FORD MOTOR COMPANY – SUPPLY CHAIN AND

OPERATIONS MANAGEMENT ANALYSIS

MGMT25000

NOVEMBER 27, 2022

SUBMITTED BY: AHMED IBRAHIM
CONTENTS

ABSTRACT....................................................................................................................................2

INTRODUCTION.........................................................................................................................3

BRIEF INTRODUCTION OF FORD MOTOR COMPANY...............................................3

COMPETITIVE STRATEGY..................................................................................................3

MOST IMPORTANT COMPETITVE PRIORITIES OF FORD MOTORs......................4

LEAST IMPORTANT COMPETITVE PRIORITIES OF FORD MOTORs.....................4

ORDER WINNERS IN AUTOMOTIVE INDUSTRY...........................................................5

ORDER QUALIFIERS FOR FORD MOTORs.....................................................................5

SUPPLY CHAIN OF FORD MOTORS..................................................................................5

SUPPLIERS............................................................................................................................6

TRANSPORTATION/DISTRIBUTION/INVENTORY MANAGEMENT.....................6

MANUFACTURING CAPABILITIES................................................................................7

UNKNOWN-UNKNOWN SIGNIFICANT SUPPLY CHAIN RISK AND MITIGATION

STRATEGY................................................................................................................................8

KNOWN-UNKNOWN SIGNIFICANT SUPPLY CHAIN RISK AND MITIGATION

STRATEGY................................................................................................................................9

CONCLUSION...........................................................................................................................9

REFRENCES...............................................................................................................................10
 ABSTRACT

This research paper is based on the supply chain and operations management analysis of an
American multinational automobile manufacture named as Ford Motor Company with stock
exchange symbol of “F” having per share price of $14.08 as of 27th November 2022. In this
report, all the information is based on facts and figures from reliable and genuine sources.
Competitive strategy of Ford is tilted towards product differentiation which is explained briefly
in this report by supporting all the facts with most and least important competitive priorities for
Ford Motor company. All the order winners and order qualifiers are also defined and then the
supply chain structure of the company is well explained and designed visually, with
interconnection of all the suppliers, inventory management, transportation and manufacturing
capabilities prevailed in the supply chain of the company. Ford Motor company is utilizing its
supplier relationships efficiently and has made its name in the automobile industry. It has
managed its operations and supply chain remarkably. In the end, unknown-unknown and known-
unknown significant supply chain risk are explained along with the risk mitigation techniques
Ford followed and succeeded. In the last, understanding the risks faced by Ford and how it
tackled it using the mitigating activities will give an overview that how a global brand work
efficiently by working proactively with great leadership and supply chain network.
 INTRODUCTION

BRIEF INTRODUCTION OF FORD MOTOR COMPANY

Ford Motor Company, also known as Ford, is a leading American automotive company
headquarter in Michigan, USA which is specialized in designing, manufacturing, and marketing
cars, trucks, Sport vehicles and other electric vehicles as well. Founded by Henry Ford and then
incorporated on June 16, 1903. (GlobalData, 2022). Ford also provides vehicles related leasing
and financing services to its clients. It has a huge market base and targeted regions with
customers across Middle East, North America, Africa, Asia Pacific, and South America. Ford
Motor markets its vehicles under the brand name of Ford and Lincoln.

Ford operates casting plants, metal stapling plants, engine plants, transmission plants and many
other service lines. As of 2021, it has 183,000 employees with 1502.4% higher net income than
FY 2020 with market capitalization of $46.5 Billion. Its main products vary around SUVs,
Crossovers, Trucks, Vans, and Electric Cars. Their main purpose is to build a better world for
people that will be free to move and can be able to pursue their dreams. (Ford Company, 2022)

COMPETITIVE STRATEGY

As a leading car manufacturing company in the world, Ford has produced large range of fuel
efficient, secure cars with SUVs models into the automotive industry. It has always focused to
provide the best experience and with a reliable brand image to its customers. Talking about the
competitive strategies of the Ford Motor due to which it has become a global brand from
decades. It has always followed technological innovations proactively as in automotive industry,
one who follows with technology will lead the market. Technological advancement has always
benefitted Ford by increasing their product portfolio.
Ford invests a huge amount to its Research and Development activities every year, and it has
focused on product differentiation strategy with proper operations management activities.
Another competitive strategy is its product ranges as per the required needs of its target market.
Ford has earned a global position and strong presence with the help of its manufacturing
distribution networks across the world, it has 08 R&D centers and regional engineering’s with
more than 55 manufacturing/assembling plants. It has more than 15,000 dealerships with
sophistication Human resource management and marketing techniques. (Pratap, March 09, 2020)

MOST IMPORTANT COMPETITVE PRIORITIES OF FORD MOTORs

Ford Motor Company most important competitive priorities are the Innovation, Customer
Loyalty, Supply Chain management Brand Image and its Research and Development Centers.
Supply Chain management is always a backbone of the success of any company’s manufacturing
and sales. It is important to invest heavenly on the supply chain activities to ensure that the
supply is of high-quality goods/services with quality raw materials. Ford motors has optimized
its Supply chain and due to which it has reduced its production costs with improved product
quality and delivery. Its sources from a variety of suppliers globally and made its name in having
a sophisticated supply chain network. (Pratap, March 09, 2020)

