Ford Motor Company: Supply Chain Strategy Essay

The cut through drive Company finds itself in a dynamic business environment where bracing technologies and practices offer the potential to alter in a significant expressive style the landscape in which it operates. Henry crossing was in his time an pioneer in offering cars for the masses. He introduced to the car fabrication methods and systems innovative in their day. hybridizing accepts once again to forge smart paths to ensure future competitive advantage .Executives at crosswalk energize been considering the Direct Model created by dell computer Corporation and finds that in that respect is considerable appeal. dell has been able to speed up inventory swiftness such that there is completely eleven days of inventory on hand. This has led to an inventory subr come forthineover rate of thirty times per annum . This achievement, termed by Michael Dell Virtual Integration has been achieved by blurring the line between supplier, Dell and client, to the extent that t hird party service staff atomic number 18 often thought, by clients, to be Dells own staff.In found to see how congruent the Dell model is to Fords business we assume to prove the similarities and differences between the two companies. This entrust altogetherow us to gain round insight as to whether virtual integration could work at Ford.Ford Motor CompanyDell Computer CorporationSimilarities*Cars be consumer items.*Computers be a consumer item.*Suppliers are often located close to manufacturing facilities.*Ford maintains close locational links with suppliers.* be of suppliers is small.*Ford is working to human body relationships with a limited number of strategical suppliers.*Fords nodes range from large corporations, to government institutions, to the consumer.*Dells clients range from large corporations, to government institutions, to the consumer.Differences*Cars are personal in record and many clients want to provoke close contact. A showroom is ordinarily pref erred.*Computers are generic wine in nature and do not consider showrooms.*Safety and reliability are major concerns.*Computers are not expect to be only if reliable.*A car is made up of generic (tyres, petrol caps) and custom (dashboards, body panels) parts.*Computers are made almost entirely of generic parts.*Suppliers are often completely dependent on Ford*Suppliers are not entirely dependent upon Dell.*Ford is large and whitethorn have limited manoeuvrability.*Dell is flexible and can rapidly serve to market or supplier pressure.*Ford has a large bargainer interlock, twain independent and go with owned.*Dell has no retail network, all sales are Direct.*Ford has a vast range of products.*Dell has a limited range of products with a narrow palette of variations. outline and SuggestionsKey to Dells strategy is their policy of outsourcing all pay off. Dellacts merely as the assembler and packager. The company is able to pick and choose from the range of industry leading comp onents, allowing other manufacturers to make the investments in leading edge technology. The suppliers manufacture their, essentially generic, products for many customers and therefore are economically independent of them and excessively have little difficulty in meeting the JIT (just in time) requirements of Dell.Ford has at one time, both notable similarities and striking differences in imp disseminatement of their relationship with suppliers. Many Ford components such as tyres, windscreen wipers, and galvanizing components are sourced from large suppliers who sum the uni mixed bag components to other companies. These products are well(p) suited to a snuggled integration of supply virtual integration.On the other hand, a very large proportion of Ford components are custom made for Ford. Tier one suppliers of custom components such as body panels, seats and engine components are heavily dependent on Ford and other large carmakers. These suppliers second tier suppliers, who in turn also have suppliers. If virtual integration is to succeed with these components every company along the value chain right back to the raw materials would need to be involved. This would be a very difficult and complex network to coordinate.Fords explanation is a factor to be considered, their longevity and size in the industry gives them a tremendous degree of influence when compared with Dell, a sexual congress newcomer to business and whilst a large buyer of components, not so influential on trends and technology. The disadvantage whitethorn be that this stature may make it hard to bring their very large organisation and supplier network along the road to virtual integration.The dealer network moldiness be considered. The dealers carry a very limited range of products, which they attain in stock. If Ford decides to carry the Direct Model towards the end consumer they need to ask whether they need a dealer network and in what play. The hypothesis of disintermediation n eeds to be tryd. Alternative forms, that use the existing network ay be viable, for example, the dealer might be used to postpone the final form until the pointof customer prescribe. This might be the fitting of audio equipment, air conditioning or interior trim customisation. This would enable more consumers to social welfare from the vast possible range of options, as well as, at the same time reducing the factory lead-time for manufacture.RecommendationIf Ford is to successfully simulate Dell thus they are best able to do this in areas where they have similarities. The most notable congruency is in the area of supply of generic components. Here Ford should continue its process of building strategic relationships.Where components are of a more specialised nature then Ford should examine the relationships to ascertain whether bringing suppliers closer to the company will offer benefits to both parties.Ford should work on its internal culture. Integration of supply fetter on t he scale practiced by Dell can only occur in an environment where cultivation flows freely to all points of the supply network. As outlined in the case documents Ford maintains a juicy degree of separation of the purchasing departments from marketing and production. Ford will not be able to provide focus up and downstream unless they themselves are committed to an open culture where logistics information is a part of the behavior blood of the company.The relationship with customers is more difficult. The dealer network will credibly be averse to Ford moving towards direct sales, as it will threaten their livelihood. They can reap some of the benefits by introducing a weave based ordering service for cars, allowing clients to specify the car that they want and then matching the requirement to the cars already in stock through out the network. If a client prefers they could order a vehicle built to order and supplied to a local dealer. This will enable Ford to become closer to the needs of clients, seeing accurately what they want rather than what they buy because it is available.This agree will give the company some benefits*Information about customer wishes.*Opportunity to reduce both dealer stocks and Fords stocks by avoiding duplication.*Delaying the final form of the product by increasing the range of dealer fitted items will enable Ford to simplify manufacture, whilst offering a greater degree of in truth customisation to clients.*Delay of final form will increase dealer revenues, buy their enthusiasm and consent for the next stages of coordination.EpilogueSince this case was written, Ford has, in collaboration with General Motors and Daimler Chrysler established a joint venture, now called Covisint. It is fancy as a global business-to-business supplier exchange. Its purpose is to share information with suppliersEach of the partners has combined their E-business initiatives in order that suppliers would be able to enlarge systems to deal with a si ngle system rather than . The hoped for benefits are*increase levels of collaboration*Lower costs for all members of the supply chain* more(prenominal) efficient business practicesGM is now piloting a build to order system for its Brazilian Celta model. They are able to do this because they have the support of dealers who are sharing the cost savings with GMreferencesAustin, Robert D. 1999. Ford Motor Company Supply Chain Strategy. In Huff wade Schneberger. New York McGraw-Hill.Joan Magretta. The Power of Virtual Integration An Interview With Dell Computers Michael Dell. Harvard Business Review, March April 1998, pp. 73 84.Covisint web site, http//www.covisint.com/about/history Accessed November 2nd, 2002Ibid.US News.com web site, http//www.usnews.com/usnews/biztech/articles/020401/1industry.b1.htm Accessed November 2nd, 2002