FORD MOTOR COMPANY’S
SUPPLY CHAIN STRATEGY |
*The Virtual Integration Model Analysis at Ford Motor Company, to Companies like Dell*
As director of Supply Chain Systems, I have decided to implement portions of the new supply chain strategy of Virtual Integration and strategies from companies like Dell. Although there are several key differences between the companies, Dell’s virtual integration strategy can be applied to Ford’s supply chain operation. A modification of the virtual integration system currently used by Dell could be applied to Ford’s dependent supplier base, distribution system, dealerships and divisions. Special ...view middle of the document...
We must find ways to improve the Supply Chain management and to increase shareholder value and Supply Chain responsiveness. More specifically we are looking at how Dell manages their Supply Chain and incorporates the virtual integration strategy. A decision is required before the next meeting with the VP of Quality and Process Leadership.
Environmental and Root Cause Analysis
Current Supply Base
Certain Groups believed that the differences between Ford and Dell are too large, and how would I be able to compare a computer manufacturing company with that of a large automotive manufacturer? The Ford supply base in itself is much larger and more complex with that of Dell's. The existing supply base was a product of history and up until the late 1980’s was over inflated with thousands of suppliers across all of the business units. Purchasing selected suppliers based on lowest cost, and over looked other important aspects of the supply chain, such as logistics, and quality. With the ever growing competitive automotive market, it was important to improve on processes that would give us an advantage in the market place. Also we recently decreased our supplier base to have a closer and more long-term relationship with fewer suppliers called ‘Tier 1’ suppliers. These suppliers provide Ford with complete vehicle subsystems. The Tier 1 suppliers work with multiple Tier 2 suppliers who provide the components that make up the vehicle subsystems. The Tier 1 suppliers do not have the capital to invest in the new technologies that Ford seeks to get into. However, the Tier 1 suppliers do have fairly solid IT capabilities, but these capabilities severely drop when dealing with the Tier 2 suppliers.
Currently Ford is also using a Push type system, where producing as many vehicles as possible, and as many models as possible is the standard. This has resulted in massive over producing, which resulted in high inventory levels, and a very low turnover. The production schedule is consistent and easy to manage, but it does not align with the demands of the customer. The battle for advantages in the auto industry increases the need to be innovative, in our procedures and thinking.
With increasing competition globally, Ford’s new approach required that technology be employed to overcome the constraints imposed by geography on information flow. We find it advantageous to include our IT group to aid in major reengineering projects. Ford Teams need to continue to find ways to work together as if they were all in the same room.
Similarities & Differences between the 2 Companies
To begin our comparison of Dell Computer and Ford Motor Company, let’s begin by discussing the similarities between the companies. The main similarity is in their operating principles. As stated, all of the principles that led to Dell’s success are in place in some form at Ford. It should be noted that most of these operating...