Ford Motor Company Supply Chain Strategy

1392 Words3 Pages
bulb-icon

Recommended: Ford motor company supply chain structure

Ford Motor Company Supply Chain Strategy Background In 1913, Henry Ford revolutionized product manufacturing by introducing the first assembly line to the automotive industry. Ford’s hallmark of achievement proved to be a key competence for the motor company as the low cost of the Model T attracted a broader, new range of prospective car-owners. However, after many decades of success, customers have become harder to find. Due to relatively new threats to the industry, increasing numbers of cars and trucks are parked in dealer lots and showrooms creating an alarming trend of stagnation and profit erosion. Foreign-based automakers, such as Toyota and Honda, have expanded operations onto domestic shores and, in turn, have wrestled market share from American automakers. As a direct result, unit over-capacity has steadily risen, while heightened competition and diverse product lines have led to increasing customer demands. To answer these threats, Ford has made recent attempts to transform its dated vertical integration production model into a maneuverable, efficient supply chain. Emphasizing methods such as Just-In-Time (JIT) inventory, Total Quality Management (TQM), and Synchronous Material Flow (SMF), Ford has derived a multi-tiered system of supply. The tier system consists of numerous generic suppliers, “tier two” and below, who are managed by “tier one” vehicle sub-system suppliers. The “tier one” suppliers, by nature, are completely dependent upon Ford’s survival since the provided sub-system component is specific solely to Ford. Dell and Virtual Integration Despite the revamping effort, Ford remains plagued with prolonged Order-To-Delivery (OTD) time periods, congested inventories and error-ridden procurement processes. Upon investigation, these troublesome issues appear to be well addressed by the radically new direct business model of the Dell Computer Corporation. Dell differentiates itself through the utilization of virtual integration, an efficient and effective direct business model facilitated by electronic business providing Build-To-Order (BTO) products directly to customers. The process begins with the customer specifying exactly which features are to be included in the desired computer. Dell, then, buys components from several different suppliers via Internet-based JIT ordering. By using Dell’s process of JIT ordering , misal... ... middle of paper ... ...ndustry by integrating a direct supply network. Ford’s goal of TQM could be easily met by implementing a variation of Dell’s already successful virtual integration business model. Fostering cooperation through incentives is key since compliance of supply chain partners is necessary to gain first-mover advantage. Conclusion In today’s competitive environment, it is important for any business to focus on the customer and to provide unique value in order to achieve a sustainable competitive advantage. Without virtual integration, competitive advantage is lost. Successful implementation of virtual integration initiatives allows supplier companies, which are performing only certain processes, to work together as one entity. Therefore, operations become more efficient by reducing inventory, assuring quality, and reducing delivery time. More importantly, the organization maintains the ability to thrive in a competitive marketplace by achieving increased customer satisfaction through unique and strategic core competences. Virtual integration will redefine corporations and , eventually, entire industries as supply chains evolve into a new business model of cooperation and sharing.

Show More
Related

  • Supply Chain Management at Gulf Stream

    1345 Words  | 3 Pages

    Gulfstream Aerospace is one of leading corporate jet manufacturers in the world. They have been building jets since the late 50’s and continue to create top of the line aircraft which have become the status symbol of success. With their success comes an extensive company infrastructure and supply chain. First, we will discuss how Gulfstream uses the location to maximize the effectiveness of its supply chain. Then we will look at the business case for Gulfstream’s approach to its supply chain, and in particular, does it make sense to have a car follow supplies while it is on the rail system. Finally, we will look at Gulfstream’s to the “just in time” manufacturing and its strategic approach to choosing locations.

    Read More

  • Private Prisons: Profitability and Controversial Strategies

    730 Words  | 2 Pages

    Private prisons in the United States, came about in the early 1980s when the war on drugs resulted in a mass wave of inmates, which led to the lack of the prison system’s ability to hold a vast number of inmates. When the cost became too much for the government to handle, private sectors sought this as an opportunity to expand their businesses through the prison industry. Since the opening of private prisons, the number of prisons and inmates it can hold has grown over the last two decades. With the rising number of inmates, profits have also substantially grown along with the number of investors. But what eventually became a problem amongst the private prison industry was their “cost-saving” strategies, which have been in constant debate ever

    Read More

  • Forecasting Blue Skies

    771 Words  | 2 Pages

    For many years, companies were vertically integrated; they owned their entire supply chain. Necessary in industries heavily laden with proprietary information, this method of management was incorrectly applied to industries that had only a limited number of exclusive parts and shared the rest with other products. As companies learned their products and their competition’s products shared a significant number of parts, a new wave of manufacturing methods was developed. Electronic Manufacturing Services (EMS) was developed as a method to create asset-light companies. Necessary when changing tastes meant large inventories would be costly paperweights in a short time, this method created many unforeseen problems. The economies of scale necessary to lock in low rates were eliminated as companies ordered fewer products more frequently. Also as companies forfeited the control over their entire supply chain, issues with logistics, manufacturing, and procurement proved troublesome.

