...Ford Case Report Virtual Integrate or Not? Table of Contents -------------------------------------------------------------------------------------------------------------------------------Executive Summary 3 Issue Identification 4 Environmental & Root Cause Analysis 4-5 Alternatives 6 Recommendations 7 Implementation 8 Monitor and Control 9 Executive Summary Being one of the top 3 auto manufacturers, Ford had been challenged for their leading position in the auto industry by their foreign-based competitors (Honda and Toyota) in past decades; at the same time auto industry was overcapacity which lead to more fierce competition. How could Ford maintain competitive power and market share in auto market? Improve quality, decrease price and fast response to...
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...Conclusion………………………………………………………………………………….12-13 EXECUTIVE SUMMARY Ford Motor Company is the second largest industrial automotive corporation in the world. Their operations span over 200 countries with more than $144 billion in revenues. Over the years, its market share has been on the decline due to the entrance of foreign-based auto manufacturers. They are also faced with over industry capacity and uses minimal technology in their process. In an effort to face competition, Ford is currently reviewing Dell’s Model of virtual integration to solve their supply chain bottlenecks. However, there were fundamental issues that needed to be addressed: (1) How would the virtual integration affect the operations of Ford in areas of ordering, quality control and distribution? (2) Should Ford completely Dell’s business model or which aspects would work best for Ford? (3) Could Dell’s cycle time and lead times be replicated into Ford’s automotive infrastructure and would the current technology at Ford support this? and (4) Would virtual integration be feasible in the automotive industry given the product characteristics and industry scope? It was found that emerging technologies, globalization of foreign-based auto manufacturers and intense industry competition caused Ford’s issues. Subsequently, there were two ways Ford could handle this: adopting the whole Dell’s business model or adapting aspects of the business model. It was recommended that Ford should adapt aspects of the...
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...mark the PC industry • operated on a negative cash conversion cycle – by receiving payment from its customers before it paid its suppliers for components • build strong, stable relationships with the large corporations and other organizations who are its core customers Issue Identification Ford continues to face increased completion from foreign competitors while operating in an industry that is experiencing significant over-capacity. In the face of the challenges presented to us, we must determine if Ford should embrace the direct business model which utilizes “virtual integration” that has driven Dell to become a clear leader in their industry. Further, if we chose to utilize “virtual integration” based on the Dell model, we will need to develop and implement significant changes in the some of our most fundamental supply chain operations. In addition, we must determine how Ford should utilize emerging information technology to transform the way we interact with supply chain members. While progress in this area will be integral should Ford choose to pursue “virtual integration”, it is also a stand-alone issue even if Ford does not choose to pursue the “virtual integration” approach to supply chain management. It is imperative our decisions regarding these issues align with Ford’s key strategic objectives of placing emphasis on shareholder value and customer responsiveness....
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...Ford Motor Company – Case Study Jason Austin Denine Rood Jeanne Sands Like apple pie and a summer baseball game, Ford Motor Company has come to symbolize America, the land of opportunity. This America is a place where a person with scarcely any means can take little more than an idea and transform it into one of the most successful companies in the world. This is the story of Henry Ford and the Ford Motor Company. Consider the following quote from the Ford Web site. Ford Motor Company entered the business world on June 16, 1903, when Henry Ford and 11 business associates signed the company's articles of incorporation. With $28,000 in cash, the pioneering industrialists gave birth to what was to become one of the world's largest corporations. Few companies are as closely identified with the history and development of industry and society throughout the 20th century as Ford Motor Company. Henry Ford and his business partners where true entrepreneurs. Today, when we think about Ford, we think about innovation. From Henry Ford’s revolutionary idea of the assembly line to the new vehicles that Ford introduces every day, innovation has always been a cornerstone of Ford’s business. One little known fact is that Ford embraced QFD (Quality Function Deployment) , a Japanese quality methodology, into their product design process significantly earlier than most companies in the United States. This embracing of new ideology has led Ford to offer products...
