Ford Case Analysis

1706 Words Sep 16th, 2012 7 Pages
Major Issues
Ford Motor Company is facing a major decision with regards to its supply chain strategy moving forward. The underlying question is, “how should the company use emerging information technologies and ideas from new high-tech industries to change the way it interacted with suppliers?”. Within Ford, there are 2 major, and opposing views. First, there are those that feel strongly that Ford should follow Dell’s model of “virtual integration” (reaping the benefits of vertical integration without vertically integrating) – using the model to communicate effectively with its suppliers, achieve and focus on inventory velocity, and allow its component suppliers to specialize. The other group believed that the Dell model would not
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With this type of history, it can often be difficult for a company to make radical changes that will provide the competitive edge in the future. Ford is on the right track with its implementation of the Ford 2000 restructuring plan. Ford needed to implement a globalization strategy, and needed to decide whether they wanted to adopt Dell’s supply chain strategy. My decision is to follow Dell’s model where it makes sense for Ford, not blindly in all possible areas.
Advantages of following Dell’s model are as follows: * Implementation of better technology will not only setup Ford for the future, but also its supplier base. Long-lasting partnerships can be built. * Efficient and effective communication and coordination will be created. * Improved control over suppliers, ability to monitor performance. * Lower inventories through better forecasting. * Inventory velocity – concept to be introduced and followed by Ford.
Some potential disadvantages of the implementation of Dell’s model: * New costs will be incurred in development of new web-based systems, also time spent in training Ford’s supplier base. * Difficulties of implementing a true “build to order” model in the automotive industry. * Implication for information sharing between Ford and its suppliers – trust issues? * Will the new supply chain be able to overcome the lack of technology within its supplier base?
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