THE QUALITY JOURNEY OF FORD Adrian Vido Ford

THE QUALITY JOURNEY OF FORD Adrian Vido Ford Motor Company Director, Global Manufacturing Quality

ONE FORD

ONE TEAM Americas Customers Business Units Europe Asia Pacific and Africa Credit Product Development Quality Sustainability Functional Skill Teams Information Technology Finance er h t e og for T g kin rprise r o le W l Ente rship p o Pe Globa Leade As a omotive Aut Human Resources Legal Government Relations Driving Standardization Marketing Continuous Improvement Products and People Purchasing Delivering Results Manufacturing and Labor Communications One Team. . . One Plan…One Goal…One Team is driven in a global matrix structure – functional skilled teams develop global standards allowing the Business Units to thrive and deliver products and services our customers desire

ONE PLAN • Aggressively restructure to operate profitably at the current demand changing model mix • Accelerate development of new products our customers want and value • Finance our plan and improve our balance sheet • Work together effectively as one team

ONE GOAL www. one. ford. com Asia Pacific. Americas & Africa Europe Large + Mediu m Small + =

FORD MOTOR COMPANY QUALITY AND PRODUCTIVITY IMPROVEMENT PLAN Project Leader: Alan Mulally CBG / Function: Document Editor: Bennie Fowler Quality and Productivity Opportunity Explanation: Deliver Best in World Quality and Productivity by the end of the business planning period Objectives: Process / Methodology: Utilize problem-solving methodologies i. e. 6 -Sigma, Lean, Statistical Methods, G 8 D, QPIP to drive Operational Excellence throughout the Enterprise and deliver sustainable business results Reference Number: FMC_Q&Pv 1 Revision Date: Nov 8, 2010 Target & Metrics: Metric Current 5 -yr Target Deliver Business Plan Results Quality / CBG BPR Best-in-World 2013 Deliver CBG Quality CBG Business Best-in-World An exciting viable Ford delivering profitable growth for all Targets Plan - EVERY 2013 Key Areas of Focus DELIVER OPERATIONAL EXCELLENCE TEAM, EVERY DAY Dependencies: • Working together effectively as one team • Building the technical & quality competency of all employees across the enterprise; while educating the Resources & Team: leadership team CBG / Function Leader Quality PRODUCT n Continue defect prevention and reduce TGW, R/1000 and Warranty Spend using global design rules and engineering and manufacturing standards at all times in service n Utilize global transfer function catalog to achieve improved levels of APEAL and Cust Sat n Deliver the functional attributes, systems and designs according to the Ford DNA and Global Standards n Joint Supply Base Improvement Plan PROCESS Continuous quality and productivity improvement in all functions centered around: n Creating Value Roadmap (CVR) • Order To Delivery (OTD) n Global Product Development System (GPDS) • Quality Operating System (QOS) n Ford Production System (FPS) PEOPLE n Full implementation of the Quality & Productivity infrastructure globally centered around the Core Engineering Functions n Training curriculum to promote awareness and understanding of CVR, GPDS, FPS, OTD and quality operating systems that govern these key processes PERCEPTION n Execute the plan to deliver the Proof Points n Aggressively Communicate the Plan and Progress Proof Points to All Stakeholders Americas M. Fields K. Pittel Eur/Exp & Growth S. Odell K. O’Neill Asia Pacific and Africa J. Hinrichs P. Wright Ford Credit M. Bannister C. Pratt Product Development D. Kuzak P. Ellison/ J. Zhou Mfg / Labor Affairs J. Fleming A. Vido Purchasing T. Brown D. Velliky Quality & NML B. Fowler M. Hardie

Standardization: The Key To Continuous Improvement “Today’s standardization…is the necessary foundation on which tomorrow’s improvement will be based. If you think of “standardization” as the best you know today, but which is to be improved tomorrow-you get somewhere. But if you think of standards as confining, then progress stops. ” – Today and Tomorrow 1926 Henry Ford

CONTINUOUS IMPROVEMENT AT FORD EVERY FUNCTION HAS A QUALITY & PRODUCTIVITY IMPROVEMENT PLAN • Functional Senior Leaders commit to establishing measurable standards and model a continuous improvement mindset in their organizations in order to achieve operational excellence • Quality Functional Leads are skilled technical leaders partnering with functions to Reduce Lead Time, Improve Quality, Reduce Cost while driving culture change towards simplicity and lean thinking • CEO and Quality Group Vice President co-chair monthly quality meeting where continuous improvement projects and results are reviewed

GOVERNANCE Bo. D OCCE SAR BPR ASM PMM Strategy Decisions QPM Global Mktg Review People Decisions Product Decisions Quality Decisions Revenue Decisions Determine optimal product strategy: • Target markets • Target segments • Entry timing • Platform selection • Platform sharing • Commonality EPC Determine optimal platform architecture & derivative product definition/content to: § Leverage strengths § Produce competitive advantages Determine product/ execution targets that will have greatest impact on: § Shopping § Purchase § Owner satisfaction Define appropriate methods/processes to achieve targets. § Evaluate progress against targets § Identify gaps § Prioritize gaps § Take actions Sales Decisions Marketing Decisions Determine annual revenue & margin plan: § Build quantities § Pricing (per trim level) § Model mix plans § Incentive levels § Retail/Fleet/Regional mix Determine product’s strength/weakness in marketplace. Determine effective communication to drive customer consideration & sales. The accuracy & resultant value of the Enterprise decisions is highly dependent on an unbiased and precise knowledge of the marketplace, customer and business key performance drivers PROFIT BEFORE TAXES, CASH FLOW, MARKET SHARE, COST PERFORMANCE, QUALITY, PEOPLE, SUSTAINABILITY

