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Ford Motor Company : Supply Chain Strategy

Ford Motor Company : Supply Chain Strategy. Spencer Patterson Becky Tibbenham Tatiana Gonzalez David Windle Quinn Gooch. Ford’s Model T. The Blue Oval Trade Mark. Ford Goes Global . Lincoln Motor Company acquired in 1922. Ford’s River Rouge Factory. 15,767,708 square feet.

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Ford Motor Company : Supply Chain Strategy

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  1. Ford Motor Company: Supply Chain Strategy Spencer Patterson Becky Tibbenham Tatiana Gonzalez David Windle Quinn Gooch

  2. Ford’s Model T

  3. The Blue Oval Trade Mark

  4. Ford Goes Global

  5. Lincoln Motor Company acquired in 1922

  6. Ford’s River Rouge Factory 15,767,708 square feet B-24 Bombers

  7. Henry Ford Dies in 1947

  8. Ford post WW II

  9. post WWII continued..

  10. Ford Expands its Foot Print

  11. Ford Turns 100

  12. 12 Billion in Losses

  13. Matrix Analysis: Ford Motor Company

  14. Ford’s Market Position Broad Narrow Market Positioning Low Cost Value - added Product Positioning

  15. IT’s Strategic Impact High Low Factory Impact on Business ops Strategic Support Turnaround Low High Impact on Strategy

  16. Governance and Ownership Ownership Governance

  17. IT Environment & Enterprise Organization Simple Enterprise Pull system/Low inventory Push system/ high inventory Complex Stable/Certain Environment Dynamic/Uncertain

  18. Where Systems Fall Loose Coupling Tight Linear Interactions Complex

  19. Case Questions • What advantages does Dell derive from virtual integration? • How important are these advantages in the auto business? • What challenges must Ford overcome that Dell does not face? • Is the Dell model really relevant to Ford? • How closely should Ford emulate the Dell Model?

  20. Auto Industry Industry Sales US Market Share

  21. One Ford Strategy • Formed in 2006 • Implemented by CEO Alan Mulally to better align the auto maker’s global resources • Main focus is to impact company’s purchasing operations and its suppliers • Simplify, standardize and reduce the number of vehicle platforms and parts • Simplify vehicle ordering from the customer’s prospective

  22. One Ford Objectives

  23. Profitability/ Efficiency

  24. Looking Forward • Conversion of assembly plants to small car production to support consumer preferences • Closing 3 Ford plans in 2010-2011 period • Reduced Suppliers- Target suppliers: 750 • 2004: 3,300 suppliers • 2009: 1,600 suppliers • 2010: 1,500 suppliers • Downsize/Consolidate dealerships • Too many dealers at current and expected US Mkt share

  25. What do you do when… • You want to buy a new car? • You want to buy a new computer?

  26. Ford’s Model Suppliers Ford’s Plant/Site Operations Ford’s Dealers Customers

  27. Dell’s Model Suppliers Dell Customers

  28. Ford vs. Dell: Suppliers

  29. Ford Supply Chain Profile (2008) • Suppliers located in 60+ Countries • Suppliers in Emerging Markets 36 • Supplier Manufacturing Sites 5,500+ • Parts currently being manufactured130,000 • Total Global Purchasing $90+ billion

  30. Ford vs. Dell: Supplier Interaction • Ford • Tiered system • Becoming lean • Long-term relationship • Dell • 2-3 suppliers per part • Benchmark-oriented

  31. Ford vs. Dell: Customers

  32. Ford vs. Dell: Selling to Customers • Dell • Customers order online • Shipped directly to their home or office • Ford • Customers purchase through dealer • Customers receive car at the dealer

  33. Ford vs. Dell: Selling to Customers • What does a Ford dealer do? • Maintain inventory • Test drives • Trade-Ins • Expertise • Warranty service, recalls, maintenance • Financing, Insurance, Warranties

  34. Ford vs. Dell: Customer Care After the Sale • Dell: • Warranty: 90 days to 5 years • Business Customers: Online or On-site Assistance • Retail Customers: Phone or Locally Contracted Service Providers • Ford: • Warranty: 3 to 5 years • All customers served by dealerships

  35. IT Progression at Ford • mid-1995 • May 1995 • Nov 1999 • Aug 2004

  36. Dell IT: Customer Market

  37. Dell: Supplier Market • B2B interface • Customer feedback provided to suppliers • “Real-time window” into information systems • Valuechain.dell.com • CAPS • PartMiner

  38. Case Questions • What advantages does Dell derive from virtual integration? • Inventory Expense (Cost reduction) • Control of Supply Chain (VMI, EDI, EAM) • Efficient Processes (Pull System) • Aids Market Oriented Marketing (Customer is King) • Creates a competitive advantage

  39. Case Questions • How important are these advantages in the auto business? • In context of Lean production…very. • Reduction in inventory and buffer. • Carrying & Transportation costs are reduced (pull system, accurate forecast, lot sizing, potential for mass customization) • As profit margins erode efficiency and waste/redundancies must be eliminated.

  40. Case Questions • What challenges must Ford overcome that Dell does not face? • Aligning supply chain sophistication (EAM, XML, legacy architects) • Achieving Lean Sigma in quality control (Safety) • Excellent design, quality and time (lead time) • Size and scope of organization (suppliers, vendors, networks, geography) • Organizational Behavior (Leadership & Management, decentralization)

  41. Case Questions • Is the Dell model really relevant to Ford?

  42. Case Questions • How closely should Ford emulate the Dell Model?

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