SUPPLY CHAIN STRATEGY

Ford was
Incorporated in 1973 by Henry Ford.
Second largest industrial corporation in the world.
More than $144 billion revenue and 370,000 employees
Operations spanned across 200 countries.
The company had produced an excess of 260 million
vehicles.

Fords ambitious restructuring plan.

Merging North American, European and International
automotive opserations into a single global organization.
Product development activities consolidated into 5 Vehicle
Centers (VCs).
Making processes and products globally common and
eliminate redundancies in organization & processes

Ford had several thousand suppliers of production

material In late 1980s which they decreased during early
1990s
Long-term relationships with a subset of very capable,
cost efficient suppliers who provided entire vehicle subsystems who would deal with tier 2 and tier 3 suppliers.
Ford assisted its suppliers in improving their operations
via techniques such as JIT, TQM and SPC.
In exchange Ford expected yearly price reductions.

Modeled roughly on Toyota Production System.

Ford Production System (FPS) a multi-year project which
drew on internal and external expertise.
Level Production and move to a more pull-based system.
Important part of FPS was SMF [Synchronized Material
Flow]which imparted Synchronized production, continuous
flow and Stability throughout the process.
A key to Synchronous Material Flow (SMF) was In-Line Vehicle
Sequencing (ILVS) which also helped to forecast the stocks
Ford made its manufacturing leaner, much more responsive
and efficient by integrated system.

Reduce customers order to delivery time from 45 -60 days to

15 days.
To achieve this they had to forecast the customer demand
from their dealers.
A minimum of 15 days of vehicle in each assembly plants
order bank.
Regional mixing centres that optimize schedules and
deliveries of finished vehicles via Rail Transportation.
Robust order amendment process to allow vehicles to be
amended for minor color and trim variations without having
submit new orders.

On July 1, 1998 Ford launched the first of its Ford Retail

Network (FRN) ventures in Tulsa, newly formed Ford
Investment Enterprises Company (FIECo) whose Primary
goals were To be a test bed for best practices in retail distribution and
drive those practices throughout the dealer network
To create an alternate distribution channel to compete with
new, publicly-owned retail chains
FRN bought all the Ford dealers in a local market so that the
dealers were in competition against the "real competition
such as GM, Toyota, Honda, rather than with each other.
Showrooms would have a consistent look on the outside,

Replacing the PHYSICAL COMPONENTS of the company

with INFORMATION using internet as its backbone.
The Business owns only their brands and clients.
Eliminated need to physically produce, ship or handle any
products since they are outsourced.

Enhancing customer value by letting customers were

allowed to configured PCs according to their computing
needs
Eliminate middleman
The Customer experience could be enhanced by data
from customer feedback.

DELL

vs

FORD

Minimize Suppliers
Eliminate Middleman
Forecasting Demand
Better communication between suppliers and
manufacturers.

For supplier network had many layers while dell had very
few, so ford has to try to decrease the layers
Lower supplying tires does not have the IT knowledge, so it
is difficult to implement JIT
Try to minimize manufacturing units
Ford sell most of cars through dealership, Dell follow direct
sales model

IF FORD IMPLEMENTS DELLS MODEL

Ford will be able to increase its portfolio.
There will be improvements in supply chain that will benefit
ford and the customer however the manufacturing and
servicing process complexity may increase and may cause
trouble
Technical edge over existing competitors.
Supplier and FORD communication will be much better n
shrink the supplier network.
IF FORD DOES NOT IMPLEMENT DELLS MODEL
Ford may loose out of innovation as competitors may adopt

 Re-Engineer its existing Supply chain to gain technical edge.

Dell and Ford vary a lot in their organizational structure and
Fords business model is far too complex.
However, Ford can implement similar model and eliminate
unnecessary physical components and perform Virtual
Integration in a suitable way.