Ford Motor Co

Table of Contents

Executive Summary        3

Issue Identification        4

Operating Environment        5

Root Cause Analysis        7

Alternatives or Options        9

Recommendation(s)        13

Implementation Plan        14

Monitor and Control        16

Executive Summary

Ford’s core business is the design and manufacture of automobiles for sale on the consumer market. This market is highly competitive, there many options our there for customers.  To remain competitive, Ford must continue to review its systems and processes and look for any efficiencies and cost saving measures.

One avenue of potential cost savings and process efficiencies is to review its supply chain model and compare it to other successful companies.  A full review of this model has shown it to be an extremely complex system.  The system is comprised of thousands of suppliers, an independent network of dealers, and very little communication flow between them.  Because of this, Ford has no direct control on the end user experience.

Realizing these issues, I am recommending a migration from the existing supply chain model to one of a “Virtually Integrated” supply chain like the Dell model.  This system has been extremely successful for Dell.  Through this model, Ford will be able to use emerging information technologies and ideas from high tech companies to better interact its suppliers and end users.  Ford should be able to boost sales, offer a greater end customer experience, shorten the order delivery time, and reduce costs in the process.

The proposed system will not be a direct copy of the Dell model however, it will have to be adapted to the automotive industry.  The computer industry and automotive industry are completely different.  Under a full “virtually integrated” supply chain, Ford would end up losing all its dealerships, thus having a way of allowing customers to “test drive” a vehicle before ordering.  In the computer industry, this really isn’t an issue as customers are more focused on specifications and price rather than feel.

To implement the new system, Ford will have to invest in new hardware and software.  It will also have to develop a new website capable of take orders from customers.  Links from suppliers to Ford’s centralized IT network will have to be created.  Training will have to occur for suppliers and dealerships before the official launch.  A new advertising campaign will have to occur to make customers aware of the new buying experience.

After all of this is done, the new system will have to be monitored.  Ford should schedule periodic review and overall evaluation meetings.  Recommendations for improvements should be noted along the way.  Customer service surveys will have to occur as well to obtain the necessary feedback on the overall customer experience.

The goal of this is to increase shareholder value and increase the level of customer service to one that customers will want to come back to.  By investing in this process, over the long-term. I’m confident that we will reach our goals.

Issue Identification

Fundamental Issue: (Nature: Strategic, Timing: Long-Term)

The fundamental issue is how should Ford use emerging information technologies and ideas from new high-tech industries to change the way it interacts with suppliers.  The current process is very complex, involving thousands of suppliers for tens of thousands of products.  Can the Dell “virtualized integration” model of supply chain be implemented at Ford.

To determine if the Dell “virtualized integration” model can be implemented, the fundamental issue must be broken down into smaller sub-issues.  These sub-issues are as follows:

Tactical Issues:

1. IT Infrastructure: (Short-Term)

Does the IT Infrastructure at Ford and its suppliers meet the requirements of a system like the Dell model?

1. Purchasing: (Short-Term)

How will the Dell model affect the Purchasing Department at Ford?  

1. Inventory Management: (Short-Term)

How does the Dell model affect Inventory Management within Ford and within its suppliers?

Strategic Issues:

1. Forecasting: (Long-Term)

Lack of customer information affects ability to properly forecast.  This lack of information impacts all levels of production and can lead to product overstock or shortages.

1. Control of End Users: (Long-Term)

Ford has a lack of direct control on end users.  Ford wants to be able to provide the best customer experience, and at the same time make that experience consistent throughout the organization.

1. Concerns from Dealers & Suppliers: (Short-Term)

In a change to the Dell model, what are the concerns that will come from Dealers and Suppliers.

Operating Environment

Ford, based in Dearborn, Michigan began operations in 1903.  

Through the years, it’s main competition has been General Motors and Chrysler, but recent expansion from foreign-based manufacturers such as Honda and Toyota, has led to an ever-increasing over-capacity (estimated at 20 million vehicles).

To gain a competitive advantage, Ford and other companies moved toward industry consolidation.  As an example, the purchase of Sweden’s Volvo by Ford.

As foreign-based manufacturers have expanded to North America, other developing and industrialized nations have recognized the wealth and job-producing effects of automobile manufacturing.  This increase in world competition has forced manufactures to continually improve quality, reduce cycle times all while reducing costs.

In 1995, Ford introduced the Ford 2000 restructuring plan.  This plan merged its North American, European, and International operations into a single global organization.  This initiative called for dramatic cost reductions to be obtained by reengineering and globalizing corporate organizations and processes.