1. What are your experiences of buying any product online vis a vis buying it from a shop or a dealer?

It is striking how dell makes a computer customisable to the buyers' taste. Cars also are customisable; just think of all the possible options you can buy with a car. But at Dell you can buy your customised computer online, something I haven't seen for car manufacturers. People normally buy their new car via the dealer channel. Dell bypasses totally the dealer channel. Computers and cars are consumer items. Cars however, for many families, aren't "just another commodity". For many people it's quite a big investment that needs serious thinking. People like to test the car first, see it in reality and talk from person to person with the dealer. Safety is a major item for cars and not for computers, who are expected to fail now and then. A car also needs regular maintenance, something a computer needs less or not. And here the trust relationship between dealer and customer can be important. Also shipping and delivery aren't as easy and low cost for a computer. Also the customising of a car won't be as easy and fast as a computer. A car is built from generic and custom parts while a computer is entirely made from generic parts. Experience were not so great while buying on the spot d car Knowledge of sales force Limited choicesfor models Reading materials on cars Inconsistency over deals from different dealers Number of dealers in the city is limited to 1 to 2 and hence making it difficult tostrike a good deal. After Sales service there is always as a huge rush of customers due to limited number of dealers.I was curious to check out the DELL website after the question PS I have never been to the site before. What I saw there was something that I would want to havefor selecting a car too (Not sure if thats possible) Highly User Friendly Choices are unlimited Very Interactive Educationa

2. What advantages does Dell derive from virtual integration ? How important are these advantages in the auto business ? DELL as an organization is able tospend more time in adding value to its customer. This has become the corecompetency for the company. DELL is able to gather more intelligence by theon-line interface which enables it forecast and understand the customer requesteven better

1.Suppliers own inventory until it is used in production Effective CostMeasures

2.They also maintain near ship points, Delivery time ranges between 15mins to 1 hr Enables JIT process. Zero Disruption of ManufacturingProcess due to Transportation Delays 3.External Logistics supplier used to manage internal supply chain BetterInventory Management 4.Focus on Strategic Partnerships Less number of suppliers, leanerprocess of Supply Chain

3. What challenges does Ford face that are not also faced by Dell ? How should Ford deal with these changes?

Too large a supplier base to manage Not all suppliers had the financial backing to bring technology changes inline with Fords technology changes. Lack of supporting technology Inconsistent processes across geographies. Purchase department independent of the Product Department Inconsistent Dealer Network Very High Complexity unlike DELL. In case of DELL there were just 50component to assemble with about 8-10 of them being critical and amaximum permutation of 100

Integrating the Purchase and Products team and creating an evaluation mechanismfor the suppliers will enable the team to prune the long list of suppliers. Only thosewho can be long term strategic partner should make it to the final list.With the Strategic Partners, Ford should invest in extending technology changes tosupport the suppliers. (However, no free lunches)Ford should engage IT consultants in this journey. Also it should look at centralizingsome of its key functions to make the processes standardized and leaner. Bringingall the geographies on a single platform will enable effective 2 way communication.Ford also started setting its own dealership. All the outlets had the same consistentlook and feel.Most of the changes that are being recommended above are already beingimplemented. 4. If you were Teri Tekai, what would yourecommend to the senior Executives ? To what degree should Ford emulateDells Business Model?

The sales cant be completely virtual like the DELL model. The customer will needto have the feel of the car he is going to buy. The Retail Outlets can be done awaywith.TQM is a must as the cars have to go thru stringent certification process. UnlikeDELL which had decided to test the SONY screens. One can have a return policyfor defective computers; however, ones life will not come back from defective car.Ford cant completely outsource to its suppliers. There is some component that hasto be manufactured by Ford itself (Like the Ford Engine).Also DELL was huge on customization. This was not too much of cost incurrence byDELL. However Ford will not be in a position to afford the customization cost. Ithas to roll out standard models.DELL hardly invested in physical assets and Ford cant afford to

go lean in thatarea specifically.IN case of DELL most of its customers were corporate customers. Auto industrysmainstay is retail customers and it cant afford to be taking its time to penetrate inthis market (DELL took its own time).

