CASE ANALYSIS

Ford Motor Company - Supply Chain Strategy

About the Company

• Founded by Henry Ford and incorporated on June 16, 1903• The Ford Motor Company is based in Dearborn , Michigan.• Second largest industrial corporation of the world.• Revenues more than $144 billion (at the time when case was written).• About 370000 employees• Operations in more than 200 countries• Sells commercial automobiles under Ford Brand and Luxury cars

under Lincoln brand.

About the Case

• Discusses about Ford’s Future.• How should the company make proper use of internet technologies

and innovative ideas to improve on various aspects : Better supplier relationships , Reduced production costs , reduced working capital , reduced cycle time etc.• How can the company increase shareholder’s value ?• Two groups : One favoured “Virtual Integration” model – which is

used by “Dell”• Other group resisted as there are lot of differences in Automobile

Business and Computer Manufacturing business.

Problems/Issues :

• Increased production cost and cycle time at Ford• Decreasing shareholder value• Home markets being captured by foreign-based auto manufacturers like

Toyota and Honda – Increased competition• Need of quality improvement• Lesser profits at Ford as compared to comparatively newer companies like

Dell and Cisco• Need of a much efficient competitive supply chain• Implementation of “Dell” model – whether it will work or not ?• Whether Virtual Integration will work for Ford or not ?

Solutions:

• Ambitious restructuring plan “Ford 2000” – included merging its North American , European and International Operations into a single global organization.

• Aimed at dramatic cost reductions by reengineering and globalizing corporate organizations and processes.

• Consolidation of product development activities into five “Vehicle Centres”- each responsible for product (vehicle) development for particular consumer market.

• Making processes globally common- leading to process redundancies and economies of scale.

• Use of IT to enhance material flows and reduce inventories.

• Launch of a public internet site , a company-wide intranet network for better coordination between teams and an extranet network for better coordination with suppliers.

• Partnered with Chrysler and GM to work on automotive network exchange (ANX) – aimed at consistency in technology standards and better coordination with suppliers.