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...Ford Motor Company Table of Contents Executive Summary 3 Introduction 4 Issue Identification 5 - 7 Environment and Root Cause Analysis 8 - 9 Alternatives and Options 10-11 Recommendations 12 Implementation 13-14 Monitor and Control 15 Conclusion 16 Ford Motor Company Executive Summary As director of Supply Chain Systems, Teri Takai recommends implementing virtual integration strategies from companies like Dell to portions of Ford’s supply chain strategy. Although there are several key differences between the companies, the restructuring plans of Ford 2000 have set a viable foundation to implement Dell’s virtual integration strategy in inventory management, customer service and support and suppliers’ management. The redesign of the process must include design not only of the supply chain but also of fulfillment, forecasting, purchasing, and a variety of other functions that historically been considered independently within the Ford hierarchy. Teri believes that implementing virtual integration by building on Ford’s key initiatives and projects including Ford Production Systems (FPS), Order to Delivery (OTD) and Ford Retail Network (FRN) that are currently underway will make their supply chain run more smoothly with less bottlenecking, reduced inventory, and better overall...
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...Environmental and Root Cause Analysis Advantages of Virtual Integration Integration of a virtual supply chain could bring about numerous benefits for Ford to refine their supply chain that would potentially make them more profitable and a leader in the industry for cost effective supply chain management. Since it is so competitive, any cost effective procedures could make their product more appealing to the end customer and to their suppliers to give them preferable terms and share information. The key advantage to virtual integration for Ford would be able to accurately forecast the amount of inventory they need. Dell currently operates with a limited amount of inventory on hand by only ordering exactly what they need. For example, Michael Dell explains in his interview that when they order, they will say “Tomorrow morning we need 8,562, and deliver them to door number seven by 7 A.M”. Currently, Ford uses the Order to Delivery initiative which aims at reducing lead times and by sharing the information with suppliers, they would speed up the entire process and deliver the end product faster and with a reduced cost base for the organization. Another big advantage of implementing virtual integration for Ford would be for its Ford Retail Network, where Ford aims to purchase each showroom and give a consistent design and reduce competition between dealerships that sell Ford automobiles. Having the ability to communicate with each other in real time by pooling and share...
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...------------------------------------------------- Executive Summary As director of Supply Chain Systems, Teri Takai recommends implementing virtual integration strategies from companies like Dell to portions of Ford’s supply chain strategy. Although there are several key differences between the companies, the restructuring plans of Ford 2000 have set a viable foundation to implement Dell’s virtual integration strategy in inventory management, customer service and support and suppliers’ management. The redesign of the process must include design not only of the supply chain but also of fulfillment, forecasting, purchasing, and a variety of other functions that historically been considered independently within the Ford hierarchy. Teri believes that implementing virtual integration by building on Ford’s key initiatives and projects including Ford Production Systems (FPS), Order to Delivery (OTD) and Ford Retail Network (FRN) that are currently underway will make their supply chain run more smoothly with less bottlenecking, reduced inventory, and better overall performance. Managers could overcome the complex and inaccurate manual process of forecasting and procuring parts which would result in reduced OTD lessen costs and enhance customer satisfaction. Further improved Supply Chain management will improve Supply Chain responsiveness and increase shareholder value to keep investors interested in the company. ------------------------------------------------- Introduction ...
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...Ford Motor Company Case Study Executive Summary The Ford motor company has been a progressive leader throughout the history of the company. In order maintain this leadership, it has had to adapt to the ever changing business environment and market conditions. With the emergence of new information technologies and ideas from new high-tech industries, it must evaluate how these tools can be utilized to further the business. Recently, virtual integration has been proven very successful to companies like Dell and Cisco. However, this approach is best suited for companies that have very few layers of suppliers as well as more centralized production. The Ford motor company cannot simply change their entire supply chain to fit this model. That being said, some of these theories and practices can still be incorporated into Ford’s current supply chain. These must be calculated changes, involving various departments within Ford’s organization, collaborating with their most valued and dynamic suppliers. With Ford already moving somewhat toward this direction with suppliers who provide complete subsystems for their automobiles, further changes in these areas should prove feasible with limited risk. Issues • Determining whether or not to incorporate the virtual integration model used by other recently successful firms such as Cisco and Dell • Uncertainty on how to utilize emerging information technologies to interact with suppliers • Many...
