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Ford Motor Company Essay

1098 words - 5 pages

Case Study
for
Ford Motor Company
Supply Chain Strategy

Prepared by Student:
Prepared for Instructor:

This report is submitted in partial fulfillment of the requirements of the course

Table of Content

Subject Page

Executive Summary ............................................................................... 2
Issue Identification -.......................................................................................... 3
Environmental And Root Cause Analysis.............................................. 3
Alternative And Options......................................................................... 5
Recommendation And ...view middle of the document...

Issue Identification:
In order to become more efficient in supply chain strategy, Ford's upper management proceed with restructuring plan called Ford 2000 aimed to merge all its operations centers to one global organization. The goal behind this restructuring is to reduce operational cost and reduce the order to delivery time by reengineering and globalizing. The reengineering is including important component such as Order to Delivery (OTD) and Ford Production System (FPS) .

Environmental and root cause analysis:
Competitors and suppliers are the most important components of the external environment to Ford. Ford faced pressure from the external environment represented in the Japanese auto competitors such Toyota, Honda and Nissan. The competitors have the power to sell their cars at good quality and low price. Ford profit after each car is USD 1,770 while Honda or Toyota profit is almost USD 900. However the profit of Japanese car is less than Ford but the economy scale of Japanese cars are higher than Ford. By the end the over all profit of Ford needs to be increased but how? Ford needs to reduce the cost as long as they can not increase their economy of scale.

In terms of suppliers, Ford decreased its first level suppliers which we called (Tier 1) in order to have long-term relationship. Ford dose not manufacture all its parts but the suppliers provide Ford with cars sub-systems. The direct suppliers work with level two suppliers who provide the base material to made the parts. For example, Tier 2 suppliers proved the raw material to Tier 1 suppliers who manufacture the parts or car components. Here Ford think how to use the IT to communicate with supplier 1 and supplier 2 or 3.

Supplier 1 does not have that capital in order to invest in the new technology which Ford is looking for. If the supplier 1 has difficulty in install new technology how about the supplier 2 , is he has that capital and possibility to hock up in the new technology? Hence, Ford does not have direct contact with supplier level 2.

For the internal environment, IT might works in terms of information flow for the reengineering organization and it might helps to reduce inventory. To facilitate the information flow internally, Ford launched a company-wide Intranet in mid-1996. In addition, Ford further expanded upon that system to include business-to-business (B2B) capacity by January 1997 which also comprised the Automotive Network Exchange (ANX). Ford’s public Internet site went live in 1995. Internet usage exploded, and by mid-1997, Ford’s website was getting more than 1 million hits per day. During this revolutionary...

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