SCM - Ford Final

7/29/2019 SCM - Ford Final

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Ford MotorCompany: SupplyChain StrategyCase Study Analysis

Group 4

SameerRounika

Aditya D

Chirag RSiddhar


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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


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Problem definition

Key Issues:

Address the viability of implementing a virtual integration model througsupply chain similar to Dell

Many internal and external factors involved based on the nature of auto

industry and Fords current operations

To leverage current information technology and create a closer relationwith customers and suppliers


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FORDs Existing Supply Chain

Fords Existing Supply Base

Supplier selection primarily on the basis of

the cost

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

Ford Production System

Aimed at making Ford manufacturingoperations leaner, responsive and effi

Synchronous Material Flow (SMF)Vehicle Sequencing (ILVS)


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FORDs - Existing Supply Chain

Order To Delivery

To reduce the time from a customers order to delivery of thefinished 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 stability3. Regional mixing centers that optimize schedules and deliveries

of finished vehicles via rail transportation

4. A robust order amendment process


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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 thro

the dealer network

To create an alternate distribution channel to compete with new, publicly owned retchains such as AutoNation


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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


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Benefits of Dell Supply Chain

Bring Ford close to customers

Meet customer needs faster and efficientlyInternet

Lower inventory, distribution costs Convenience for customers

Develop relationship with customerBuild to

order


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Comparison of Dell and Ford Supply chain


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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


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Enterprise Model Comparison


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Model Difference


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Moving from Push to Pull

Design StrategyVehicle combination

Please everyoneMore is better

Mainstreamcustomer

Minimal

Marketing Pricing strategyVehicle PurchaseIncentives

Budget drivenHigh

Market driveLower

Manufacturing andsupply

Capacity Planning

Schedules

Driven by programbudgetMake whatever you

can

Market drive

Schedule fro

customer

Dealer network Ordering

Order to delivery

Inventory

Model

Based on allocationsand constraintsLonger

High with lowturnover

Independentdealership

Based on cusdemandShorter

Low with rapturnover

Company co


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Pros and cons

Advantages Disadvantages

Customization to clients requirement Need to change traditional process of

Needs met faster Costly and time consuming activity

Minimal Inventory Loss of dealership loss of business

Ability to forecast better Emotionally sensitive issue

Improved relationship with customers andsuppliers

Directly control customer service


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Problems with Dell Supply Chain

Ford has complex network of suppliers and many of them does not suthe necessary infrastructure

Cars requires more components than a computer and cannot be easilshipped in a box

Full disclosure of the purchasing information might conflict Fordspurchasing power

Very difficult for Ford to eliminate it dealers as it has a set distributionchannel


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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 jumvirtual integration

Internet could serve as a primary tool for dealing with suppliers and make partial jump tpartial 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 samenormal distributor centres.

Therefore, ensuring partial adoption of Dells virtual integration model thereby creatingthe customer


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Thank You!

Questions

Documents

SCM - Ford Final