3 CASE STUDY FORD KUGA CRISIS In December 2016, The Times broke the story that Ford Kugas were catching fire mysteriously and that one person had died when his Ford Kuga caught fire a year earlier in December 2015. This information resulted in Ford SA being attacked in the media and angry customers calling radio stations threatening to take legal action against the company for not informing them about the potential dangers of the car. Soon afterwards, Ford was reported to the National Consumer Commission (NCC). In January 2017, the NCC pressured Ford SA's American CEO, Jeffery Nemeth, to recall the affected models. It was discovered that this would involve about 4 556 Kuga Ecoboost 1.6 lite models manufactured in Valencia, Spain, between December 2012 and February 2014. Ford then released a statement explaining that the fires were possibly caused by overheating due to a lack of coolant circulation and that the recall would involve replacing the affected components in the cooling system and updating the software of the car so that it could alert the driver in time if the car overheated or if the coolant circulation dropped. Ford went on to blame the hot South African weather for the overheating, while auto experts blamed poor engineering of Ford's cooling circulation system and its control module which could malfunction in high temperatures. In March 2017, Nemath was summoned to appear before parliament to give an update and progress report on the recall. He admitted that about 47 Ford Kugas had caught fire between 2015 and 2017, also that faulty components had been replaced in almost 3 000 Kugas and that the company was still trying to trace 600 Kugas. Later in March, Nemath himself was recalled to the USA by Ford and a new CEO, Casper Kruger, was appointed. Ford tried to salvage the situation and rebuild customer trust and loyalty. It gave affected customers courtesy cars to drive while their Kugas were being repaired; it assisted some customers to trade in their Kugas for some other models and it extended the warranty on the affected Kugas to six years. Despite these efforts, Ford Kuga sales dropped by 50% in January 2017. Moreover, in 2019, the NCC advocated that the company should be fined 10% of its annual turnover if found guilty of deliberate negligence and cover-up over the Kuga saga. Ford instituted several actions: Employee involvement became a buzzword at Ford, e.g. teamwork and collaboration between management and workers were cultivated. Plans were put in place across business functions and between the organisation and its customers and suppliers to improve - the implication of this was that, to achieve better quality, everyone inthe organisation had to work together to make improvements and solve problems. Employees were given the power and authority to manage problems in their departments and to implement solutions to the problems was a way of empowering them. Employees' attitude was cultivated to display commitment to quality - the focus had to be on manufacturing error-free products. Furthermore, Ford started a programme that not only focused on their customers and customer satisfaction but also on the organisation's business processes, using scientific tools, technologies and methods that managers could apply to make systematic changes in processes and products. From the supply chain point of view, Ford improved relationships with suppliers to the extent that suppliers became part of the process of delivering total quality to the customers and meeting their needs. A "new culture" at Ford, one of striving for continuous improvement was cultivated - the concept of Kaizen, that was pioneered by Japanese companies, which requires the organisation and all its members to improve on something every day. Source: Adapted from: Lazenby, J.A.A. Editor. 2019. The strategic management process. A South African approach. 2nd ed. Van Schaik Publishers: Pretoria 3.1 Briefly discuss what Ford's management did to solve the company's quality problems. (5marks) 3.2. Explain what the consequences were of Ford's poor-quality components and the subsequent recall of the Kugas. (4marks) 3.3 Assume you have been hired as a quality consultant by Ford. Advise Ford on ways it can improve quality in the company. (13marks)