Case Study: Ford Mondeo
In 1992, Ford Motor Company decided to produce a world car, that is, a car that would be produced and sold internationally with little variation in the vehicle between markets. This world car was named the Ford Contour and Mercury Mystique for the North American market and the Ford Mondeo for the European Market. All of these models were built with a 90% similarity due to body design differences, local conditions and mandates.
Ford decided to expand internationally to increase sales, spread production sites, and to increase their research and development. The company believed that economies of scale and supplier flexibility would improve cost efficiency and supplier efficiency. Ford felt that these factors would help its global image and improve its position within the auto industry.
One of the major issues that Ford had to face was the international integration and selection of suppliers, production scheduling, and supplier relationships. Ford's goals with suppliers were to select suppliers based on merit and also reduce the number of suppliers for their world car. Ford successfully reduced the numbers of suppliers to 227 with a worldwide supplier office and selected these suppliers based on 'best-of-class' components within a worldwide scale. The company also used a tiering system of their suppliers by approaching them long before the production of the Mondeo, which allowed for plenty of time for extensive communication of the vehicle's components. Ford strived for just-in-time production scheduling in order to reduce inventory holding costs, however this method of production was impractical. So, the new assembly sites were positioned within 30 km of suppliers for quick delivery. Ford estimated that their high-volume ordering would save the company $150 per car, and attempted to maintain that savings by asking that all suppliers absorb the costs of all future cost increases. This posed a major threat between Ford and its...
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