TEXAS TECH UNIVERSITY

Case 2-3: Ford Motor

Company: Supply Chain
Strategy

Case Critique for ISQS 5231 - IT for

Managers

Professor:
Dr. Qing Cao
Team # 4
Dalal Ahmad
Sayed Almohri
Aliza Levinsky
Andy Rupp
Avinash Sikenpore

2010

Team 4 Critique 1

Contents
Summarize the case ..................................................................................................................... 2
Critique and analyze team 5. ....................................................................................................... 3
Evaluate participation and ways to improve ............................................................................... 5
Appendix A: Glossary ................................................................................................................. 6
Appendix B: Car producer forecast ............................................................................................. 6
Works Cited .................................................................................................................................... 7

Team 4 Critique 2

Summarize the case

The case 2-5 deals with the hurdles, implications and the extent of virtual integration in
one of the worlds largest automobile manufacturing company. Ford Motor Company: Supply
Chain Strategy case focuses on the viability of implementing a supply chain strategy following
Dells model.
There are several factors which affect how an auto industry is managed and the way
important decisions in regard to the company are taken. Ford was established by a visionary
Henry Ford in 1903 and it has been in business ever since. Its main competition till 1970s was
with General Motors and Chrysler. However with the entry of Japanese companies like Honda,
Toyota and Nissan the firm faced stiffer competition with the auto market being overcapacitated. In 1995 Ford initiated the Ford 2000 plan aimed to restructure many of their key
processes like Order to Delivery (OTD) and Ford Production System (FPS). They wanted to
reduce the OTD from 60 or more to 15 or less days. FPS was created to convert the supply chain
from a push type to a pull type. Ford aimed at reducing the number of suppliers which 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 3 suppliers.
The aim was to create a more cost effective supply chain. Ford provided its suppliers with its
expertise and techniques to help them better manage their operations. Another important
initiative taken by ford was the Ford Retail Network (FRN) to reduce competition among its
dealerships in the same locality by having only one unified dealer who provides the best possible
level of customer experience. The director of supply chain system, Takai has to take an informed
and well thought decision if they should implement the Dells integrated supply chain or not.

Team 4 Critique 3

Critique and analyze team 5.

We think that the overall presentation on Ford was good and a lot of information over and
beyond the case was discussed and presented. Even then we feel that there were plenty of issues
the team could have handled in a better manner. The first area they lacked was describing the
specific initiatives by Ford like the Ford Retail Network (FRN), Ford Production System (FPS)
and Order to Delivery (OTD) in more depth. Secondly they left the main issue quite open to
debate and not specific in terms of the recommendations and the suggested course of action at
different levels of the organization and how exactly to integrate the emerging technologies into
its supply chain. If we were the presenting team we would have approached this case in a very
different way.
An important part of analyzing any case is to elaborate on the alternatives the company
has, delving the implications of each and exploring ways how best it can be implemented.
Therefore we have enlisted the alternatives with a brief description of the pros and cons. Then
we also go ahead and recommend the best alternative according to us and discuss the reasons
behind it. Alternatives with their pros and cons: 1) Keep its existing supply chain
a) Advantages: No major changes and additional costs involved.
b) Disadvantages: Fords 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.

Team 4 Critique 4
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.
After more careful examination and review of the alternatives we came to the realization that
the 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 Toyotas 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 exible) versus mixed production (exible).
So we would recommend Ford to extend its E-business strategy by partially
implementing the Dells model of supply chain. The part of the Dells 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.

Evaluate participation and ways to improve

We believe that our team was more prepared and ready for this case following recommendations
to improve from the previous case critique. We wrote down the questions for the team to ask but
their time management was not the best which limited us. Even though we could not participate
with the intensity we intended in the class, all members came up with insightful ideas and
thought provoking comments. One way we could further improve our team performance is
through having a team discussion prior to class on the case so we can focus on important issues
more carefully and having a more clear idea of our expectations.

Team 4 Critique 6

Appendix A: Glossary
Lean production: doing more with less through a whole integrated system that eliminates
waste and focus on continues improvements of operations that add value.
Just In Time: smoothing the ow of material arrive just as it is needed.
Kaizen: a system for continuous improvement.
Poka-yoke: A foolproof mechanism that prevents defects from occurring.
Jidoka: Authority to stop the production line.

Appendix B: Car producer forecast

Team 4 Critique 7

Works Cited
Doubrava, K. (n.d.). Ohio University. Retrieved 04 12, 2010, from Oak and the world of the web:
Ford Case analysis: oak.cats.ohiou.edu/~kd636398/esp/Ford_CaseAnalysis.doc
Ed Davis, B. A. (200, 05 10). University of Virginia. Retrieved 04 14, 2010, from Fords EBusiness Strategy: http://faculty.darden.virginia.edu/gbus88500/documents/ford_ppts.pdf
Lynda M Applegate, R. D. (2008). Corporate Information Strategy and Management: Text and
Cases. McGraw-Hill/Irwin.
Roberta Russell, B. W. (2007). Operations management: creating value along the supply chain.
Wiley.