Ford motor company: suply chain strategy

How should the company use emerging information technologies (i. e. Internet technologies) and ideas from new high-tech industries to change the way it interacted with suppliers? IV. OBJECTIVE To be able to make the supply chain run smoothly by eliminating bottlenecking, enhance inventory management and improving overall performance. V. ENVIRONMENTAL SCAN (AREAS OF CONSIDERATION) Strengths • Second largest industrial corporation in the world • Revenues of more than 144 billion • About 370,000 employees

• Operations spanned 200 countries • Strong relationship with suppliers Weaknesses Lengthy customer to delivery time (45-65 days) Opportunities Industry relying on technology is in the growth stage (Late 1990s) Threats • The car industry is facing increasing overcapacity • Advantage in the industry was fast becoming global • Non-parallel IT maturity especially with 1st tier suppliers who were not able to invest in new technologies at the rate Ford itself could VI. ON GOING IMPROVEMENTS Ford 2000

• Product development consolidated into five Vehicle Centers (VCs) – each responsible for the development of vehicles in a particular consumer market segment • Making processes and products globally common – Eliminate redundancies – Realize economy of scales VII. TWO VIEWS BY THE TEAM Group favoring Virtual Integration • This group argued that the new technology made it inevitable that entirely new business models would prevail • Ford needed to radically redesign its supply chain and other activities or risk being left behind – favored “virtual integration”

• modeling the Ford supply chain on that of companies, such as Dell Advantages: This option will lead to customization to clients and eventually, vertical integration Disadvantages: Since improvement will be made, this will mean more cost on the part of the company. Improvement will take time as internal and external changes involved as well as the new system had to be integrated with other operations. Cautious Group (keep the existing supply chain)

• This group believes that the difference between the auto business and relatively newer businesses – (i. e., computer manufacturing) were important and substantive

• Ford supplier network had many more layers and companies • Purchasing organization played a more prominent and independent role than had Dell’s Advantages: The will be no significant changes in the company and it will also involve no additional cost. Disadvantages: IF no improvement will be made, Ford’s IT capability will eventually become obsolete. VIII. Differences between Dell and Ford Enterprise Model Comparison [pic] [pic] IX. Recommendation In view of the findings, it is recommended that the company extend its E-business strategy.

IT Improvement is the way of the future and it will be strategic to take advantage of the benefits of its usage despite the cost. IT should be noted however that due to the differences between Dell and Ford, not all will be applicable for the latter. Unlike in Dell, the dealers role is deemed to be vital for Ford, hence this part of the system should be kept. Ford should also take note of the non-parallel IT development between the company and its suppliers hence the need for centralized IT systems that recognizes these differences.

It will be advantageous to have a well-coordinated system to ensure smooth flow of materials and reduced bottlenecks and enhance the efficiency of the supply chain. Suppliers may be given access to Ford’s central design database while Ford controls the access and functionality as per the requirements. 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.