GLOBAL MANUFACTURING QUALITY BUSINESS ENVIRONMENT SUMMARY COMPETITIVE NEWS All MFG: Decade of Change: Top 10 Ways Your Car Has Changed In 10 Years The Auto Channel, Jan 5, 2011 Ten years ago, automakers were touting the number of cup holders in the cabin and the increased off-road capabilities of family haulers. Today, these same companies are racing to offer increasingly hands-free mobile communication, eye-popping fuel economy and technologies aimed at helping drivers avoid accidents. Many of the changes in automobiles were driven by the ever-evolving ways people use mobile devices and the Internet to consume information, communicate with others and even engage in commerce. Here are the Top 10 ways the industry has changed since 2000; infotainment, entertainment, taking out the guesswork, accident avoidance, fuel economy, built-in navigation, creature comforts, security and paint colors. Understanding what consumers want and need tomorrow – or even next year – isn’t enough. We have to anticipate needs and desires farther out, 10 years down the road and beyond so we can deliver vehicles that will truly fit our customers’ lives. ” Implications to Ford: Ford must understand new technologies and develop new testing procedures and understand customer expectations, apply lessons learned and adjust the confirmation system if required. Hyundai MFG: Hyundai Opens Russian Plant, Unveils Solaris Quality Magazine, September 21, 2010 From steel stamping to assembly, the Hyundai Motor Manufacturing Rus carries out “full-cycle” manufacturing, being the first foreign automaker to have such a complete facility in Russia. The presence of a stamping shop will allow Hyundai to produce high-end stamped panels while having better control over production costs. Implications to Ford: Must continue to be aware as our competitors are expanding their Mfg footprint in Russia at the stamping level to ensure quality control. CHINA MFG: Vietnam May Step Into China's Footsteps as Next Manufacturing Hub The Quality Magazine, June, 15, 2010 With rising labor costs and cultural shifts in China pushing manufacturers to look for new sourcing options, many are rediscovering Vietnam. Transportation leaders are responding investment in theofdeveloping nation whose business managed to grow last year We canwith never lose sight our competition as others struggled. Vietnam's prime minister reported at last week's World Economic Forum on East Asia that its economy will grow

CURRENT MODEL VO/SBU FNA- % Green FSAO- % Green G G Fo. E- % Green APA- % Green G G G Satisfactory Y Marginal-Plan to Recover R Unsatisfactory Y R Change From/To

2011 MANUFACTURING QUALITY KEY AREAS OF FOCUS Area Process People G Key Actions Status FNA FSAO Fo. E APA Emphasis on proper usage and quality of 6 Sigma 6 Panel/Global 8 D's on high leverage projects while ensuring appropriate levels of MBB/BB/GB's. R G G G Strengthen plant floor measurement system to detect and prevent defects during launch through advanced quality planning and enhancements to current model QOS G Y G G Verify implementation and impact of Manufacturing QPIP infrastructure actions G G R G Deliver targeted improvements to the Assembly / Stamping CM Quality Operating System Y G G G Deliver targeted improvements to the PTO Plant Quality (QOS, PTC, Launch, Supplier) G G Y G Release and begin implementation FAP-02 -100 Workstation Robustness G R G G Global ISO 9001 G G G R Heighten knowledge and competency of QOS Standards via: Current Model GQIP (help desk, calibration sessions, BB training and Quality College) G G G Y Satisfactory Y Marginal-Plan to Recover R Unsatisfactory Special Attention / Comments Y R Change From/To

MANUFACTURING QUALITY RISKS AND OPPORTUNITIES Risks Current Model • QPIP Quarterly Self Assessment risks include Leadtime Metrics, Glidepaths, Process Capability, VOME Health Charts, PTO Contamination and Pass Through Characteristics Forward Model • Initial communication of YS/YC’s to Manufacturing continues to be a global systemic finding. • Regional resource status of LRCA coaches in FNA & APA impacting ability to adhere to Forward Model coaching plan. Opportunities Current Model Manufacturing • Ensure execution of the ONE DRIVE process to standard. • Base department containment of emerging quality issues • Addressing Launch systemic issues • Stop Ship global governance Enterprise • Update BSAQ System for Powertrain application • Develop and implement a standard Quality Operating System Ocean Freight processing. • Adding Post Assembly Issue to ECB Binning Process: Transportation Damage, Mod Centers, FCSD Goodwill • Proposal to feed GQRS Management Lease data into EVB Forward Model • Global plan in place for 2011 to train Forward Model teams on YS/YC communication to address systemic issue for FAP 03 -111 adherence • Rollout FM Bingo Board tracking progress of GPDS deliverables critical to manufacturing quality (<PS>-<PA>)- updated monthly 6 Sigma • Efforts ongoing to strengthen 6 -Sigma infrastructure and documentation within the standard forums.

Managing the Quality Pendulum • ONE TEAM • • • ONE PLAN • • Globally optimizing collective strengthens Expected behaviors required to carry out strategy Cadence Transparency…alignment, alternatives, adjustments Constancy of purpose ONE GOAL • Common and simple definition of success