LEAST IMPORTANT COMPETITVE PRIORITIES OF FORD

MOTORs

The least important competitive priorities of Ford Motor company are the High Sales and
Marketing. As Ford Motor has earned a big name in the automotive industry which required no
marketing to its customers as of their loyalty. Customers believe on the innovations and
technological advancements of Ford and have trust with brand loyalty towards Ford, which
makes it easy for Ford to sell its products due to its historical brand image in the automotive
industry. (Ford Motor Company’s Competitive Advantage and Future). And High Sales can be
least prioritized because if all other things are up to the benchmark, then it will earn sales
automatically without being their important strategy to follow due to its R&D activities,
advancements, and customer loyalty.

ORDER WINNERS IN AUTOMOTIVE INDUSTRY

Order winners are the attractive attributes of a product which helps company in winning a
purchasing decision of a customer. In the automotive industry, it is the technological
advancement, research & development and its supply chain network with operational efficiency
which makes it winning the game, whoever will advance first by fulfilling the customers’ needs
will lead the market in the long run and will earn loyalty for life.

ORDER QUALIFIERS FOR FORD MOTORs

Order qualifiers are the factors of competitiveness for a company where the performance of its
operations must be above some benchmark level to be considered by its target customers and
these are the necessary qualities/attributes to be considered in a product. In an automotive
industry as well as for Ford, the major order qualifiers are the Prices of the products, its quality,
and its variety in its product lines. (Study Moose, 2017). All these three factors are the qualifiers
for its customers to consider the products they are offering in the market.
SUPPLY CHAIN OF FORD MOTORS

Suppliers
Assembly Manufactur
around Dealerships Customers
Plants ing Plants
the world

Note: All the activities in supply chain network are performed with the help of third-party
logistics partners to reach the raw materials from suppliers to assembly plant,
manufacturing plants, dealerships and finally to the customers.

SUPPLIERS
As per the annual report of Ford Motors company, it has claimed by their management that Ford
Motors have around 1,200 Tier 1 production suppliers who provides the ford’s vehicle parts that
are usually comprised of around 1,000 different materials. (FORD MOTORS, 2022) All the
suppliers of Ford motors believe on responsibility leadership since Ford has always been relying
on the efficiency and the quality of their selected suppliers. The main locations of these suppliers
are globally, but mostly spread around Ontario-Canada, Japan, Hungary, Poland, Germany,
China, Lowa, Sweden, Colombia, and many other regions of the world. (Pratap, March 23, 2020)

We know that the main supplier selection criteria in an automotive industry is to focus on the
prices, its quality, and its delivery process. Ford always focuses on selecting the supplier based
on the long-term relationships. Ford selection criteria is to go for a supplier who believes on
collaboration and long-term relationship, and then focusing on the prices they offer based on the
informed calculations, then the quality of the spare parts, and in the end that the supplier should
follow the delivery timeline for smooth operations. (MAVERICK, November 29, 2021)
Ford Motors monitor its suppliers every quarter to analyze the efficiency of its supply chain
including the suppliers and the logistics partners and to identify the gaps for future rectification.
It appreciates its partners and assist them with the best to achieve a collective growth and
position in the market. (Miller, 13 April 2021). Ford Motors focuses on market penetration
strategy, so if we look for the model from the Sourcing Matrix, ford is using Partner (Strategic)
function, as it always focuses on maintaining strong relationships throughout its supply chain and
strategically aligning and doing partnerships like the one Ford did with DHL logistics (Pratap,
March 23, 2020). For strengthening its communication channels, Ford is using Aligned Business
Framework method to promote healthy communication with its suppliers and OEM partners
regarding all the technological advancements that make it differentiate from its other
competitors. (TEAM, POSTED ON DECEMBER 9, 2020)

TRANSPORTATION/DISTRIBUTION/INVENTORY MANAGEMENT
Ford Motors has its first foreign branch in Canada, currently it has operations across the North
America and in almost 125 countries around the globe. Ford has all the facilities which has high
importance in terms of operations. It has manufacturing plants, transmission and assembly
plants, Engine, Stamping and Forging locations. It has its assembly plants in Michigan,
Argentina, Canada, Germany, Greater China, India, Mexico, Romania, US, Thailand, Turkey,
Spain, Louisiana, Vietnam, and Venezuela. With this, it has its distribution centers, one of which
is in Leduc Canada. Along with this, Ford possess its transmission plants in China, US, Mexico,
UK, and Germany. (COMPANY, 2022). The manufacturing plants varies around Asia Pacific,
Europe, Middle East, Africa, North America, South America etc. All these facilities have highest
importance in terms of production, but the high importance is given to Canada and US, as these
are the highest of all.

