Ford’s Supply Chain Strategy

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and the outcome could be a higher order lead times, higher cost and operational hassle.

ANALYSIS

Analyzing Ford and its Supply Chain strategy to its end customers and how Ford thinks, it can be improved by implementing of Ford 2000 project or following Dell’s Integration

SWOT ANALYSIS of Ford

STRENGHTS’ WEAKNESS

 Second largest corporation in the World with revenues of more than $144 billion and operating in 200 countries

 Wide and large span of dealer’s and service network

 Strong Customer relationships

 Production cost are lowest in the industry  Lower Product quality in comparison with foreign or Japanese brands

 Lack of global infrastructure even presence in 200 countries

 Lead time is quite high with 60 days

 Internal bureaucracy and conflicts made it long time for any decisions

OPPORTUNITIES THREATS

 Asian markets are Growing faster than developed economies

 Gap in-between the technology

 Customers looks for longer relationships with dealers as well as with company

 Ford should adopt global platform and adopts Toyota policy  Majorly dependent upon local markets such US and Canada

 Japanese brands are biggest threat to Ford and which already have better production and technology

 More suppliers are moving to China and Mexico region for lower cost of production

 Mergers & Acquisitions in Automobile Industry creates an indirect threat for Ford

ALTERNATIVES

A. Design a mixture of online and offline operations and form procedures to enable customization and ordering by customers over the internet but maintain physical dealerships as well.

Advantages:

 Customization to customers, start a supply chain vertical integration business model

 Open new market segment and attract clients who like online shopping

 Reduction in overhead and inventory carrying costs by implementing of forecasting system

 Direct control on customer service experience

Disadvantages:

 Costly, time consuming, requires internal and external changes which are not easy to handle and integrate with other operations.

 Independent dealers will complain due to internal competition

 Suppliers’ inability to keep up to speed with Fords modern IT technology

B. Create a virtually integrated supply chain based on Dell’s model. Ford and all its suppliers would share information between their systems and the Internet to coordinate the flow of materials and production. All customer orders would be taken either via Ford’s web site or by phone and then build. A pull system would be implemented completely.

Advantages:

 Customization to clients, start of vertical integration in the supply chain

 Customers’ needs are met faster at higher profits due the elimination of reseller’s mark-ups

 Directly control customer service

 Minimal inventory carrying costs and higher order lead time

 The ability to forecast demand is significantly better

 Improved relationships with both customers and suppliers

Disadvantages:

 Ford’s traditional processes and production methods would have to be changed to take advantage of this new form of supply-chain management. Since it is a very costly and time consuming activity, the difference in the two industries makes it a risky option

 The loss of dealerships will mean a loss of business to competition

 Change management has to take effect which is costly and emotionally sensitive.

RECOMMONDATIONS & IMPLEMENTATIONS

I. In order for Ford to keep technologically advancing, they will need to keep their Tier 1 suppliers on track with them and develop direct links to Tier 2 suppliers. For this Ford should create a “central design database” in which Ford can control the level of information shared with each Tier of suppliers. This way Ford can control the supply chain for its suppliers with the use of IT infrastructure and no tier supplier were able to interact with each other.

In this way Ford can involve their purchasing department too and be an important part of advanced supply chain strategy and they can also include open bidding system in particular Tier of suppliers to get more competitive cost in globalized market.

Lastly, if something should happen with the Tier 1 supplier, Ford would essentially lose the relationship with all of the Tier 2 suppliers working under that one supplier or current system. Having a direct relationship with each Tier 2 supplier would effectively create a more stable environment for that supplier because they would not only have a relationship with the Tier 1 supplier but also directly with Ford.

Monitor & Control of IT Infrastructure

For the new IT system, Ford can use globalized platform and set up their network system in Developing economy to use economies of scale and be more cost saving. Ford can monitor their system every quarter and can ask for some part of technology to be covered by suppliers, if they have to be a part of Ford supply chain. This way Ford lowers their initial investment too.

II. Ford could successfully realign the purchasing department with the product development area and would cut costs and increase efficiencies along the way. The purchasing team could work out proposals as to what standard components the engineers should use so that purchasing can decrease