Ford Motor Co.

Case- Supply Chain Strategy

Group 6 Submitted by:Babaria Ashish Sanjay(11DCP-070) Chandan Kumar Singh(11DCP-071) Gourav Mukherjee(11DCP-073) Himanshu Saxena(11DCP-075) Kaamil Nakhasi(11DCP-077) Dontul Mahesh Kumar(11DCP-078) Manas Mukul(11DCP-079) Nora Bounabat(12-FRN-228)

Case-Background
Ford is contemplating on redesigning its supply chain incorporating new advances in information technology and ideas from new generation company like Dell.
Ford is 100 years old Founded 1903, Dell on the other hand was founded 15 years ago. Product variety:- Ford
Necessitates the management of large number of individual component inventories Production capacity for individual components get set long in advance and cannot be changed quickly

Powerful independent dealer network Unionized labor force Incompatible systems

Benefits of Virtual Integration for DELL

Ford credit DEC Parts and service IBM Suppliers and dealers Variety of systems
Communication and coordination The prospect of improved control over the actions of suppliers is another important rationale for virtual integration. Real time responsiveness and inventory management Forecasting is easier for DELL as customer data is directly held by the company rather than Dealers.

Critical issues faced by Ford

Costs of developing web capabilities Implication for information sharing Problems of connecting to suppliers and other external parties who tend to be less technologically advanced than the Ford Forecasting what customers will buy for Dell and for Ford Difficulties in implementing a true build-to-order model for so complex product as an automobile. Difficulties in establishing B2B linkages Lack of technology and technological sophistication that prevail in the supply chain, especially at lower tiers

Case Problem
What practical challenges must Ford address as it tries to establish Internet linkages with its supply base?

Analysis
What is the difference between the online buying experience of Ford and DELL. How should Ford use Internet technologies to interact with suppliers
To address this problem Ford must think about its relationships not only with suppliers but also with dealers and customers. virtual integration must include design not only of the supply chain but also of fulfillment, forecasting, purchasing, and a variety of other functions that had long been considered separately within the Ford hierarchy. Fundamental questions should be raised and answered about the way Ford has historically operated internally and how it has interacted with important partner constituencies (including dealers)

Solutions
Car(Ford) High Involvement IT infrastructure for online buying may not be that relevant

Laptop (Dell)

Lower Involvement

Online buying Successful and popular among customers.

Form a mix of online and offline operations and lay procedures to enable customization and ordering by customers over the internet but maintain physical dealerships as well. Implementation of ERP by basing it to the best practices of Toyota (like lean, JIT, Kaizen etc.) Dealers to play a vital role as Customer Buying experience of a computer (using images on a computer) is vastly different from that of a car (where a consumer wants to have a feel of the car)

Steps taken before Integration

Supplier
Bigger Suppliers to achieve economies of scale. Integrate itself to 2nd and 3rd tier supplier Invest in IT infrastructure and support system

Ford
Long term relationship with suppliers. Buying Stakes in Suppliers and Dealers. Integrating functions like Forecasting, Purchasing, financing etc. and take centralized decisions Integrating with strategic suppliers and Dealers

Dealer
Dealers should be big enough to achieve integration through IT infrastructure. Dealers should not compete with each other but with real competition.

Thanks