Ford Motor Co. Case Report

r Type the company name pass over Motor bon ton Supply ambit Strategy Type the document subtitle NICOLE Table of Contents Page 3. Executive Summary Page 4. Identification Issues Page 5. Identification Issues, Environmental and Root Cause analytic thinking Page 6. Alternatives Page 7. Recommendation, Implementation, Control Page 8. Conclusions, References Executive Summary This case report addresses the challenges to implement virtual integration in Ford Motor Company, unity of the largest automobile manufacturing companies in the world.It focuses on the viability of implementing a make out filament strategy following dingles Direct Business pretence Dells direct business model used information and technology to revolutionize the PC industry it focused on developing effective supplier partnerships and JIT manufacturing meet a highly horizontal or virtual integrated company. Dell skipped the intermediate retailers, selling to customers directly eliminating the resellers mar kup and the cost and risk associated with carrying large inventories. completely this combined gave Dell a leading position in a very competitive market in moreover a 13 category period time. In 1970s Fords main competition was with General Motors and Chrysler. However with the entry of Japanese companies like Honda, Toyota and Nissan the Ameri goat firm go about a harder competition. In edict to maintain its leading position, in 1995 Ford initiated the Ford 2000 plan aimed to restructure numerous of their key processes like Order to bringing (OTD) and Ford Production System (FPS).They wanted to reduce the OTD from 60 or more than to 15 or less days. FPS was created to convert the render chain from a push type to a move type basing their forecast, production and inventory decisions on factual market demands. The decision to radically redesign Fords supply chain infrastructure may significantly affect in a positive way the growth and competitiveness of Ford Motor Company in a short, mid and long term period.I strongly game the implementation of virtual integration and a pulled based system in Fords supply chain. It has been proven by Dells KPIs that producing based on true customer requirements using information technologies for the cost-effective information flow from the consumers all the way down to suppliers impart directly improve the supply chain by bring down inventory levels and the related cost, reducing lead times, making your suppliers, the production systems and the overall SC more responsive and cost-efficient.This juvenile strategy will include the creation of an IT platform which its objective is to support an online movement, it will establish procedures to enable customization and ordering by customers via advanced EDI, this platform will be integrated to the physical dealerships as well so they can transmit in real time customers requirements. All customer orders would be taken either via Fords web site or by phone and then p roduce. A pull system would be implemented completely.This Platform will besides virtually integrated Fords supply chain where Ford and all its suppliers would share information by an intranet and Internet to coordinate in real time the flow of materials and production. Issues Identification Industries Differences One major(ip)(ip) issue is the differences between the auto business and the computer business were compared to Dells Fords supplier network had many more layers and many more companies making Fords supply chain more complex than Dells. Change Management (short term issue)For the reasons above some Fords SC staff thought that the Dells direct business model will non deliver the same results for Ford. Fords staff never faced with the challenge of modifying work flow processes and standard operating procedures, this can result in employees being uncomfortable, dissatisfied and challenged by this new system, therefore they may fall back to their original habits. The adaptat ion of this new initiative at staff level will be a major challenge for Ford. Purchasing (short term issue, potentially long term issue)Different from Dells were get activities reported to product discipline, Fords purchasing division is separate from product development, this is another source of disconnect in the supply chain. The efficient roll-out of new products may be impacted negatively payable to lack of communication between these two key departments. as well suppliers were picked based on cost, and little regard was given to the overall supply chain cost. At this level of the supply chain restructuring may be difficult due to corporate history and politics. Information Technologies (short term issue, potentially long term issue)An definitive issue is the lack of technological knowledge and application throughout Fords supply chain, were first tier suppliers well developed IT capabilities interacting with Ford via EDI, further they were not able to invest in new techn ologies at the same rate as Ford did. The understanding of modernity technology rapidly diminish in the lower tiers of the supply chain. This situation was different to Dells supply chain, were by using new technologies Dell shared information in a real time fashion with its suppliers, helping them know Dells daily production requirements making the supplier more responsive to Dells needs.Also Dell only kept suppliers that maintained their leadership in technology and quality making the overall supply chain more competitive. Lead Times/Production Process (short term issue, potentially long term issue) The production at Ford is based on a influence schedule making its production system push based, creating high inventory levels with low turnover, in addition to this bottlenecks were an issue in the material planning and vehicle production processes.So far this production system created a lead time of 65 days from the time a customer placed an order until the product was delivered, making the overall supply chain inefficient. Environmental and Root Cause Analysis Ford, as any other corporation is looking to win the ultimate goal increase bring in margins. The OTD and FPS initiatives established an aggressive goal to reduce lead times from over forty five days to fifteen days. To do this, it is necessary to improve the flow of information throughout the supplier network and reduce manufacturing time.The challenges faced include the unavailability of accurate demand information, sorry supplier communication at every level, lack of interaction between product development and purchasing, and resistance to change within the organization. Fords genuine OTD time requires production to guess the real demands. Consumer demand is therefore met through a push rather than a pull manufacturing process. To move to a pull system and to improve demand forecasting, Ford moldiness implement a process that will provide earlier demand notification to the supplier network.The y must also be able to immediately link the actual orders to the manufacturing schedule at any of their almost two hundred manufacturing locations. Purchasing must also play an integral role in this process to insure the correct suppliers are receiving the information. Another important step for Ford is to coordinate thousands dealerships to transmit selective information