their global presence and deal with the increasing global competition, Ford along with GeneralMotors and Chrysler saw an urgent need to consolidate their industry and started merging withother automakers around the globe. Such swift action had enabled these giant firms to achieve better quality products at a reduced cycle time and lower costs due to the economies of scale.After merging with Daimler-Benz, Ford’s data base of suppliers has increased substantially in both home and abroad. Having this huge number of suppliers has made their supply chain morecomplex, expensive to run and difficult to manage. In order to deal with the supply chain issuesand better manage their suppliers and improve their production processes and ultimatelylowering their cost, Ford in 1995 initiated the Ford 2000 plan which aimed at restructuring manyof their key processes like Order to Delivery (OTD) and Ford Production System (FPS). Theywanted to reduce the OTD from 60 or more to 15 or less days. FPS was created to convert thesupply chain from a push type to a pull type. Ford aimed at reducing the number of supplierswhich had grown to several thousands of different suppliers over the years as the company grew.Rather than focusing on selecting suppliers based on costs they wanted to develop close long-term relations with the Tier 1 suppliers who in turn managed and handled Tier 2 and Tier 3suppliers. The aim was to create a more cost effective supply chain. Ford provided its supplierswith its expertise and techniques to help them better manage their operations. Another importantinitiative taken by ford was the Ford Retail Network (FRN) to reduce competition among itsdealerships in the same locality by having only one unified dealer who provides the best possiblelevel of customer experience. The director of supply chain system, Takai has to take an informedand well thought decision if they should implement the Dell’s integrated supply chain or not.Part 5: ALTERNATIVES AND OPTIONS
Part 5.1: Alternative 1
Design a mixture of online and offline operations and form procedures toenable customization and ordering by customers over the internet butmaintain physical dealerships as well.
Customization to customers, start a supply chain vertical integrationbusiness model.
Open new market segment and attract clients who like onlineshopping.
Reduction in overhead and inventory carrying costs.
Direct control on customer service experience.
Costly, time consuming, requires internal and external changes whichare not easy to handle and integrate with other operations.
Independent dealers will complain due to internal competition.
Suppliers’ inability to keep up to speed with Fords modern ITtechnology.
Part 5.2: Alternative 2