Ford Virtual Integration Via Dell

Issue Identification Ford continues to face increased completion from foreign competitors while operating in an industry that is experiencing significant over-capacity. In the face of the challenges presented to us, we must determine if Ford should embrace the direct business model which utilizes “virtual integration” that has driven Dell to become a clear leader in their industry. Further, if we chose to utilize “virtual integration” based on the Dell model, we will need to develop and implement significant changes in the some of our most fundamental supply chain operations.
In addition, we must determine how Ford should utilize emerging information technology to transform the way we interact with supply chain members. While progress in this area will be integral should Ford choose to pursue “virtual integration”, it is also a stand-alone issue even if Ford does not choose to pursue the “virtual integration” approach to supply chain management. It is imperative our decisions regarding these issues align with Ford’s key strategic objectives of placing emphasis on shareholder value and customer responsiveness.

Systemic Issues
“One Best Way”: (Tactical / Short Term) – There are members of our organization who are of the belief there is one “one best way” to approach supply chain design and management regardless of the type of business, industry, or level of complexity associated with the supply chain. This opens Ford to risk of refining our supply chain functions and practices in ways that don’t optimize our ability to achieve our strategic objectives.
Information Technology Growth: (Tactical / Mid-Term) – As part of the “Ford 2000” initiative, there was general agreement that information technology would be deployed to dramatically enhance material flows and reduce inventories or “substitute information for inventory”. Ford’s growth in this area has significantly outpaced that of our supply partners with the magnitude of this issue increasing greatly