industry's primary third-party assessment of quality, found that the initial quality of Ford, Lincoln and Mercury brand vehicles is better than or equal to all other automakers, including Toyota and Honda. This survey tracks customers' overall satisfaction with their new vehicles after the first three months of ownership. The GQRS also named five Ford, Lincoln and Mercury vehicles as "best-in-segment" leaders for quality and/or customer satisfaction, and 15 of our vehicles were in the top three for quality and/or customer satisfaction in their segment. Overall, 36 out of 40 Ford, Lincoln, Mercury, Volvo and Mazda nameplates improved in quality in the first quarter of 2008 versus 2007.

These quality improvements are the result of a comprehensive new Quality Operating System we have been implementing for the past few years. This system builds quality into every step of the vehicle design and manufacturing process. We begin designing for quality from the very earliest stages of every vehicle program. Approximately three-and-a-half years before any new model rolls off the assembly line, we begin assessing and improving quality by virtually "pre-assembling" every vehicle, to identify and address potential quality issues at the beginning of the design process. During this virtual assembly, some 16,000 design elements are checked using a computer model of the vehicle to ensure that they meet Ford's own high standards and customer feedback. For example, when designing a vehicle's doors, design engineers use computer-aided design tools to check that the car door closes with just the right amount of effort, keeps out wind noise and presents the perfect fit and finish.

We also improve quality at this early design stage by "building" the vehicle on a virtual assembly line. The virtual build is managed by the vehicle launch team, which includes product development engineers, manufacturing engineers, suppliers and hourly line operators from the plant where the vehicle will eventually be built. This team meets daily in an auditorium with huge projection screens to immerse themselves in the digital assembly plant. The team uses vehicle data from the Virtual Engineering lab to observe how virtual employees, known as "Jack" and "Jill," build the new model part-by-part on the computer screen. Through this process, the launch team can see if the virtual assemblers have any difficulty installing elements of the vehicle. For example, if "Jack" has trouble installing a wire harness in a headliner or "Jill" can't easily make the reach to install a rooftop antenna, then the actual vehicle building process will not be as efficient and effective as possible. Based on this virtual build process, engineers can make corrections – ultimately improving build efficiency and quality – long before the vehicle design is finalized and placed on the real assembly line.

Once the digital vehicle is completed and deemed "buildable" in the virtual factory, the team moves to the Company's pilot plant, where the first units, or prototypes, are built on an assembly line that mirrors the plant where the production units will be built. The prototype build team applies lessons learned in the virtual design-and-build stages to make sure the virtual vehicle matches reality. They also test the prototypes in regular and extreme driving conditions on Ford's proving grounds and on real roads. Once the prototypes pass these tests, the launch team builds and tests units in the actual assembly plants, and hourly members of the launch team begin training and preparing the rest of the workforce for the new vehicle build.

Once vehicles are in our customers' hands, we continue to track and improve quality with a rapid problem-solving approach. We read every manufacturing-related warranty claim and migrate effective solutions into the assembly plant. We also listen to our customers using survey tools, to ensure that we understand customers' problems with our vehicles, including actual product failures and customers' dislikes of vehicle designs or features.

We use a 6-Sigma process to develop resolutions to these quality problems. Since the inception of 6-Sigma at Ford Motor Company in 2000, we have trained more than 400 Master Black Belts, more than 8,800 Black Belts and more than 90,000 Green Belts in the 6-Sigma process of problem solving. These 6-Sigma teams, which are located in almost every business unit in the Company, use a data-driven process to resolve issues and prevent the reoccurrence of problems for future customers. In 2007 we completed our efforts to integrate the 6-Sigma methodology into the Company's core processes. With this integration, there is no longer a separate department within the Company that leads the application of the 6-Sigma methodology. Instead, Quality Functional Leads now assist each organization within the Company in the implementation of 6-Sigma problem-solving methods to improve quality and eliminate waste. These projects are helping to deliver the Company's business plan and priorities.