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Risk Management

References

[1] Rose, Kenneth H. (July 2005). Project Quality Management: Why, What and How. Fort Lauderdale, Florida: J. Ross Publishing. p. 41. ISBN 1-932159-48-7.

[2] From Ford Motor Company internal memorandum: "Fatalities Associated with Crash­-Induced Fuel Leakage and Fires." Source: Douglas Birsch and John H. Fielder, THE FORD PINTO CASE: A STUDY IN APPLIED ETHICS. BUSINESS, AND TECHNOLOGY. p. 28.1994.

 

Use of rubber bladder costing $5.08 per car

Employing an extra steel plate costing $11 per car.

Effective communication.

breakdown hierarchy.

Conclusion

Human resource

  • Profit minded organization
  • Scope successful based on cost benefit analysis .
  • Killed ethics, future sales, reputation.
  • Why did it happened??
  • Poor quality of employees—NOPE
  • Traitors------BIG NO
  • Then WHY WHY WHY

INEFFECTIVE RELATIONSHIP

Human Resources Management

All planned and the controlled activities of an organization to build and maintain the relationship between employees and the organization in order to meet both business objectives and employee expectation

  • Human capital
  • DID HR FAIL ??? or DID HR SUCCEED THE SCOPE???

Communication is key to everything!

Communication drives the world!

Ford aims to maintain good communication channels between management, unions and employees.

  • Formal discussions
  • Ford Communications Network
  • TV-based communications network
  • Providing information on the company and the industry
  • Ford News
  • The company's newspaper
  • This provides a forum for employees' own opinions.

  • Communication managements relies on flow of information within a company or between multiple companies.
  • Every company uses different method of communication to reach it's target audience.
  • E.g. they may develop print material and branding strategies for employee use.

Communication Management

So what was the failure

The design, production and manufacturing engineers knew the risk of ford pinto BUT they did not bother to convince  the superior that pinto was a fire trap.

It was their moral obligation not to produce ford pinto with the known defect.

Even when a solution was found, it was not enforced or opted to the management.

Where did they fail?

Mapping out the social scope of risk management

Mitigation or solution of risks using available technological, human and organizational resources.

According to the standard ISO 31000 "Risk management – Principles and guidelines on implementation,"[3] the process of risk management consists of several steps as follows:

Risks affecting organizations can have consequences in terms of economic performance and professional reputation, as well as environmental, safety and societal outcomes.

Therefore, managing risk effectively helps organizations to perform well in an environment full of uncertainty.

  • The typical time frame for getting a car from conception to production was 43 months, Lee Iacocca set the Pinto's at 25 months.

  • Waited eight years because cost benefit analysis showed changes were not profitable.

What was the failure?

Quality control

Quality assurance

Why?

Just for competition

What was their mistake ?

Ford assumed that saving money for upgrading the fuel system would not effect them in the future.

[2]

Time Quality and cost

How did they calculate Cost

Savings: 180 burn deaths, 180 serious burn injuries, 2100 burned vehicles

Unit Cost: $200,000 per death, $67,000 per injury, $700 per vehicle

[2]

Total Benefit: 180 x ($200,000) + 180 x ($67,000) + 2100 x ($700) = $49.5 Million

Benefits

Costs

Sales: 11 million cars, 1.5 million light trucks

Unit Cost: $11 per car, $11 per truck

[2]

Total Cost: 11,000,000 x ($11) + 1,500,000 x ($ I 1) = $137 Million

Quality management 

[1]

  • Guarantees that an organization, product or service is consistent

  • There are four component in Quality management

  • quality planning, quality control, quality assurance, and quality improvement

Top 5 Quality management Failure

[1]

In order to compete with burgeoning Japanese imports, Ford Motor Company mandated the production of a car that would cost no more than $2000 and weigh no more than 2000 pounds. The result was the Ford Pinto and its cousin the Mercury Bobcat. As the car neared production, engineers discovered that it failed rear end collision tests miserably due to the location of its fuel tank between the rear bumper and rear axle. Despite being made aware of the problem, Ford management decided to leave the car as is, electing to bear the cost of any lawsuits versus spend the $11 per car to fix the problem. In 1978, after over 100 deaths caused by fuel tank fires were reported due to rear end collisions, the NHTSA recalled 1.4 million Pintos and Bobcats to modify the fuel tank. Ford’s reputation suffered terribly, being seen as the company that put profit ahead of safety, and drove even more buyers to imported cars, the purpose for creating the Pinto from the start.

What is Quality?

Quality is the customer opinion about product and service

[1]

THE FORD PINTO CASE

  • Commitment to overall quality improvement based on previous experiences.
  • Purchasing is done based on simple data automation with shareable database.
  • Spot purchasing.
  • Low employee empowerment.

Procurement management is a form of management, where goods and services are acquired from a different organization or firm.

All parts and resources were housed.

Drawbacks in Procurement Management

  • Less information exchange.
  • Manual and redundant procedures.
  • Lack of technology.
  • Procurement was carried through paper based and labour intensive methodologies.

Procurement Management

  • Multi vendor sourcing.

Integration Management

Integration management is a collection of processes required to ensure that the various elements of the projects are properly coordinated. It involves making trade-offs among competing objectives and alternatives to meet or exceed stakeholder needs and expectations.

Scope Management

What is scope?

The work that needs to be accomplished to deliver a product, service, or result with the specified features and functions

 Scope creep is a term which refers to the incremental expansion of the scope of a project, which may include and introduce more requirements that may not have been a part of the initial planning of the project

The up gradation of the Defective fuel system design in ford pinto should depend on cost-benefit analysis and not on ethics

Overlooking the errors during analysis

The process of retooling

The Ford Pinto is a subcompact car produced by the Ford Motor Company for the model years 1971–1980. Initially offered as a two-door sedan.

Competitors: Japanese small cars .

In order to obtain the huge available market. It was necessary ford manufactured the new automobile in a short duration

Introduction

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