Ford Case Study Essay

Executive Summary hybridisation is one of the leading companies in the auto manufacturing. The identifyor of put out go by means of governances at crossway was put in a tough typeset to make recomm turn backations with regards to the companys add together twine of mountains strategy. There atomic number 18 2 groups within fording that have two different opinions on how crossover should be using emergent entropy technologies and ideas from high tech industries, such as dingle, to change the way it interacts with suppliers. The introductory group argued that cross should play along dells business model to improve efficacy and increase profits. This group emphasizes that crosswalks virtual integration should be the blueprint for what ford should attempt. On the other end, the second group believes that cross and Dell ferment in two different industries and it is not workable to adopt Dells business model. This effect study go away demonstrate the toot causes of the problem and will present the reason why cut through should pursue with the mixed flak. Some of the solutions in the mixed approach ar initiationd on Dells business model, magic spell the rest are not. These solutions are pricely and magazine consuming, notwithstanding hybridizing will eventually harvest the benefits of this approach.Issue IdentificationTeri Takai, Director of Supply Chain Systems, is about to make critical recommendations to senior executives on crosss usage of emerging information technologies and ideas from high tech industries to deepen the methods track interacted with suppliers. There are two different projects on this matter. The first view, which is in favor of virtual integration, argues that technology became a major actor in supply range, and get over needs to redesign its supply chain by adopting new technologies to prosper. Supporters of this view used Dell as an utilization of virtual integration. Dell utilized new technologies to cut down working(a) capital and risk of ancestry obsolescence. The other view was more conservative. Supporters of this view argued that the auto industry is much different the computer industry with regards to layers of suppliers, complexity of parts, and history. Ford supplier network is massive and has many an(prenominal) layers and a stripe of companies. The growth of Ford resulted in growing the supply small to reach several thousands of suppliersin the 1980s. Even though Ford started reducing its supply base in the 1990s, there were still too many suppliers. In comparison to Dell, Ford needed thousands of parts to manu facture a vehicle, whereas Dell need few hundreds to manufacture a computer. This shows how complicated Fords supply chain versus Dells. Ford excessively has to controls the supply chain for its dealerships that are spread around the globe. The longer the supply chain is, the more problems would arise. For Dell, the supply chain is shorter and guests buy blatantaneously from Dell without going through dealerships or retail stores. Ford has no direct feedback from customers due to the fact that many of the dealerships were mugwump and not owned by Ford. Many Ford dealers were competing against each others instead of the real competition. For Dell, the situation was transgression versa, Dell dealt and interacted directly with customers with no dealership exactment. While Fords first tier supplier has moderately developed IT infrastructure, they basisnot afford to spend in new technologies to keep up with Fords pace. The disappoint tiers of suppliers have very weak IT infrastructure and technological advancements, which would limit Fords supply chain and increase lead magazine and cost. In Dell processes, posit forecasting is important, where changes are shared out with suppliers instantly. This is not the case for Ford. Before the Order to Delivery project, Ford never involved dealers in the forecasting process. Environm ental & Root Cause AnalysisWith returns of $144 billion, and 370,000 employees in 200 countries, Ford became the second largest industrial corporation worldwide. Fords main business is design and manufacturing of automobiles. Since 1903, Ford had produced more than 260 vehicles. The auto industry has been growing, at the said(prenominal) time some of the international automakers entered the US market and are competing fiercely with the US automakers Ford, GM & Chrysler. With this tight competition, Ford and many automakers felt the need to move industry consolidation to reduce cost and improve quality. In 1998, Ford had profits $6.9 billion, and 3.9% return on sale. Ford has a huge supply based which was picked primarily based on cost. A component of these suppliers lacked the IT infrastructure. Although Ford has good relationships with some of its suppliers, they arent hardened as a part of Ford. On the other side, Dells suppliers have a very developed IT infrastructure and the y are handle aspart of Dell, and they acted like one. Fords suppliers are unusual with nature and complexity. For Dell, suppliers own inventory until it is used in action, whereas the situation is frigid for Ford. This affects Fords cash flow and turnover rate and puts a lot of pressure on Fords production facilities. It also makes Ford hold the risk of holding sizable inventories to produce end products. Ford is lacking on demand forecasting, changes are not shared with the supply base immediately. Dell utilizes new technologies to share changes with its suppliers. Fords organizational structure is another challenge, where Fords purchasing is independent of product development, even engineers cannot discuss pricing with suppliers. At Dell, the purchasing consort works collaboratively with the