Ford Motor Company Case Study

Topics: Supply chain management, Ford Motor Company, Supply chain Pages: 6 (1689 words) Published: December 2, 2012

Ford Motor Company Case Report

Executive Summary
Ford Motor Company has a long history, starting in Michigan in 1903. They have focused on designing and manufacturing and have been very successful, however with increasing competition, global markets and over-capacity the company needs to look at ways to improve profitability. The company has implemented various programs and processes to create a lean, responsive system with better consumer forecasting.

Their challenge is to continue to research ways to stay viable in current market and industry conditions. Dell Computers has been very successful with a direct model and virtual integration that may or not work well for Ford.



The Ford Motor Company is facing a number of challenges including the direction of CEO Jac Nasser to focus on customer responsiveness and shareholder value to deal with increasing competitiveness, an industry with potential over-capacity and the expansion into globalized markets. Ford had begun to implement systems to reduce cycle-time, improve quality and to lower costs. Programs included consolidating product development into five Vehicle Centres (VCs), reeingineered processes such as Order to Delivery (OTD), Fort Production System (FPS) and Business to Business (B2B) capacity. Additionally, information flow was examined to overcome geographical constraints, thus becoming a critical component of Ford’s global approach. During the past decade the company has implemented many programs and processes becoming the most improved automaker with steady upward trending sales and record profit sharing.

The supply chain initially had a base of many competitive suppliers until the 1990’s when they began to move toward fewer, long term supplier relationships. Ford fostered relationships with tier one suppliers who would interface with tier two and other suppliers. With Ford’s support, the suppliers tried a variety of strategies including Just-In-Time (JIT) inventory, Total Quality Management (TQM) and Statistical Process Control (SPC). A limitation emerged in the variance of IT expertise and capability among the supply chain members.

To reach the goal of reduced cycle time, creating a lean and flexible process, Ford is researching Dell Computer’s successful direct model to see if this virtual integration system would work for them. The direct model reduces the time and costs of third party distribution through direct interfacing with as few partners as possible as a way to improve production and customer responsiveness. The challenge is to determine if this system will work for Ford Motor Company. * ANALYSIS:

The CEO’s directive is complicated by various factors. While Dell’s direct model works for Dell, it may or may not be effective with Ford. The company has been through a decade of change and adjustments to various processes and directions and while the option is available, a decision is not urgent as Ford is in a fairly good position.

Dell’s direct model involves a customer focus, small numbers of supplier partnerships, customization, a just-in-time inventory and manufacturing. In order to do this, Dell ties in technology to communicate and coordinate these goals and strategies. They use what they call vertical integration. This means that they work very closely with customers and suppliers including actually having staff on site working directly with customers and partners, sharing information and knowledge to enable flexibility and effectiveness reducing cycle times.

Dell establishes partnerships or collaborations with their customers and suppliers which is much like controlled outsourcing....

References: Austin, Robert D., Ford Motor Company: Supply Chain Strategy, 9-699-198, Harvard Business School Publishing, 1999.
Magretta, Joan (2001) “The Power of Virtual Integration: An Interview with Michael Dell,” Harvard Business Review
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