Ford Vs Dell

From: XXXXX

To: XXXXX

Subject: Ford Motor Company vs. Dell Computer Corp: Supply Chain Strategy

Date: March 17, 2007

Summary:

As per our meeting earlier this week, here is the information you requested regarding the supply chain strategy of the Ford Motor Company. I have also included a quick comparison to the strategy used by Dell Computers in attaining my final recommendation.

Ford's Dilemma:

The director of supply chain systems at Ford has two options to consider before implementing its new strategy towards the company's supply chain strategy. First, it must consider virtual integration, and modeling its supply chain after companies like Dell. Secondly, it should consider the possibility of continuing the organization's current supply chain strategy based on the intuition that Ford's supplier network has more layers and more companies than Dell (Austin, pg. 1).

Ford's Supply Chain - A Brief History:

In the 80's Ford picked suppliers based on the lowest cost and the overall costs of he supply chain was ignored. Dealing with so many suppliers led to a higher overall costs and a complexity that was difficult to control.

In the 90's Ford cut down the number of suppliers drastically and shifted towards longer term relationships with a set of suppliers that would provide entire vehicle sub systems. Although the numbers of suppliers were lower the supply base was different in its nature and more complex that the one used by Dell (Austin, pg. 3).

Currently, there are 5 major reengineering projects: Ford Production System (FPS), Synchronous Material Flow (SMF), In line vehicle sequencing (ILVS), Order to Delivery (OTD), and the Ford Retail Network (FRN).

FPS is an integrated system aimed at making manufacturing systems leaner, more responsive and more efficient. SMF is part of the FPS and is a process that produces a continuous flow of materials through a fixed and leveled vehicle schedule. This vehicle schedule is the aforementioned ILVS, which uses vehicle in-process storage devices and computer software to assure that the vehicles were assembled in order sequence (Austin, pg. 4). The purpose of Order to Delivery (OTD) was to reduce the consumer wait time from 45-65 days down to 15 days. This was accompanied by an overall vision to create "a lean, flexible and predictable process that harmonized the efforts of all of Ford's components to enable it to provide customers with the right products in the right place at the right time. (Austin, pg. 5)" Finally there is the Ford Retail Network, with its main concern was to purchase all the Ford dealers in a local market to avoid competition against each other, and to focus on the "real" competitors like GM, Chrysler, or Toyota (Austin, pg. 5).

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