    Read More

  • The Pros And Cons Of Private Prisons

    993 Words  | 2 Pages

    The justice system in the United States is supposed to serve justice to individuals who are have been harmed and punish those who have broken the law. There are some judges who have stock in GEO Corp. and the CCA, and when a criminal is in front of them for sentencing, instead of sending them to a state-run prison, they are sending them to private one’s which they have stock in. By having private prisons now an option for housing criminals, county judges are “helping” their communities by adding a huge surplus of income coming into their county, but have found a way to make more of their own money since they hold stock in these private companies.“ bonds issued for prisons since the late 1980s is approximate $90 million—a vast sum for a county with an annual budget of only $5 million,” (Abramsky, 2004). Many of these judges are making money off of their own cases that they are presiding over and are making money in a racketeering business, which is now in the millions of dollars.“ As a state, we have done a poor job of monitoring the program and have made no real attempt to find out what taxpayers are getting for their money.”(Epstein, 1). There are many states that are like the idea of private prisons because it helps bring revenue to their communities but have no idea of what is actually going on inside, and how only a few people are making money off of these private

    Read More

  • The Power Of Habit Charles Duhigg Analysis

    1647 Words  | 4 Pages

    Addiction is something that may seem inevitable, but at the end it’s entirely the fault of a person who is addicted. In the article, “the power of habit” by Charles Duhigg, it states how Angie Bachmann became addicted to gambling and how it was entirely her fault because she kept accepting the offers from casinos and many other reasons. Both the casino and Angie knew what they were doing by Angie letting herself get into the situation and the casino encouraging it. She started out as a well-settled housewife. When everybody left the house, she ended up all alone without having much to do. Because of this, one day, as she was passing through the streets, she decided to visit a casino for a change. “She knew gambling could lead to trouble, so

    Read More

  • The Power Of Habit Analysis

    873 Words  | 2 Pages

    Everyone develops habits in their life, but it depends on whether or not you have an obsession or develop an addiction for it. In Chapter 9 of “The Power of Habit” by Charles Duhigg, Angie Bachmann has a gambling addiction which led her to massive debts. She is a wife of Brian Thomas and have 3 daughters. Angie Bachmann should be held accountable for her gambling debts because her set of rules weren’t working, was tempted by Harrah’s perks, and her environment shaped her to become addicted.

    Read More

  • Private Prisons In America

    3047 Words  | 7 Pages

    One of these apprehensions is the personnel hired in private prisons. There is fear that they are not hiring adequately credentialed staff and that the staff may not be properly trained to operate at the correct security level, or the significant turnover rate of staff prevents correction officers from gaining expertise in their field (Gran & William, 2007-8). Some experts contend that the only way private prisons can operate for less cost than public prisons is to hire fewer staff, pay lower wages, and reduce staff training (Dunham, 1986). Jing (2010) also notes that private correctional officers are paid on average 59% less than their public counterparts, have less training, and a higher turnover rate. With private contractors having a financial interest in parole release proceedings, there is also a risk that staff members will supply parole boards with biased or misleading information in order to keep their facility populated at capacity (Dunham,

    Read More

  • The Role and the Importance of Supply Chain Management

    1624 Words  | 4 Pages

    This report has clearly in detail described the meaning, benefits as well as the need and challenges of the RFID in the supply chain system. While RFID comes with a larger magnitude of benefits than the bar code, it’s an expensive medium and comes at a price that may be prohibitive to many businesses. On the one hand, RFID is advantageous in different areas of the supply chain and does not require line-of-sight scanning; it helps in labor reduction, enhances visibility of products and processes , and helps in inventory management. On the other hand, RFID is an expensive solution, lacking benchmarks or standards, suffers from some adverse deployment issues, and suffers from major privacy concerns. However with the ultimate aim to see the establishment of item-level tracking which should act to revolutionize SCM practices, RFID is here to stay.

    Read More

  • Levels Of Planning

    1709 Words  | 4 Pages

    Ford’s production plants rely on very high-tech computers and automated assembly. It takes a significant financial investment and time to reconfigure a production plant after a vehicle model is setup for assembly. Ford has made this mistake in the past and surprisingly hasn’t learned the valuable lesson as evidence from the hybrid revolution their missing out on today. Between 1927 and 1928, Ford set in motion their “1928 Plan” of establishing worldwide operations. Unfortunately, the strategic plan didn’t account for economic factors in Europe driving the demand for smaller vehicles. Henry Ford established plants in Europe for the larger North American model A. Their market share in 1929 was 5.7% in England and 7.2% in France (Dassbach, 1988). Economic changes can wreak havoc on a corporation’s bottom line and profitability as well as their brand.