Ford Motors uses a mix of transportation options that is railcars, sea transport, trucks, motor
vehicles, trains and airplanes are also used for transporting some of the critical components with
urgency. (DEARBORN, JUN 23, 2014)

Previously, Ford stock on raw materials for all the parts of the vehicles to manufacture some
before time. But now it is also implementing Just-in-time methodology for the equipment’s
which are expensive and can be available just in time. It was used by Ford as the part of “Dock
to factory floor” method. (MSI, 2022). Ford main distribution channels include its dealerships,
auto parts etc. so we can say that it follows direct to store distribution method for delivering its
products. Ford Motors follows just-in-time inventory control method for its inventory
management with the aim to reduce costs and eliminating the waste (IvyPanda, Jul 29th, 2021)

MANUFACTURING CAPABILITIES
Ford Motors company is mostly aligned towards the strategy of Make-to-Order (MTO) and
Make-to-Stock (MTS) because it believes that there is no need of carrying large inventory. Now,
when Ford received any order that a dealer doesn’t have in the stock/inventory then they can
quickly get the parts which are necessary from their suppliers to deliver the order within the
designated 6 to 8 weeks delivery time. (group, Aug 20, 2021). Ford motors come under the Job
shop in Product Process matrix due to its low volume and unique orders from customers. We
know that capacity hindrances affect the operations, so capacity management always brings
challenges for the companies so does for Ford Motors, it is working to improve its capacity by
developing new facilities and distribution networks but managing it accordingly is crucial. Ford
company has enough excess capacity for its production, and it is currently using more than 80%
of its capacity.

The forecasting components are present in the demand for vehicles are the trend patterns of the
consumers that what are they preferring for buying a vehicle, it is also noted that automotive
industry always faces seasonal trends due to the demand factors, usually facing high demand in
spring and fall. Ford Motors believes on short term forecasting mainly quarterly based due to the
seasonal effects it is facing in the industry. Forecasting the demand for automotive is always
tough due to the seasonal factors and the consumer preferences, it involves a lot of assumptions.
(Montgomery, 2019)

Ford Motor company is using lean manufacturing processes that is used in Just-in-time deliveries
from the suppliers to manufacture the vehicles. The flexible manufacturing model of Ford has
allowed the customers with different options by staying at or near by capacity at the ford’s
assembling plant. This all is because that the company has implemented JIT and lean
manufacturing method.
UNKNOWN-UNKNOWN SIGNIFICANT SUPPLY CHAIN RISK AND
MITIGATION STRATEGY

Ford Motor Company has global business and its presence in the international market, with this
global supply chains are always exposed to the risks which local supply chains also facing in the
domestic market. We know that there are two sources of risks, one is unknown-unknown and the
other is known-unknown. The first one is uncontrollable that its unknown-unknown. This can be
occurred due to natural disasters, geo political risks, epidemics, terrorist attacks, violation in fuel
prices etc. All these can shut down production lines because of lack of parts inventory. Being a
global company, Ford has faced such situations and risks and tackled it well. One of which is
increase in the awareness of climate change, due to which many consumers are giving priority to
the fuel-efficient cars and in the response of such risk, Ford Motor increased its name in making
the fuel-efficient engines which are economical too.

United States also got into many trade wars with few countries, and this could affect Ford’s
business, like the US government tariff on foreign goods had adversely affect the cost of doing
business and would make the cars expensive, so for that Ford Motor starts doing businesses in
the low-cost countries to reduce such risk of high labor cost and machinery cost. (Seto, 2019)

KNOWN-UNKNOWN SIGNIFICANT SUPPLY CHAIN RISK AND

MITIGATION STRATEGY

Known-unknown supply chain risks are those which are quantifiable and are more controllable
by the company. These risks can be execution problems faced by the company, forecasting
accuracy, any supplier’s performance related risks or any changes in the market conditions. All
these risks are controllable as compared to the unknown-unknown supply chain risks faced by an
international organization like Ford.
Back in 2002, Ford analyzed that it has quality problems and increase in complains, for which it
blamed its suppliers for the decline in the vehicle quality as compared to its suppliers. For which,
Ford made tough contractual requirements with their suppliers and the suppliers said that they
will help in savings costs in the designs and the materials for Ford Motors. It set stiff quality
goals for its suppliers especially Tier Suppliers. It also set that the suppliers must reduce their
faulty parts per million by 25% and must stop the shipments by 25% too (Autoweek, 2002).

CONCLUSION

In the conclusion, it was very productive analyzing the supply chain and operation management
activity and progress of such a big name in automotive industry like Ford Motor company who
has a global presence. We know that supply chain of any company will define how the company
is performing and an efficient supply chain will always bring wonders like in the case of Ford
Motor for fulfilling the goals and objectives. Identifying the competitive strategy of Ford along
with its most and least important priority factors, also got understanding regarding its suppliers,
manufacturing capabilities, its inventory management techniques, and the transportation
functionalities. Along with this, the supply chain risks faced by Ford and how it mitigates
efficiently. All this is very important for getting an overview of how a company work in a global
industry. We can conclude that Ford is performing good in the automotive industry by being a
name for fuel-efficient vehicles in the world.

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