product development team. With all these challenges in the US market, Ford initiated a restructuring plan called Ford 2000. This plan was aimed to reduce costs by reengineering and global izing organizations and techniques. Ford introduced the Order to Delivery (OTD) where it aimed to reduce the cycle time from 60 days to 15 days. Ford also micturated the Ford Production System (FPS) which is similar to the Toyota Production System, and it was intended to streamline Fords trading operations and make it more productive. Another initiative Ford took was the Ford retail Network (FRN), and the goal was to deliver a high level of customer service and maintain customer satisfaction. Alternatives & OptionsFord has some preferences with regards to using emerging information technologies and ideas from high-tech industries to change the way it interacts with suppliers. The first Alternatives to adopt Dells business model of virtual integration, where Ford would share information and systems with its supply base to coordinate inventory and streamline production. Ford would win online customer shopping experience to receive orders and feedbacks and integrate them into Ford systems and its suppliers. This excerpt has some advantages and disadvantages. It would improve the relationship between Ford and its suppliers, where information are communicated instantly between both of them. It would help in forecasting demand based on the information received and shared. It would also connects Ford directly to its suppliers and customers. This virtual integration would help Ford reduce its cycle time and costs dramatically, which would be reflected on the end productsprices. The major disadvantage of this option is the high cost and lengthy process to execute it. It does not involve Ford only, but its suppliers as well. Ford and Dell operates in two different industries, and each industry has its own features. There is a magnanimous chance that virtual integration might not work as well as it does in the auto industry due to the complexity of manufacturing process, consumer behaviour, and history. The second substitute(a) is to maintain the status quo and wa it for the new Ford 2000 plan to start giving results. This recent initiative proposed solutions for a lot of Ford problems including suppliers and usage of new technologies. The advantages of this alternative are that Ford has already in the middle of executing the Ford 2000, and it should be long bounteous until the results are revealed. It is a comprehensive plan where there was an initiative for roughly every aspect of the supply chain. The main disadvantage of this alternative is that it overlooks the instant communication between Ford and its suppliers. The third alternative is the mixed approach. Ford would adopt some of Dells business Model, at the same time introduce other changes. Ford would pick the feasible and applicable operations of virtual integration that best fit the automobile industry. On the other side Ford would narrow down its supply base and increase tier 1 suppliers. Ford would encourage and coordinate with suppliers of sub-system components. This alternat ive would allow Ford to tailor the best practices for its needs, but it would be dearly-won, time consuming, and changes would affect different parties of the supply chain. Recommendations & ImplementationFord and Dell operate in two different industries that have different characteristics. Ford cannot reduplicate Dells business model and expect positive results, but Ford can benefit from Dells experience. Based on the analysis of the above information and the study of this case, I would recommend to stay with the third alternative. Ford has the organizational infrastructure to adopt and execute this alternative. Ford has a very well developed IT system and the resources to move on with these changes. Ford would update its IT system to share information with its supply base including tier 2 and tier 3 suppliers, where supplier would have addition to Fords central data. Ford might have to team up with some of these supplier to develop their IT systems to ease the transformation a nd synchronisingof information. Ford would reduce its supply base as much as it could, by short-listing suppliers and encouraging sub-systems suppliers through incentives. Ford would re-discuss terms with its suppliers to pay for inventory only when parts are used in production. Ford would adopt new technologies to share real-time information with all its supply chain members. Ford cannot skip dealerships before reaching end users, but can use dealership as a demand forecast route and to deliver high customer service. These changes would ensure the smooth flow production and eliminate bottlenecks , which would in turn increase efficiencies and revenues and reduce lead times. reminder & ControlFord must monitor that actions that it would take to measure the achiever of changes. Ford would have to assign a team of IT specialists to monitor the convert of suppliers IT systems and to help with any challenges. Ford would monitor lead times for customer orders regularly to see if lead times are improving and to snag for bottlenecks. Ford to create an interactive website to answer and address customers concerns and suggestions. Form to create a committee of different supply chain members to lead these changes and direct them. This committee would meet semi-annually to discuss the changes and to address any problems or concerns. terminationFord is one of the biggest car companies in the world. To overcome the challenges and to enjoy endless success , Ford must adopt the above recommendations. The process is costly and time consuming, but it would pay off on the long run.