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...Chain Systems, I have decided to implement some of the key components of the new supply chain strategy of Virtual Integration from the companies like Dell Computer Corporation. Though there are several differences between the companies, Dell’s virtual integration strategy can be applied to Ford’s supply chain operation. A modified Virtual Integration System can be applied to Ford’s dependent supplied base, distribution system and dealerships. Special care needs to be taken to address the issue of unique dependency of our Tier 1 suppliers. The management of Tier 2 and Tier 3 suppliers would be more suited by the standard procedures used by Dell. If we could find a solution to all the obstacles of virtual integration at Ford, it could make our supply chain run smoothly with the best inventory solutions and overall performance. Managers will be able to overcome the complex and faulty manual process of forecasting and procuring parts which result in reduced OTD, thus decreasing the costs and enhancing customer satisfaction. Issues Identification • Inaccurate forecasting • Supply chain based on outsourcing dependent on large supplier network • Ineffective communication in supplier network • Long Cycle Times • Dealer network structure • Following the traditional “Push” model Environment and Root Cause Analysis Ford’s Supply Chain is based on Vertical Integration and Outsourcing strategy, this has created a complex supply chain, increasing inventory and OTD (Order to...
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... SUPPLY CHAIN MANAGEMENT IN IT APPLICATIONS SUMMER 2 2014 Case 1 Ford Motor Company: Supply Chain Strategy Assignment Questions: 1. Based on your reading of the Harvard Business Review interview with Michael Dell, CEO of Dell Computers, what is your conclusion about the advantages Dell derives from virtual integration? How important are these advantages in the auto business? Explanation: Michael Dell’s insight on innovative combination of customer focus, supplier partnership, mass customization and just in time manufacturing enabled the coordination across company’s boundaries to achieve new levels of efficiency and productivity as well as extraordinary returns to investors. Michael dell termed it as virtual integration. Virtual...
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...Control……………………………………………..……….………7 Exhibit One: ………………….…………………………………….………….…….7 Exhibit Two: ………………….…………………………………….………….…….8 Executive Summary “How should the company use emerging information technologies and ides from new high tech industries to change the way it interacted with suppliers?” Supply chain management at Ford was a push system until 1995, at this time the model changed to a made to stock system. Due to the complexity of the existing supply chain, there is an urgent need for change. Founded over a 100 years ago, Ford currently has many processes in place, that will not be changed in an easy, cost effective manner. Dell uses a virtual integration business model that has been modified throughout the past 15 years to be as efficient as possible for Dell. Implementation of virtual integration business model, similar to Dell, will make the supply chain more cost effective, therefore increasing revenues. However, based on the differences within the two industries, I recommend a partial implementation of virtual integration model. Using information technology Ford Issue Identification * Complex supplier network – Ford has a very large number of suppliers. These suppliers have been organized into three Tiers. Tier 1 suppliers manage and handle the tier 2 and tier 3 suppliers’. * Outdated Information Technology systems * Minimal control over independent dealerships – Independent dealer network, unionized labor force, incompatible and...
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...new supply chain strategy of Virtual Integration and strategies from companies like Dell. Although there are several key differences between the companies, Dell’s virtual integration strategy can be applied to Ford’s supply chain operation. A modification of the virtual integration system currently used by Dell could be applied to Ford’s dependent supplier base, distribution system, dealerships and divisions. Special care will need to be taken to address the unique dependency of our custom Tier 1 supplier. The management of lower tier suppliers of general or generic components would be more effectively suited by the standard procedures used by Dell. If we at Ford could find a solution to the obstacles of virtual integration, it could make our supply chain run smoothly with less bottlenecking, inventory, and better overall performance. Managers could overcome the complex and error-prone manual process of forecasting and procuring parts which would result in reduced OTD lessen costs and enhance customer satisfaction. ISSUE IDENTIFICATION Senior Executives have asked how Ford should use the emerging information technologies and ideas from new high-tech industries to change the way we interact with Suppliers. We must find ways to improve the Supply Chain management and to increase shareholder value and Supply Chain responsiveness. Specifically we are looking at how Dell manages their Supply Chain and incorporates the virtual integration strategy. A decision is required...
