Executive Summary Ford Motor Company is based in Dearborn Michigan and was incorporated in 1903 by Henry Ford. Its core business is the design and manufacturing of automobiles. As Teri Takai, the Director of Supply Chain Systems, I will recommend Environmental and Root Cause Analysis How should Ford progress with emerging technologies and other high tech ideas Virtual integration – Ford needs to radically change its supply chain to keep up with the changing technologies.
Others were more cautious Shareholder value and customer responsiveness Auto industry is increasingly competitive, especially with the introduction of foreign based manufacturers Need to improve quality and reduce cycle times while lowering the costs of developing and building cars Take advantage of size and global presence Technology has been employed to connect teams that may be on different continents to interact as if they are in the same room. A public internet site has been established Extranet is possible , potentially connecting Ford with its suppliers business is good… record pro?
t sharing Extremely large supplier base Efforts are being made to reduce this supplier base The top tier suppliers had a reasonably developed it systems and were communicating with Ford electronically The concern came from lower tier suppliers who did not have the knowledge of modern technology systems Ford – Purchasing was involved very closely in nearly every product decision Price negotiation was solely in the hands of the purchasers. The engineers were not to discuss pricing with the suppliers How would this work in a virtually integrated system Ford Production System 1) Synchronous Material Flow – a continuous ?
ow of material and products driven by a ? xed sequenced and leveled vehicle schedule utilizing ? exibility and lean manufacturing process – one key is In Line Vehicle Sequencing – uses vehicle in process storage devices & computer software to ensure vehicles are assembled in order sequence – By using the sequence Ford could tell suppliers when and where certain components would be needed
2) Order to Delivery – 15 days from customer order to delivery of product – forecasting from dealers of customer demand – min 15 days of vehicles in each assembly plant – regional mixing centers to optimize schedules & deliveries of ?nished vehicles via rail – variable order process to be able to make small changes without having to enter a new order – E.
G trim color • • • Ford’s regional expansion to address the competition for market shares demanded cost management for the infrastructure upgrades IT infrastructure places limitations on the type of application development based on the platforms Easy access to information and prompt delivery of vital data to key individuals requires proper knowledge managementOrganizations reengineering and process remodeling is necessary when adapting new technologies to maintain the cost and increase efficiency Supply chain errors and delays can severely affect the progress of the business and the market value of the corporation
• Alternatives 1) Keep its existing supply chain a) Advantages: No major changes and additional costs involved. b) Disadvantages: Ford’s IT will eventually become obsolete.
2) Form a mix of online and offline operations and lay procedures to enable customization and ordering by customers over the internet but maintain physical dealerships as well. a) Advantages: Customization to clients, start of vertical integration, b) Disadvantages: Costly, time consuming, requires internal and external changes which are not easy to handle and integrate with other operations.
3) Create a virtually integrated supply chain based on Dell’s model. Ford and all its suppliers would share information between their systems and the Internet to coordinate the flow of materials and production. All customer orders would be taken either via Ford’s web site or by phone and then built. A pull system would be implemented completely. a) Advantages: Customization to clients, start of vertical integration in the supply chain.
b) Disadvantages: Ford’s traditional processes and production methods would have to be changed to take advantage of this new form of supply-chain management. Since it is a very costly and time consuming activity, the difference in the two industries makes it a risky option. Recommendation and Implementation he long term implication of the first and third option is the company going out of business. Keeping the existing supply chain would continue to deliver the same dismal results and declining profits for the company which eliminates option 1.
The third option seems illogical when we take into account the fact that Ford is an automobile manufacturing company and Dell assembles customized computers for its customers via the internet, eliminating dealerships all across and relying on website for its sales will put it at a great disadvantage with other auto makers. In spite of the recent loss of trust and quality issues with Toyota we will base our recommendations and critique comparing Toyota’s usage of information technology in making their process and operations lean. Toyota has been the forerunner in implementing many of the
best practices in manufacturing industries like JIT (Just in Time), Kaizen, Poka-yoke, Jidoka and other techniques which are solely dependent on their ERP (Enterprise Resource Planning) system. Since the production at Ford is based on a predetermined schedule it is a push based system. One way to move from a push based system to move towards a pull based system is by producing at a uniform level by the use of IT modules enabling MIXED model sequencing Team 4 Critique 5 (Appendix B shows an example of a car producer trying to plan for September sales forecast using batched production (not flexible) versus mixed production (flexible).
So we would recommend Ford to extend its E-business strategy by partially implementing the Dell’s model of supply chain. The part of the Dell’s model which does not fit with Ford need to be discarded. The dealers would still play a role in the distribution since we saw in the classroom discussion how the buying experience of a car from a dealer cannot be substituted by something virtual like a 3d model on a computer or images and description online.
The IT systems should be centralized since its Tier 2 and Tier 3 suppliers might not be able to update their IT infrastructure as frequently as Ford. Suppliers can have access to central design database while Ford controls the access and functionality as per the requirements. The whole coordinated system would ensure a smooth flow of materials and reduced bottlenecks and enhance the efficiency of the supply chain giving a competitive edge to Ford.
And lastly we feel that dealers can play a more involved role in forecasting customer demand and Ford should explore the option of outsourcing it to a firm which specializes in forecasting demand and can work with each dealer or network of dealers. Monitor and Control Ford has considerably more manufacturing facilities than dell, the system would not be as simples as in Dell’s situation, many more employees… would require much more training to see total bene? ts. Customers expectations – would you buy a car online without seeing it in person, test drive etc.