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Ford Motor Company: Supply Chain Strategy

Case Study Analysis

Group 4: Sameer Agrawal – A001 Rounika Anshu – A003 Aditya Dave – A009 Chirag Ranka – A034 Siddharth Setia – A042

ANX ▪ The success phase .Company and Industry Background ▪ FORD MOTOR COMPANY – A Brief ▪ Growing global competition and Industry consolidation ▪ FORD 2000 – Single Global Organization ▪ Information Technology – A critical enabler ▪ The Internet revolution – Intranet.

Problem definition ▪ Key Issues: ▪ Address the viability of implementing a virtual integration model through its supply chain similar to Dell ▪ Many internal and external factors involved based on the nature of automotive industry and Ford’s current operations ▪ To leverage current information technology and create a closer relationship with customers and suppliers .

responsive and efficient ▪ Synchronous Material Flow (SMF)  In-Line Vehicle Sequencing (ILVS) ▪ Shift of focus from being cost centric to establishing long term relationships ▪ Motto was to make supplier operations easier via a range of techniques like JIT. TQM and SPC .FORD’s – Existing Supply Chain Ford’s Existing Supply Base ▪ Supplier selection primarily on the basis of the cost Ford Production System ▪ Aimed at making Ford manufacturing operations leaner.

FORD’s . Regional mixing centers that optimize schedules and deliveries of finished vehicles via rail transportation 4.Existing Supply Chain Order To Delivery ▪ To reduce the time from a customer’s order to delivery of the finished product from 45-65 days to 15 days ▪ Based on following elements: 1. a minimum of 15 days of vehicles in each assembly plant’s order bank to increase manufacturing stability 3. A robust order amendment process . Ongoing forecasting of customer demand from dealers 2.

FORD’s . Primary goals of FIECo. publicly owned retail chains such as AutoNation .Existing Supply Chain ▪ Ford Retail Network FRN Launched under the newly formed Ford Investment Enterprises company (FIECo. – ▪ To be a test bed for best practices in retail distribution and drive those practices throughout the dealer network ▪ To create an alternate distribution channel to compete with new.) 2.

▪ Build – to – order strategy ▪ Just in Time Inventory system ▪ 6 day Inventory – 6 day Cycle ▪ Integrated Supply Chain ▪ ▪ ▪ ▪ Rapid Product Design Fabrication Assembly Direct Shipment to Customer .DELL’S Supply Chain ▪ Use of Direct Model without the use of retail channels.

distribution costs • Convenience for customers • Develop relationship with customer .Benefits of Dell Supply Chain • Bring Ford close to customers • Meet customer needs faster and efficiently Internet Build to order • Lower inventory.

Comparison of Dell and Ford Supply chain .

Similarity Dell vs Ford’s system Dell Process Suppliers own inventory Suppliers maintain ship points Customers frequently steered Demand Forecasting critical Demand pull through out value chain Strategic Partnership with supplier .

Enterprise Model Comparison .

Model Difference .

Moving from Push to Pull Design Strategy Vehicle combination Pricing strategy Vehicle Purchase Incentives Capacity Planning Schedules Dealer network Ordering Order to delivery Inventory Model Please everyone More is better Budget driven High Driven by program budget Make whatever you can Based on allocations and constraints Longer High with low turnover Independent dealership Mainstream customer Minimal Market driven Lower Market driven Schedule from customer Based on customer demand Shorter Low with rapid turnover Company controllerd Marketing Manufacturing and supply .

Pros and cons Advantages Customization to clients requirement Needs met faster Minimal Inventory Ability to forecast better Improved relationship with customers and suppliers Directly control customer service Disadvantages Need to change traditional process of Ford Costly and time consuming activity Loss of dealership loss of business Emotionally sensitive issue .

Problems with Dell Supply Chain ▪ Ford has complex network of suppliers and many of them does not support the necessary infrastructure ▪ Cars requires more components than a computer and cannot be easily shipped in a box ▪ Full disclosure of the purchasing information might conflict Ford’s purchasing power ▪ Very difficult for Ford to eliminate it dealers as it has a set distribution channel .

Possible Solutions & Recommendation ▪ 1st Solution ▪ Keep existing supply chain as it is and not make any major changes ▪ May fall behind in IT and may become outdated in their industry ▪ 2nd Solution ▪ Extend Ford’s E-business strategy with customers and suppliers and make a partial jump towards virtual integration ▪ Internet could serve as a primary tool for dealing with suppliers and make partial jump towards partial integration. ▪ Only cars sold over the Internet would be build to order and rest would remain the same through the normal distributor centres. ensuring partial adoption of Dell’s virtual integration model thereby creating value for the customer . ▪ Therefore. ▪ It would also allow customisation of automobiles by customers ▪ This would incorporate many of Dell’s supply chain activities.

Thank You! Questions .