Ford Case Study

Topics: Supply chain, Supply chain management, Logistics Pages: 8 (1804 words) Published: February 20, 2014
 Executive Summary
Although Ford is a successful company in the world, with increasing competition and new technology improvement, Dell’s succeed by implementing “Virtual integration” , Teri Takai, Director of supply chain system, has to choose if Ford will make a change implementing Virtual integration based on Dell's model, or just stay as Ford is currently doing. Some are arguing that virtual integration is not feasible for Ford because of Ford’s business is totally different from Dell and business complexity makes Ford no way to go that road. However, others believe the Dell’s model will succeed in Ford as well because of new information technology and similar business principle will make it work in Ford. Ford should implement the virtual integration model even Ford is much more complex then Dell, but Ford can not simply copy Dell’s model because the vehicles are not like a computer that you can order online and delivery by a carrier. They need to create a plan based on Dell model but focus on Ford’s business and conditions. Teri Takai should be the key person and work together with IT, Purchaser s, Sales and accounting department to start the program: to reduce inventory by building strategic supplier relationship . the ordering system should change form old model ( PO to suppliers, products go to Ford warehouse and then to distribution centers, dealers then customers ) to the new model ( orders to suppliers then products to distribution channel ) that is heavily relying on information sharing and communication. A VP and IT, sales, purchasing accounting should be involved to find strategic suppliers, good information systems further to make suppliers and customers their in house partners. Even a good plan still needs to be monitored and adjusted so the team should sit together regularly and evaluate and improve the program.

The Ford Motor Company, Based in Dearborn, Michigan, was the second largest industrial corporation in the world with revenues of more than $144 billion and about 370,000 employees in over 200 countries. The company’s main business was the design and manufacture of automobiles. As the growing of competition in automobile industry, Ford needed to continue to improve quality, customer service and reduce cycle time and lower the cost. In 1995, Ford initiated a restructuring plan called Ford 2000 which aimed to reduce cost, eliminate organizational and process redundancies such as Order -To-Delivery (OTD) , the time that it takes from a customer placing an order to delivery of a finished product with gaols reducing OTD time from 60 days to less than 15; Ford Production System (FPS), the integrated system tried to make Ford manufacturing operations leaner, more responsive and more efficient, moving from Push to Pull system. In 1998, Ford Retail Network (FRN) was launched to reduce competition among their dealers by owning the dealers or building partnership with dealers to gain more control of distribution to improve customer service level.

Issue Identification

The following are a list of issues that must be addressed:
Complexity of dealing with large network of suppliers
Investment and knowledge shortage in lower tiers’ suppliers Dealers compete with each in some places
single sales channel
Customer segmentation
Relatively high inventory
Need to improve information technology and demand forecasting system

Environmental and Root Cause Analysis

Complexity of dealing with large network of suppliers
In Ford existing supply chain, the suppliers were picked based on cost and the overall costs of the supply chain were ignored. Dealing with so many suppliers led to a higher costs and a complexity that was difficult to control quality. The more dealers you have to deal with, the more mistakes you might make, therefore reducing suppliers but keeping long term relationships with them should be the...
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