Supply Chain Management of Ford Motor Company

Topics: Ford Motor Company, Henry Ford, Automotive industry Pages: 17 (5633 words) Published: May 7, 2012
Supply Chain Management of Ford Motor Company 

As the second-largest automobile company in the world, Ford Motor Company represents a $164 billion multinational business empire. Known primarily as a manufacturer of automobiles, Ford also operates Ford Credit, which generates more than $3 billion in income, and owns The Hertz Corporation, the largest automobile rental company in the world. The company manufactures vehicles under the names Ford, Lincoln, Mercury, Jaguar, Volvo, Land Rover, and Aston Martin. Ford also maintains controlling interest in Mazda Motor Corporation. Ford's financial stability was shaken in early years of the new millennium as a result of slowing sales, quality issues, and a debacle involving Firestone tires.

Origins of an American Legend

Henry Ford, the founder of the Ford Motor Company, was born on a farm near Dearborn, Michigan, in 1863. He had a talent for engineering, which he pursued as a hobby from boyhood, but it was not until 1890 that he commenced his engineering career as an employee of the Detroit Edison Company. In his spare time, Ford constructed experimental gasoline engines and in 1892 completed his first gasoline buggy. Dissatisfied with the buggy's weight, he sold it in 1896 to help fund the construction of a new car. Ford's superiors at the electric company felt his hobby distracted him from his regular occupation and, despite his promotion to chief engineer, he was forced to quit in 1899.

Shortly afterwards, with financial backing from private investors, Ford established the Detroit Automobile Company. He later withdrew from the venture after a disagreement with business associates over the numbers and prices of cars to be produced. Ford advocated a business strategy which combined a lower profit margin on each car with greater production volumes. In this way, he hoped to gain a larger market share and maintain profitability.

Independently in a small shed in Detroit, Henry Ford developed two four-cylinder, 80-horsepower race cars, called the 999 and the Arrow. These cars won several races and helped to create a new market for Ford automobiles. With $28,000 of capital raised from friends and neighbors, Henry Ford established a new shop on June 16, 1903. In this facility, a converted wagon factory on Mack Avenue in Detroit, the Ford Motor Company began production of a two-cylinder, eight-horsepower design called the Model A. The company produced 1,708 of these models in the first year of operation.

The Ford Motor Company was sued by the Licensed Association of Automobile Manufacturers, an industrial syndicate which held patent rights for road locomotives with internal combustion engines. Ford responded by taking the matter to the courts, arguing that the patent, granted to George B. Selden in 1895, was invalid. During the long process of adjudication, Ford continued to manufacture cars and relocated to a larger plant on Piquette and Beaubien Streets. A Canadian plant was established in Walkerville, Ontario, on August 17, 1904.

Henry Ford and his engineers designed several automobiles, each one designated by a letter of the alphabet; these included the small, four-cylinder Model N (which sold for $500), and the more luxurious six-cylinder Model K (which sold poorly for $2,500). The failure of the Model K, coupled with Henry Ford's persistence in developing inexpensive cars for mass production, caused a dispute between Ford and his associate Alexander Malcolmson. The latter, who helped to establish the company in 1903, resigned and his share of the company was acquired by Henry Ford. Ford's holdings then amounted to 58.5 percent. In a further consolidation of his control, Ford replaced John S. Gray, a Detroit banker, as president of the company in 1906.

In October 1908, despite the continuing litigation with the Selden syndicate, Ford introduced the durable and practical Model T. Demand for this car was so great that Ford was forced to enlarge its production...
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