Part 1: Executive Summary
After carefully analyzing Ford’s existing supply chain I immediately became aware of its highly complex nature. This high level of complexity combined with other internal and external factors have pushed Ford to search for solutions in order to overcome the costly supply chain challenges that they are facing and may continue to face in the future. Ford’s major difficulty in their present system is: the inefficient control of their large data base and complex network of suppliers, the existence of independent distributors and their inability to communicate and serve their customers directly. Realizing an urgent need to modify their supply chain in order to make it more cost effective and more profitable, and after careful analysis of the whole situation, I have recommended the partial implementation and execution of the virtual integration direct business model that has been used by Dell. Through this model, Ford will use the emerging information technologies and internet as well as new ideas from high tech industries in order to interact and transact with their suppliers and end users. Furthermore, Ford can boost its sales by providing better customer service and by having faster communication between suppliers, manufacturers, and customers in the value chain. This proposed system will have to run concurrently with the existing supply chain so that Ford will cover both market segments at the same time. Since Dell and Ford are two different types of industries, one is in computer manufacturing and the other is in auto industry, it does not seem right for Ford to implement exactly the same "virtual integration model" as Dell. In fact, if Ford implements the full direct business model alone and abolished its existing supply chain then Ford will certainly run into a high risk of losing their business to competitors due to the fact that customers want to test and feel the car before they buy it for a large amount of money. On the other hand, when customers buy computers on line they don’t have to worry about touching and testing the computer, all they require is a better price than the retail shops and the product’s specs are according to their needs. Ford should set up a special department in order to handle this new business process. Investment in new high tech equipments is required as well as training should be provided before the new project’s kick off date. Suppliers’ computers should be linked to Ford’s master computer network and customers should be made aware of this new shopping experience for buying an automobile. To measure the performance of this model, Ford should schedule periodical review and evaluation meetings. Recommendations for improvements should be noted along the way in order to be evaluated. The improvement of customer service and shareholder value should be the main aim of the whole project. At this time it’s hard to anticipate its success or failure, but by investing time and effort into it I will be confident of its success if not in the short term it will definitely in the long run. [pic]
Part 2: ISSUES
Part 2.1: Fundamental Issue
Nature: Strategic Timing: long term
The fundamental issue for Ford is the management and control of their large data base of their business partners, particularly suppliers and sub-suppliers. Unlike Dell which has only about 50suppliers, Ford has several thousand suppliers and operates in a more complex network of business relationships. To produce a single product, Dell needs less than hundred parts where as Ford needs several thousands. In addition to such large data base of suppliers, Ford also has a large number of dealership networks who are widely spread in large geographical areas around the world. Managing both suppliers and customers in a single efficient supply chain had always been a challenge for Ford who is constantly looking for new ways to better control and manage their supply chain operations in a more productive...
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