THE QUALITY JOURNEY THE QUALITY JOURNEY

OF FORDOF FORD

Adrian VidoAdrian VidoFord Motor CompanyFord Motor Company

Director, Global Manufacturing QualityDirector, Global Manufacturing Quality

Where we were…below Where we were…below industryindustry

J.D. Power and Associates 2004 Initial Quality StudyProblems Per 100 Vehicles

LexusCadillacJaguarHondaBuickMercuryHyundaiInfinitiToyotaMercedes-BenzAudiBMWOldsmobileVolvoAcuraChevroletINDUSTRY AVGChryslerDodgeLincolnPontiacSubaruGMCFordMitsubishiSaabJeepMINILand RoverSaturnSuzukiKiaNissanMazdaScionPorscheVolkswagenHummer

Ford ranks 23rd

VIEW FROM THE BOTTOM:BELOW AVERAGE QUALITY THREATENED FORD’S FUTURE

How below average quality How below average quality hurt Ford….hurt Ford…. Unsatisfied customersUnsatisfied customers Lost sales and market shareLost sales and market share Lower resale valuesLower resale values Poor reputationPoor reputation Loss of credibility/trustLoss of credibility/trust Higher warranty costsHigher warranty costs Low employee moraleLow employee morale

Ford’s quality offensive Ford’s quality offensive plan….plan….Design in QualityDesign in Quality Standard global processStandard global process

Global Product DNA: looks, sounds, feels like a FordGlobal Product DNA: looks, sounds, feels like a Ford

Don’t compromise customer wants for lower costDon’t compromise customer wants for lower cost

Verify designs further upstream through virtual toolsVerify designs further upstream through virtual tools

Build in QualityBuild in Quality

Read every claim, every day; address Read every claim, every day; address in 24 hoursin 24 hours

Virtual manufacturing to reduce Virtual manufacturing to reduce worker injury/strainworker injury/strain

Each assembly function (body, paint, Each assembly function (body, paint, etc.) has a dedicated team of problem-etc.) has a dedicated team of problem-solvers solvers

People QualityPeople Quality Developing a critical mass of problem solversDeveloping a critical mass of problem solvers Ford has trained over 90,000 Green Belts, over 9,000 Black Belts Ford has trained over 90,000 Green Belts, over 9,000 Black Belts

and over 500 Master Black Belts worldwideand over 500 Master Black Belts worldwide Ford has over 900 technical specialistsFord has over 900 technical specialists

The Road Back….The Road Back….Ford #1 mainstream brand J.D. Power Initial Quality Study

2010

2009Ford: “World-Class Reliability”; 90% of line-up average or better reliabilityConsumer Reports 2009 Annual Auto Issue

2008

Ford launches a new, stricter global quality standard

2007

2006

2003

2002

Ford achieves initial quality that’s equal to Toyota and Honda—the tipping point RDA’s Global Quality Research Survey

Ford’s quality ranks below industry averageJ.D. Power Initial Quality Study

Global Product Development System launched; quality built-in early

Things-gone-wrong per 1,000 vehicles Then: 2,350 Now: 1,100 in 2009

1837

12061287

1395

1563

196019201980

23402354

1000

1250

1500

1750

2000

2250

2500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

FLM Total TGW Trend

FLM ranks 1st in Satisfaction, improving by 2 pct. Pts.

GM Satisfaction improves 3 pct. pts. over last year, reaching 80%.

GQRS CUSTOMER SATISFACTION US FLMGQRS CUSTOMER SATISFACTION US FLM

FLM

New GMHonda/Acura VW/Audi

Hyundai/Kia

Nissan/InfinitiChrysler LLC

Toyota/Lexus/Scion

Industry Improvement = 0%better

Satisfaction with Overall Quality

72

82

73

80

74

72

67

7071

73

8283

82

8181

82 82

767577

7375

82

65

70

75

80

85

90

2005 2006 2007 2008 2009 2010

GQRS TGW/1000 US FLMGQRS TGW/1000 US FLM

FLM TGW continue to improve (5.5%), but does not keep pace with Honda’s improvement rate (8.6%).

FLM gives up its first place ranking but remains statistically equivalent to Honda at 95% confidence level.

TGW/1000 Trend

1837

1206 1140

1659

1190

1836

2041

1749

1625

15541548

13341241

1113

1561

13961289

1771

1438

1926

1659

1316

1487

900

1150

1400

1650

1900

2150

2005 2006 2007 2008 2009 2010

Honda/Acura

Toyota/Lexus/ScionNew GM

Nissan/Infiniti

FLM

Chrysler LLC

Hyundai/KiaVW/Audi

Industry Improvement = 1.9%

better

Where we are today….#1 full-Where we are today….#1 full-line brandline brand

J.D. Power and Associates 2010 Initial Quality StudyProblems Per 100 Vehicles

Ford #1 Mainstream Brand

Benefits of having industry-leading Benefits of having industry-leading quality….quality….

Customer satisfaction Customer satisfaction – – 82% customer 82% customer satisfactionsatisfaction****

Increased dealer showroom trafficIncreased dealer showroom traffic Higher U.S. sales Higher U.S. sales – – 20% jump in 201020% jump in 2010

U.S. market share growthU.S. market share growth – – up 16% in 2010up 16% in 2010

Better resale valuesBetter resale values – – highest avg. auction highest avg. auction valuevalue**

Improved credibility and reputationImproved credibility and reputation Fewer warranty repairs Fewer warranty repairs – – 40% lower globally 40% lower globally

v.s. 2009v.s. 2009

Boosts employee morale Boosts employee morale *Data Source: Vehicles 1-5 YIS, NADA AuctionNet May CYTD, Mileage and Mix Controlled, Luxury

Brands Excluded**Data Source: J.D. Power and Associates 2010 Initial Quality Study

Ford’s Ford’s QualityQuality Strategy Strategy

Improve our Improve our ProductProduct by identifying customer by identifying customer satisfaction opportunities with leading designs satisfaction opportunities with leading designs

Standardize and adhere to key quality Standardize and adhere to key quality ProcessesProcesses in Manufacturing, New Model Programs, and in Manufacturing, New Model Programs, and Product DevelopmentProduct Development

Develop our Develop our PeoplePeople by building a world class by building a world class quality organization with advanced problem-quality organization with advanced problem-solving knowledge for improving quality and solving knowledge for improving quality and productivityproductivity

Improve our Improve our PerceptionPerception by delivering and by delivering and communicating proof points to stakeholderscommunicating proof points to stakeholders

Commitment To Innovation And Quality Excellence: Continuous Improvement For Life

Edge

Taurus

Expedition

Transit Connect

Fiesta

Flex

Fusion

Explorer

E-Series

MustangFocus

Super Duty

Escape

F-150

Have you driven a lately?