FORD CASE

³Ford Motor Company: Supply Chain Strategy´ Ford Motors is one of three leading automotive manufacturing companies in the United States. Based in Michigan in 1903 by Henry ford and grew to reach revenue of $150 billion and more than 370,000 employees by 1996. In the 1970's, the automobile market for the major auto makers General Motors (GM), Ford, and Chrysler- was crunched by competition from foreign manufactures such as Toyota and Honda. In 1999, Ford acquired the Swedish Volvo model in an attempt to compete in the foreign market and expand to other regions. Furthermore, Ford launched a full organization re-engineering business process plan called "Ford 2000" aiming at reestablishing the company's infrastructure. The process meant reduction in their Vehicle Centers (VCs) to only five covering the operations that spanned 200 countries. It also meant cutting redundancies and requiring Information Technology (IT) to be the driving force and the link  between Ford centers worldwide. In building Ford's IT infrastructure, the company fo cused on implementing a setup that supported the TCP/IP communication protocol proto col based on the U.S. department d epartment of Defense requirements.

CASE QUESTIONS: 1.

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challenges does Ford face? How are these challenges different than what Dell would have faced? Challenges faced by Ford:

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Ford's regional expansion to address ad dress the competition for market shares demanded cost management for the infrastructure upgrades IT infrastructure places limitations on the type of app lication development based on the platforms Easy access to information and prompt delivery d elivery of vital data to key individuals requires proper knowledge management Organizations reengineering and process remodeling is necessary when adapting new technologies to maintain the cost and increase efficiency Supply chain errors and delays d elays can severely affect the progress of the business and t he market value of the corporation

Ford is 100 yrs old Founded 1903, Dell on the other hand was founded 15 years ago. When we compare Ford and Dell then old channel player¶s concerns cost, forecasting forecast ing what customers will buy for Dell and for Ford and difficulties in implementing a true build-to-order model for so complex product as an automobile. Dell¶s direct relationship with customers is key to forecasting. Dell has easy access to data useful for forecasting; most of the data are already in Dell¶s systems. In case of Ford, the dealers dea lers own most of the direct data about customer demand.

Ford has a very base of individual customer unlike Dell that has a relatively small number o f  institutional customers.

2. How can these challenges be addressed? To address these problems Ford adapted the TCP/IP protocol from the beginning and made sure that all its technical infrastructure upgrades adhere to the standards. This made the transition of  its system to the Internet as cost effective as it could be. For proper knowledge management Ford created a "Knowledge Domain Team" to build complete information in all areas that were identified as vital to the business. Ford must think about its relationships not only with suppliers but also with dealers and customers.

3. W hat

risks does Ford face in meeting these challenges?

4. How does the model adopted by Ford depend on its type of business? As

Ford face difficulties in establishing B2B linkages and lack of technology and technological complexity that specially prevail in the supply chain. It also faces difficulties in real time responsiveness and inventory management, forecasting and communication and coordination. Dell model base on ³virtual integration´ Virtual integ ration is the ability to achieve the advantage without actually vertically integrating. Virtual integration includes design not only of  the supply chain but also of fulfillment, forecasting, purchasing, and a variety o f other functions.

5. To what degree should Ford emulate Dell¶s business model? It is not wrong for large firms to try to adapt to successful processes implemented by other firms. So the level of commitment is important for large firms to maintaining their position in the market. These companies know the revolving nature of business in the sense of how easy it is to fall back if they did not keep up with the change. The Ford process also shows the need for quick  and resourceful thinking when faced with situations that might seem to be unfavorable. The way Ford ventured into the foreign market by acquiring local manufacturers was a strategic decision that did not only enabled Ford to merge with different technologies, but it also saved it the additional cost of establishing production centers in other co untries.