Ford Motor Company
In a global marketplace of buyer power and consumer choice companies are looking to operations outside of their industries to find creative ways to remain competitive. Ford Motor Company is doing just that with innovative computer giant, Dell. Ford is able to adapt the unique virtual integration tactics to its own practices. With extreme differences in industry, there are certain aspects that Ford must consider amending to fit their specific needs.
Dell has mastered the concept of “virtual integration” by reaping the benefits of vertical integration with being exposed to the risk of owing a large amount of assets. Their Internet based, direct-to-consumer, sales strategy allows for customization and an extremely low inventory level. Similarly, Dell shares information with all suppliers in real-time as if they were vertically integrated into the company. This leads to extreme coordination across all suppliers, although they are all separately owned. Lastly, Dell is able to grow easily and quickly without the need to invest in infrastructure. To foster growth the company adds new suppliers therefore adding capacity.
The auto industry relies heavily on a few main suppliers for components and key inputs for production. This makes information sharing and communication across various tiers of the supply chain important. In this extremely asset intensive industry, coordination is a way to reduce inventory buildup throughout the entire supply chain. Growth is important, but is a long process requiring a significant amount of capital. In the current auto industry there is surplus of car manufactures making lean operations more attractive.
As Ford considers the potential benefits to be gained from the Dell model they must also consider additional challenges specific to their industry and company. In the auto industry supplier relationships are very close and long term. The product life cycle in the auto industry is long while the technology industry’s product life
Dell has mastered the concept of “virtual integration” by reaping the benefits of vertical integration with being exposed to the risk of owing a large amount of assets. Their Internet based, direct-to-consumer, sales strategy allows for customization and an extremely low inventory level. Similarly, Dell shares information with all suppliers in real-time as if they were vertically integrated into the company. This leads to extreme coordination across all suppliers, although they are all separately owned. Lastly, Dell is able to grow easily and quickly without the need to invest in infrastructure. To foster growth the company adds new suppliers therefore adding capacity.
The auto industry relies heavily on a few main suppliers for components and key inputs for production. This makes information sharing and communication across various tiers of the supply chain important. In this extremely asset intensive industry, coordination is a way to reduce inventory buildup throughout the entire supply chain. Growth is important, but is a long process requiring a significant amount of capital. In the current auto industry there is surplus of car manufactures making lean operations more attractive.
As Ford considers the potential benefits to be gained from the Dell model they must also consider additional challenges specific to their industry and company. In the auto industry supplier relationships are very close and long term. The product life cycle in the auto industry is long while the technology industry’s product life