Ford Motor Company Case Report
FORD MOTOR COMPANY
Written Case Report
F.B.
EXECUTIVE SUMMARY
As director of Supply Chain Systems, I have decided to implement the new supply chain strategy of Virtual Integration, and model its supply chain after companies like Dell. Although there are several key differences between the companies, Dell’s direct business approach can be applied to every facet of Ford’s operation. Special care will need to be taken to address the unique dependency of our custom “tier- one” suppliers. A modification of the virtual integration system currently used by Dell could be applied to Ford’s dependent supplier base, while the management of lower tier suppliers of general or generic components would be more effectively suited by the standard procedures used by Dell.
STATEMENT OF ISSUE:
In 1913, Henry Ford revolutionized product manufacturing by introducing the first assembly line to the automotive industry. In the 1980’s, Ford picked suppliers based on lowest cost and the overall costs of the supply chain were ignored. Dealing with so many suppliers led to a higher overall costs and a complexity that was difficult to control. In the 1990’s, Ford cut down on the number of suppliers drastically and shifted towards more long term relationships with a set of suppliers that would provide entire vehicle sub systems. Although the number of suppliers were lower, our supply base was different and more complex then the one used by Dell.
After many decades of success, customers have increasingly become harder to find. Due to relatively new threats to the industry, an increasing numbers of cars and trucks are parked in dealer lots and showrooms, creating an alarming trend of stagnation and profit loss. Foreign based automakers such as Toyota and Honda have expanded into domestic shores and in turn have wrestled marked share from American and Canadian automakers.
To answer these threats, we have made recent attempts to transform our dated vertical (not virtual) integration
Written Case Report
F.B.
EXECUTIVE SUMMARY
As director of Supply Chain Systems, I have decided to implement the new supply chain strategy of Virtual Integration, and model its supply chain after companies like Dell. Although there are several key differences between the companies, Dell’s direct business approach can be applied to every facet of Ford’s operation. Special care will need to be taken to address the unique dependency of our custom “tier- one” suppliers. A modification of the virtual integration system currently used by Dell could be applied to Ford’s dependent supplier base, while the management of lower tier suppliers of general or generic components would be more effectively suited by the standard procedures used by Dell.
STATEMENT OF ISSUE:
In 1913, Henry Ford revolutionized product manufacturing by introducing the first assembly line to the automotive industry. In the 1980’s, Ford picked suppliers based on lowest cost and the overall costs of the supply chain were ignored. Dealing with so many suppliers led to a higher overall costs and a complexity that was difficult to control. In the 1990’s, Ford cut down on the number of suppliers drastically and shifted towards more long term relationships with a set of suppliers that would provide entire vehicle sub systems. Although the number of suppliers were lower, our supply base was different and more complex then the one used by Dell.
After many decades of success, customers have increasingly become harder to find. Due to relatively new threats to the industry, an increasing numbers of cars and trucks are parked in dealer lots and showrooms, creating an alarming trend of stagnation and profit loss. Foreign based automakers such as Toyota and Honda have expanded into domestic shores and in turn have wrestled marked share from American and Canadian automakers.
To answer these threats, we have made recent attempts to transform our dated vertical (not virtual) integration