    Read More

  • Value Chain Analysis: Strategic Analysis Of Paypal

    1344 Words  | 3 Pages

    Value webs are concerned with what goes outside of the firm, and how well the firm coordinates direct, and direct suppliers, and delivery firms, and customers. By working with other firms, and using information systems, an advantage can be gained, by developing industry-wide standards for exchanging information, which eventually forces all market participants to subscribe to similar standards. Information exchange becomes more fluid, which positively influences efficiency, this in turn, makes product substitution unlikely. Such efforts also increase barriers to entry, which discourages new entrants. The internet has made possible to create highly synchronized value webs that integrate different business processes among the whole industry. These value webs are highly responsive and adaptable to environmental changes in supply and demand, as relationships can be bundled or unbundled, depending on the market conditions. Quick decisions can be made in order to optimize the value web relationship in order to deliver the required product or service in the right place and

    Read More

  • Global Supply Chain Management

    997 Words  | 2 Pages

    Lean manufacturing and just-in-time processing are great business strategies that can severely stress a supply chain. The supply chain and supply chain management is a critical operations management element for any major company to succeed and remain competitive in the global market. The supply chain is one of many pieces critical to maximizing value to the end customer and requires close management to minimize external impacts. If a company is relying on another company to supply the raw materials needed for their production line, then impacts to this other company could impact their supply chain. Careful risk management is needed to optimize performance. As a company expands into global markets and global suppliers, this risk and management challenge is multiplied. The global nature of the company could impact important activities such as transportation, funds transfers, suppliers, distributors, accounting and information sharing. Disruption to the supply chain can significantly reduce revenue, cut market share, inflate costs and threaten production. A major disruption would have obvious impacts to profit, but could have additional intangible impacts to the credibility of the company if products are not delivered on time.

    Read More

  • The Importance Of Death In Hamlet

    997 Words  | 2 Pages

    In the beginning of the play, Hamlet was afraid of death but sought death. After Hamlet lost his father and his mother remarried Claudius, this impacted Hamlet so much and caused a great quantity of sorrow in him. Hamlet says while alone, “O God, God, how weary, stale, flat, and unprofitable seem to me all the uses of this world,” (Act 1,Scene 2,Lines 132-134). Hamlet is saying that life to him now is pointless and says that it is like a garden that is growing wild because no one is taking care of it. Hamlet wants to end his life but says that God made it a law against suicide. Hamlet also fears death, “The undiscovered country from whose bourn no traveler returns…Thus conscience does make cowards of us all,” (Act 3,Scene 1,Lines 80-81,84). Hamlet fears the unknown of death and isn’t ready to deal with that, so that is why Hamlet is willing to live in his pointless

    Read More

  • Dell Analysis

    1398 Words  | 3 Pages

    Dell’s main strength lies in their perfection of the Direct Model, which boasts a production process that lasts only a day and a half so the company is able to serve customers quickly and has the capacity to withstand very large orders. Dell built held no finished goods inventory on hand, which helps to reduce idle assets and risk. The company maintained excellent relations and communication with suppliers who were able to adhere to Dell’s just-in-time inventory management and allowed suppliers to send shipments direct to customers, reducing inefficiency. Dell encouraged suppliers to locate their facilities in close proximity to assembly operations. Additionally, Dell had very high customer service and support satisfaction and maintained some of the best performance metrics in the industry. Finally, their main source of revenue came from businesses and large government institutions and no single customer represented more than 2% of their sales, which lowers their risk of buyer power.

    Read More

  • Toyota Supply Chain

    2794 Words  | 6 Pages

    The business environment is increasingly becoming competitive and challenging. In the recent past, manufacturers have found themselves facing the threat of dwindling profit margins due to unfortunate global events such as the 2007 global financial crisis and the on going Europe economic crisis. The need to improve operation efficiency so as to ensure current and future investment yield the highest rate of return has therefore become extremely important. Manufacturers are now actively engaged in, managing their costs, Research and Development, adopting best procurement strategies, among other Actions. While such actions might eventually lead to positive results, additional business value can be achieved through proper management of the supply chain (Waymer, Ivanaj & Mussa 2009; Krivda 2004).

    Read More

  • Ford Motor Company

    1840 Words  | 4 Pages

    Ford’s business level is the integrated cost leadership/ differentiation strategy; this involves engaging in primary and support activities that allow the company to simultaneously pursue low cost and differentiation. This strategy is flexible and enables Ford to use technology to control the production of variety of products in moderate, flexible qualities and with a minimum manual interaction, whose goal is to eliminate cost verse product variety. Cost leadership is a strong strategy, but it can be undermined by the frequent changes in technology, the imitation of cost advantage and lost of focus on consumers. Ford’s differentiation strategy focuses on developing a unique product that consumers are willing to pay and the combination of these two strategies enables Ford to stay on its core competencies.

    Read More

More about Ford Motor Company Supply Chain Strategy

Open Document