sales efficiently, Dells business model involves direct manufacturer contact with the consumer, this greatly reduces order time by removing middle-man interference and inventory requirements. further for the automobile industry without the distribution channels will be impossible for a potential customer to decide to buy a car without interrogatory it, seeing it and feeling it. For this reason the auto industry lacks this ability. Considering all the issues above and their associated challenges, would be fair to say that Fords multi-layered supply chain is in great need of a technological solution to its informati on sharing and communication needs. Alternatives 1. Keep Fords existing supply chain and initiatives of progress without investing in a new IT platformThe existing initiatives such as FPS and OTD and their overall objectives and their supply management goals are a step in the right direction for providing the necessary data sharing with suppliers and therefore achieve the goals of Fords initiatives. Ford will have to rely on the actual technology (EDI) such as phone or email in some cases depending if it is a tier 1 suppliers can depend in a more sophisticated tools such as the FRN or the extranet created to connect ford with its suppliers in the B2B initiative.The advantage of this is that there will not be major changes and excess cost involved besides the ones related to the overall SC efficiency, the disadvantages of this is that it has been proven that any enterprise which is not up to date with the newest information technologies will not stay competitive and in a leadership p osition within mid and long terms, facing the chance of getting behind in a such competitive market. 2. Support Fords FPS and OTD initiatives by creating a specialized IT frame that will help to achieve the virtual integration in Fords SC.The initiatives above must now contain an advanced IT solution to be linked to the outside groups, tier-2 suppliers and upstream to the distribution network. The IT system will focus on developing the open sharing of real time demand information between the distribution network and the supplier pool. Further development of long-term supply contracts with key vendors and a continued focus on the sub-systems supply format will improve confidence while simplifying and speeding the spotless process.Building linkages from the dealerships (Also is necessary to invest in the E-business infrastructure) all the way down to the lowest tiers, so the right people get the necessary data in the fashion and time that is needed to improve the SC. The disadvantag e of this will be in the short term and probably midterm period, due to all the crusade and extraordinary monetary investment that an initiative like this requires. If the system is poorly chosen, the entire initiative will fail.Technology costs, if not monitored and controlled, can escalate uncontrollably. Also while the platform is operational there may be unexpected issues which the staff and suppliers will not be able to solve causing inefficiencies in the supply chain, affecting Fords and its suppliers revenue directly. The advantage is that with an infrastructure like this Ford will virtually have automated its supply chain translating in achieving Fords initiatives and therefore their ultimate goal Be more profitable and a leader automobile manufacturing companyRecommendation I strongly support the implementation of alternative number 2. Dells direct business model will be the guideline to follow when applying this model in Fords organization. Although there are several majo r differences between the companies, Dells direct business approach can be applied to every facet of Fords operation. The decision to support virtual integration will help redefine Ford as a competitive, cost effective and profitable company.Instead of remaining static, Ford must pursue continually create by mental act along with the new technologies trends, failure to incorporate the modish information technologies will result in continued inefficiencies and eventually Ford will be displaced from the automobile manufacturing leading positions. Implementation form 1 dead on target and timely information should be the primary focus of the IT implementation. For this stage, the existing FPS initiative should be combined more extensively with the existing intranet and extranet.Ford should leverage the B2B capabilities to incorporate upstream ordering information from the distribution network. To minimize risk, stage 1 should be applied on a specific product line and only with key s uppliers (pilot projects). Initially, the information sharing may be a simple as providing real time demand to suppliers on a secured web site. Stage 2 Once this first stage has achieved quantitative results the IT objective will be to automate the order-to-scheduling process to adapt processes that would notify suppliers of orders and their manufacturing locations based upon every day orders from the dealerships.The objective is to develop information flow upstream from the suppliers. Ford will need to know on an accurate and real time fashion the suppliers singular daily capacities, only then Ford will be able to effectively allocate orders. Control Understanding this challenge, implementation plans will require phasing and qualified training, with follow through at all levels to ensure a predictable and comfortable transition.This stage should be split into manageable groups, action plans should be in place for addressing specific challenge areas, such as technically issues. Th e control will focus in monitoring the KPIs within Ford and its suppliers, by this stage the refined IT solution will help to achieve FPS goals such as lower inventories, faster inventory turnovers, leaner manufacturing process, making the overall supply chain more cost effective and responsive, achieving the 15 days lead-time established by ODT. ConclusionFord is an example of a company who can evolve at any stage of its existence it is committed to be leader in the automobile market. They decision to implement major changes within the organization shows the end to do anything to stay competitive, Ford knows that if they dont keep up with the new trends, they will lose ground easily over the time. Once once again I realize how the information plays the most important role within any organization, the effective and efficient manage of it will smooth any operation helping to achieve the expected results.Whether your company is vertical, horizontal or virtual integrated a key issue is to build based on real requirements delivered in real time. If everything starts with the right step, all of the following levels of the SC will enjoy a more organized and efficient process. Supporting these basic ideas with and efficient IT infrastructure will give the ultimate competitive advantage to any company it is applied.In conclusion if the recommended strategy is implemented successfully and in a timely manner, Ford will be positioned to become a dominant player in the automotive market enjoying great growth and larger profit margins. References Ford Motor Company SC Strategy Case Study Harvard Business School by Robert D. Austin The Power of Virtual Integration An converse with Dell Computers Michael Dell by Joan Magretta.