The Impact of Six Sigma in The Automotive Industry

The Impact of Six Sigma in The Automotive Industry

By producing results that collectively rely on a multitude of interconnected complex manufacturing processes, automobile manufacturers are inarguably one of the best candidates to implement and subsequently study the efficacy of six sigma. Automotive companies acknowledge the importance of quality in not only making products that resonate well with their customers but also emerging profitable in an increasingly competitive market.

In the last couple of decades, the manufacturing industry as a whole has seen just how to and how not to implement continuous quality improvement strategies, thanks to case studies from automotive companies. Consequently, many of them are now implementing proven technologies and strategies to improve their overall manufacturing efficiency rates. As a matter of fact, six sigma is now popular even among Fortune 500 companies like Visteon, TRW Automotive Holdings, Tenneco Automotive, PACCAR, Navistar International, Lear, Johnson Controls, Goodyear Tire & Rubber, General Motors, Ford Motor Company, Federal-Mogul, Delphi, Dana, Cooper Tire and Rubber, Brunswick, Autoliv, ArvinMeritor, and many more.

The GM Case
In 2015, GM faced a challenge concerning the Cadillac Escalade SUV 22 inch chrome wheels. They suffered a shortage because of the inability of the supplier to produce enough to cater to the company’s needs. So, to solve the issue, GM decided to adopt a new problem-solving strategy across various company departments to improve efficiency and make more specialized Escalade wheels.

According to GM’s vice president of operational excellence, this strategy, along with other operational excellence business improvement projects, was projected to boost the company by $3 billion after eliminating waste, reducing variation, improving quality, saving on production costs, and improving revenue. Additionally, they expect to achieve 10 percent adjusted profit margins, and 10 percent customer loyalty points increment by the year 2020.

When the rubber met the road, GM began analyzing efficacy levels at the supplier’s plant. They later found out that shortage was mostly due to limited resources being committed since the supplier had also been using part of the plant to produce a different wheel for a separate vehicle model, which was not as profitable as the Escalade. So, they took a re-engineering approach by coming up with a different Escalade wheel, which would see them capitalize on all the production resources. Additionally, they eliminated at least four steps from the transportation process to help them get their wheels faster and cheaper.

Eventually, GM shifted wheel-production operations to their Arlington Assembly plant based in Texas. This not only improved overall efficiency but also helped them refocus their engineering department in revising the wheel, which saw them come up with a new technique of reusing the transit wheel. This move alone has not only helped customers save up to $1000 on specialized wheels but has also cut production costs by $5 million.

The Toyota Case
Unlike GM, Toyota’s experience with six sigma has not been all rosy, but rather mixed fortunes, mostly due to the company’s inability to strictly adhere to the process’ principles. After successfully overtaking GM back in 2009 and growing to become the world’s largest automotive company, Toyota is now facing criticisms from its shareholders because of the recent spate of recalls. After faulty gas pedals had been linked to 12 deaths, Toyota was forced to recall 9 million cars and pay a 1.2 billion shilling fine to the federal government in the year 2010. Two years later, an additional 7.4 million cars were recalled due to faulty power windows. To cap it all, as of June 2016, Toyota has recalled 4.3 million vehicles due to faulty fuel tanks and air bags.

For a company that’s well-known for its six sigma strategies, this recent turn of events has undoubtedly left many people worrying about the overall efficacy of the strategy. A bulk of the members of the improvement community, however, have rushed to defend Toyota’s production system. According to them, Toyota’s problems should not be blamed on system failure, but rather on quality-control personnel who failed to strictly adhere to it.

Former employee and founder of Toyota Production Consulting Corp, Mikiharu Aoki, expressed his sentiments on the subject by saying that Toyota just failed in living up to the same principles it had created and was teaching others. Lantech’s CEO Jim Lancaster made similar observations and indicated that humans are capable of making mistakes and veering away from the rules.

From these two cases, it is pretty obvious that six sigma has had mixed impact in the automotive industry. While strict adherence guarantees positive results, poor implementation and failure to stick to the rules can result in unfavorable outcomes, just like Toyota has experienced.

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