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...Company Background and History In 1995, to reduce cost and increase efficiency, Ford 2000 was developed to reengineer company processes including Order to Delivery (OTD) and Ford Production System (FPS) with a primary strategic goal of decreasing OTD from 60+ days to less than 15. A company-wide Intranet was launched in 1996 and expanded to include business-to-business (B2B) capacity by January 1997 including the Automotive Network Exchange (ANX) and the public Internet site went live in 1995. By 1997, the Internet site had more than 1 million hits per day. Ford was honoured as most improved automaker in the 1997 JD Power Initial Quality Study and by 1998 it acquired Volvo and surpassed Chrysler in profit per vehicle ($1770) while total profit hit $6.9 billion. Ford Motor Company is the second largest industrial corporation in the world operating in 200 countries around the globe with 180 manufacturing plants. Issues Teri Takai, Director of Supply Chain Systems is contemplating recommendations on information technologies (e.g., Internet technologies) from new high-tech industries could alter how Ford interacts with suppliers. • One group favoring "virtual integration" like Dell. • Another group believes differences between the auto business and computer manufacturing is substantive. Relative to Dell, Ford’s supplier network has more layers and companies, and Ford’s purchasing organization was more prominent and independent than Dell's....
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...supply chain management at Ford Automobile Company. Some of the issues identified includes: traditional supplier base which extends to thousands of suppliers, technology is not kept abreast and huge inventories. Further, virtual integration model as implemented in Dell Computers is discussed and its pros and cons to implement at Ford. Clearly, Ford operations make it difficult to gain all the benefits of virtual integration that Dell Computers have reaped. Recommendations are made to implement certain aspects like reducing suppliers, outsourcing non-core activities, direct sales, technology improvement, and production standardisation. In addition, key metrics are used to monitor and control the success of these measures. Table of Contents Executive summary………………………………………………………….2 Issue Identification ………………………………………………………….4 Root Cause Analysis…….……………………………………………...….. 5 Alternatives and Options…………………………………………….………7 Recommendations…………………………………………………………...9 Implementation……………………………………………………….…….11 Monitor and Control………………………………………………………..12 Conclusion…………………………………………………………….…….13 Issue identification: * Long Lead time * Organisational and process redundancies * Traditional supply chain model and outdated technology * Huge supplier base * Huge production network and social responsibility * Large retail network of private dealerships * Large finished good inventory * Independent purchasing body within Ford Environmental and root...
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...------------------------------------------------- ------------------------------------------------- Ford Motor Company Case Report ------------------------------------------------- Executive Summary Ford Motor Company has a long history, starting in Michigan in 1903. They have focused on designing and manufacturing and have been very successful, however with increasing competition, global markets and over-capacity the company needs to look at ways to improve profitability. The company has implemented various programs and processes to create a lean, responsive system with better consumer forecasting. Their challenge is to continue to research ways to stay viable in current market and industry conditions. Dell Computers has been very successful with a direct model and virtual integration that may or not work well for Ford. CONTENTS * ISSUE 3 * ANALYSIS 4 * ALTERNATIVES 6 * RECOMMENDATIONS 7 * IMPLEMENTATION 8 * CONCLUSION 8 * REFERENCES 9 * ISSUE: The Ford Motor Company is facing a number of challenges including the direction of CEO Jac Nasser to focus on customer responsiveness and shareholder value to deal with increasing competitiveness, an industry with potential over-capacity and the expansion into globalized markets. Ford had begun to implement systems to reduce cycle-time, improve quality and to lower costs. Programs included consolidating product development into five Vehicle Centres (VCs), reeingineered...
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