Company: Supply

Chain Strategy

Adithya Sridhar
Praveen Venkatraman
Melroy Rodrigues
Thanyalat Chaleunsouk
Sivasankari Santhanakrishnan

Agenda
Ford Motor Companys Goals
Company Background and its Supply Chain
Management System
Current Problems
Direct Model and Virtual Integration
Comparison of Fords Business v/s Dells Business
Recommendations

Prime Goals of Ford

Motors
Increase
shareholder values

Improve customer
responsiveness

Increase
revenue/decrease
operating cost

Using IT to improve
customer satisfaction

Identify bottlenecks in
the SCM and solve it

Ford Motors Background

Ford Motor Company
- Headquartered in Dearborn, MI
- Second largest industrial corporation in the
world
Core Business: Design and Manufacture of
Automobiles
Until 1995, Ford SCM was a Push System - Made
To Stock (MTS)

Ford Value Chain

FORD 2000
Ford 2000: A restructuring plan started in 1995- aimed at
dramatic cost reduction and increasing overall efficiency
Merged international automotive operations into a single
global organization
Reduced Vehicle Centers (VCs) to only five
Teamed up with Chrysler and GM to work on the Automotive
Network Exchange (ANX)
Reduce the number of suppliers
Place IT within the process reengineering organization

FORD 2000
Ford Production System
Aimed at making Ford manufacturing operations
leaner, more responsive and efficient
Synchronous Material Flow (SMF): Produced
continuous flow of materials and products
In-Line Vehicle Sequencing (ILVS): Used ASRS and
computer software in assembling

FORD 2000
Ford Retail Network
Ford Investment Enterprise Company (FIECo): Aimed
at an alternate distribution channel to compete with
publicly owned retail chains.
Better face-off with real competition (i.e. GM, Toyota,
etc.).
Increase service outlets and business not just in new
and used vehicles but also in parts and service, body
shop operations.

Shift towards a Pull

System- Order To Delivery

MTS OTD Compared

Current Problems
No Direct feedback from the customers
Managing vast supplier network
Not using IT to its full capability
Issues in forecasting
High OTD time

Ford v/s Dell

Dell
Ford
Product complexity

High: 30,000+ parts Low: 300+

Product cost and life High / long term

span
No of suppliers /
sub-suppliers

Low / shorter
term

Large (1000+) Multi Small (50)

tiers
single tier

Distributors/ Dealers many

None - direct
to customers

Dells direct business model and virtual

integration

How Dell applied VI to

their business
In four main areas:
Organization Simplification
Reduce the working capital by outsourcing

Inventory Management
JIT via information management and flow
Build to order, reducing the cost of storing finished
goods

Customer service and support

Finer customer segmentation, more tailored solutions
Faster response time

Supplier Collaboration
Information and feed back sharing
Product development, R&D

How VI could work in Ford

Dells VI

Ford
Possibility

Organization Simplifying

Inventory Management

Customer Service and

Support

Suppliers management

Recommendation 1:
Inventory Management
Shift the ownership of raw materials to
suppliers:
By using EDI with suppliers and the
existing advantage of nearby ship
points.

Recommendation 2:
Customer Service and
Support
Allow product customization both online and
offline
Collect customer data from dealers to
Segment customers
Accurately forecast demand by individually work
with local dealers

Implement a support network where parts can be

exchanged and delivered in a short time.

Recommendation 3:
Supplier Management
Invest in IT for supplier, in order to bring the same
level of IT knowledge among suppliers and Ford
Sharing design with supplier in order to speed
time to market
Involve supplier in R&D