Description

Ford Motor Company redesigned one of their flagship vehicles. The seat assembly awarded to our client, on launch status, was experiencing massive cost overrun. Ford awarded the program based on cost estimates from a similar vehicle. This new program seat assembly was the first of its kind in terms of installed fabric requirement. Other than its complicated engineering structure, the seat assembly required a “no wrinkle leather” even though leather is supposed to be slightly wrinkled.

Challenges

Ford’s engineering program cost estimates did not take the specific no wrinkle requirement into consideration. The assembled seats coming off the production line had wrinkled leader. Extra labor had to be hired to remove or reduce the wrinkles on the seats. The assembly line throughput reduced significantly and despite all the pain, Ford rejected all the seats.
Scrap, direct and indirect, premium freight, and other associated launch costs were all out of control. Client was almost at a breaking point with severe cash flow issues. Additionally, client had internal controls, expense approval and tracking mechanisms issues as well. They had difficulty tracking and reporting current operations and on-going launch costs.

Solution

MH Business Solutions reviewed and redesigned organization’s expense approval and tracking system. We reviewed program award quote details. Based on data from our reviews and observations, we sought and obtained approval to visit a facility in Manchester England that assembled a similar “no wrinkle” leather seats. We partnered with program managers and industrial engineers to update scrap, bill of materials, direct and indirect labor costs details based on launch actuals and new study. We incorporated new data and reconstructed seat program award quote. Our group participated in direct discussions with Ford to present revised quote.

Benefit

MH involvement gave our client the confidence to approach Ford Motor Company. Accounting and finance group tracked and reported expenses in real time. The visibility and reporting of launch costs improved significantly. Ford Motor Company approved of the excessive launch costs and reimbursed our consulting fees to our client.

Result

Our client successfully concluded the program launch.