Key to Dells' strategy is their policy of outsourcing all manufacture. Dell acts merelyas the assembler and packager. The company is able to pick and choose from therange of industry leading components, allowing other manufacturers to make the investments in leading edge technology. The suppliers manufacture their essentiallygeneric, products for many customers and therefore are economically independent of them and also have little difficulty in meetingt h e J I T ( j u s t i n t i m e ) r e q u i r e m e n t s o f D e l l . F o r d h a s a t o n e t i m e , b o t h n o t a b l e similarities and striking differences in terms of their relationship with suppliers. ManyFord components such as tyres, windscreen wipers, and electrical components aresourced from large suppliers who supply the same components to other companies. These products are well suited to a closer integration of supply - virtual integration.On the other hand, a very large proportion of Ford components are custom made forF o r d . T i e r o n e s u p p l i e r s o f c u s t o m c o m p o n e n t s s u c h a s b o d y p a n e l s , s e a t s a n d engine components are heavily dependent on Ford and other large carmakers. Thesesuppliers second tier suppliers, who in turn also have suppliers. If virtual integrationis to succeed with these components every company along the value chain right backto the raw materials would need to be involved. This would be a very difficult and complex network to coordinate. Fords' history is a factor to be considered, theirlongevity and size in the industry gives them a tremendous degree of influence whencompared with Dell, a relative newcomer to business and whilst a large buy er of components, not so influential on trends and technology. The disadvantage may bethat this stature may make it hard to bring their very large organisation and suppliern e t w o r k a l o n g the road to virtual integration. The dealer network must b e considered. The dealers carry a very limited range of products, which they hold instock. If Ford decides to carry the Direct Model towards the end consumer they need to askw h e t h e r t h e y n e e d a d e a l e r n e t w o r k a n d i n w h a t f o r m . T h e p o s s i b i l i t y o f disintermediation needs to be examined. Alternative forms, that use the existingnetwork ay be viable, for example, the dealer might be used to postpone the finalform until the point of customer order. This might be the fitting of audio equipment,air conditioning or interior trim customisation. This would enable more consumers tobenefit from the vast possible range of options, as well as, at the same time reducingthe factory lead-time for manufacture.RecommendationsIf Ford is to successfully emulate Dell then they are best able to do this in areaswhere they have similarities. The most notable congruency is in the area of supply of generic components. Here Ford should continue its process of building strategic relationships. Where components are of a more specialised nature then Ford shoulde x a m i n e t h e r e l a t i o n s h i p s t o a s c e r t a i n w h e t h e r b r i n g i n g s u p p l i e r s c l o s e r t o t h e company will offer benefits to both parties. Ford should work on its' internal culture.I n t e g r a t i o n o f s u p p l y c h a i n s o n t h e s c a l e p r a c t i c e d b y D e l l c a n o n l y o c c u r i n a n environment where information flows freely to all points of the supply network. Asoutlined in the case documents; Ford maintains a high degree of separation of thepurchasing departments from marketing and production. Ford will not be able to provide focus up and downstream unless they themselves are committed to an openculture where logistics information is a part of the life blood of the company. Therelationship with customers is more

difficult. The dealer network will probably be averse to Ford moving towards direct sales, as it will threaten their livelihood. Theycan reap some of the benefits by introducing a web based ordering service for cars,allowing clients to specify the car that they want and then matching the requirementto the cars already in stock throughout the network. If a client prefers they couldorder a vehicle built to order and supplied to a local dealer. This will enable Ford tobecome closer to the needs of clients, seeing accurately what they want rather thanwhat they buy because it is available. This compromise will give the company some benefits:*Information about customer wishes.*Opportunity to reduce both dealer stocks and Fords' stocks by avoiding duplication.*Delaying the final form of the product by increasing the range of dealer fitted itemswill enable Ford to simplify manufacture, whilst offering a greater degree of 'realcustomisation' to clients.*Delay of final form will increase dealer revenues, buying their enthusiasm andconsent for the next stages of coordination.