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

What are the roadblocks that make

the direct model difficult to implement
at Ford
Compare Ford with Dell
Ford 180 manufacturing facilities all over the world
Dell Only 3!
Over 4,000 suppliers offer more than 2,500 kinds of
components for Ford's product assembly.
The number of Dell's suppliers is much less than
Ford's.
Strategy

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

Ford
What practical challenges must Ford address as it
tries to establish Internet linkages with its supply
base
Difficulties in establishing B2B linkages
Lack of technology and technological sophistication
that prevail in the supply chain, especially at lower
tiers.

Ford Motor Company: Supply Chain

Strategy
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.
As supply chain systems staff members study the Dell
model in particular, they come to appreciate that 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.
The question is in fact explosive in its implications, because
it inevitably leads to fundamental questions about the way
Ford has historically operated internally and how it has
interacted with important partner constituencies (including
dealers)

One difficulty for Ford in

implementation
Ford's core product is the automobile.
Automobile manufacturing is a very complicated process and is
assembled by using many components.
This makes it difficult for customers to choose a car in direct sales or
online.

Another difficulty for Ford

Automobiles are bigger and heavier than other products.
It will cost much more for the delivery of automobile.
It's hard for the customers to return the automobile if they are not
satisfied with the product.

What could Ford do

better?
Understand the implications of "virtual integration"
and direct model in practice.
Realize compatibility and capability of IT throughout
supply chain.
What has Ford gotten right?
Recognized the potential of the Internet early on.
Cut Order- to- Delivery time from 60 days to less
than 15.
Prioritized focus on competition