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Ford Virtual Integration

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FORD MOTOR COMPANY’S | SUPPLY CHAIN STRATEGY | | | 11/13/2012 |

*The Virtual Integration Model Analysis at Ford Motor Company, to Companies like Dell*

EXECUTIVE SUMMARY
As director of Supply Chain Systems, I have decided to implement portions of the 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. In order to adopt the Dell Model we would:
· Sell direct
· Mass-produce customized products
· Build to order
· Substitute virtual integration with suppliers for vertical integration
If we at Ford could find a solution to the obstacles of virtual integration, which I will explain in detail below. It could essentially 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 order time delivery, supply chain cost savings, and enhance overall customer satisfaction.

Issue Identification
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 Delivery Times). The reorganizational efforts to date; JIT, TQM, SMF; have not reduced the OTD – Order to Delivery....

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