Case: Ford Motor Company Essay

3144 words - 13 pages

1.0 IntroductionThe Ford Motor Company finds itself in a dynamic business environment where new technologies and practices offer the potential to alter in a significant way the landscape in which it operates. Henry Ford was in his time an innovator in offering "cars for the masses". He introduced to the car industry methods and systems innovative in their day. Ford needs once again to forge new paths to ensure future competitive advantage.Executives at Ford have been considering the "Direct Model" created by Dell Computer Corporation and finds that there is considerable appeal. Dell has been able to speed up inventory velocity such that there is only eleven days of inventory on hand. This ...view middle of the document...

Ford teamed with Chrysler and General Motors to work on the Automotive Network Exchange, which aimed to create consistency in technology standards and processes in the supplier network so that suppliers, already pressed to lower costs, would not have to manage different means to interact with each automaker.3.0 Identifying Ford's key problem areasIn spite of the success in the auto industry, Ford is facing serious challenge in its supply chain and other activities.3.1 More suppliers. Without a highly efficient computerized system for doing business with its tire suppliers, Ford would not have been able to offer consumers this option. Relying on phone and fax messages would take far too long to communicate customer preferences from the dealer to the Ford factory to the tire companies, all of which are links in the overall car production supply chain.3.2 Flow and cost. Ford keeps the following information about the flow and cost data for all distribution centers to dealer channels: distribution center identification number, dealer identification number, product identification number, the number of miles between each distribution center and its dealers using the road network.3.3 Purchasing system. Suppliers even farther down the chain are more behind. Ford needs to consider not only the total cost savings a supplier provides. At Dell, purchasing activities reported in to the product development organization. At Ford, purchasing was organizationally independent of product development and had been-historically and up to the present-a powerful force within Ford. Because of the sheer volume of materials and services that Ford purchased, a very slim reduction in purchasing cost could result in very significant savings.3.4 Ford Production System. The mass-producer uses narrowly skilled professionals to design Ford's products made by unskilled or semiskilled workers tending expensive, single-purpose machines. These churn out standardized products in very high volume. Because the machinery costs so much and is so intolerant of disruption, the mass-producer keeps standard designs in production for as long as possible. The customer gets lower costs but at the expense of variety and by means of work methods that most employees find boring and dispiriting (Austin, Robert D. 1999, P4).3.5 Orders to Delivery (OTD). Consumers unwilling to compromise their preferences in order to buy from a dealer's inventory will certainly appreciate an accurate delivery date and a reduction in the amount of time it takes to get a specially ordered vehicle. Dealers have an interest in that they maintain huge vehicle inventories including vehicles they have ordered for stock but that consumers seem reluctant to buy. Ford, of course want to find ways to reduce costs in a system that absorbs billions of dollars relating to purchase materials and transportation costs, as well as inventory costs. Suppliers will have to respond to the timing, cost, and quality challenges that...

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