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

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, ANX The success phase

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 Fords current operations

To leverage current information technology and create a closer relationship

with customers and suppliers

FORDs Existing Supply Chain

Fords Existing Supply Base
Supplier selection primarily on the basis of
the cost

Ford Production System

Aimed at making Ford manufacturing
operations leaner, 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

FORDs - Existing Supply Chain

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

FORDs - Existing Supply Chain

Ford Retail Network
FRN Launched under the newly formed Ford Investment Enterprises company (FIECo.)

2. Primary goals of 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, publicly owned retail
chains such as AutoNation

DELLS Supply Chain

Use of Direct Model without the use of retail channels.
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

Benefits of Dell Supply Chain

Bring Ford close to customers Meet customer needs faster and efficiently

Internet
Build to order

Lower inventory, distribution costs Convenience for customers Develop relationship with customer

Comparison of Dell and Ford Supply chain

Similarity Dell vs Fords 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 Fords

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 Fords 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.

It would also allow customisation of automobiles by customers This would incorporate many of Dells supply chain activities. Only cars sold over the Internet would be build to order and rest would remain the same through the
normal distributor centres.

Therefore, ensuring partial adoption of Dells virtual integration model thereby creating value for
the customer

Thank You!

Questions