FORD MOTOR Strategy

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TEXAS TECH UNIVERSITY2010Case 2-3: Ford MotorCompany: Supply ChainStrategyCase Critique for ISQS 5231 - IT forManagersProfessor:Dr. Qing CaoTeam # 4Dalal AhmadSayed AlmohriAliza LevinskyAndy RuppAvinash SikenporeTeam 4 Critique 1ContentsSummarize the case ..................................................................................................................... 2Critique and analyze team 5. ....................................................................................................... 3Evaluate participation and ways to improve ............................................................................... 5Appendix A: Glossary ...........................................................

...................................................... 6Appendix B: Car producer forecast ..............................................

............................................... 6Works Cited .................................................................................................................................... 7Team 4 Critique 2Summarize the caseThe case 2-5 deals with the hurdles, implications and the extent of virtual integration inone of the worlds largest automobile manufacturing company. Ford Motor Company: SupplyChain Strategy case focuses on the viability of implementing a supply chain strategy following

Dells model.There are several factors which affect how an auto industry is managed and the wayimportant decisions in regard to the company are taken. Ford was established bya visionaryHenry Ford in 1903 and it has been in business ever since. Its main competitiontill 1970s waswith General Motors and Chrysler. However with the entry of Japanese companies like Honda,Toyota and Nissan the firm faced stiffer competition with the auto market beingovercapacitated.In 1995 Ford initiated the Ford 2000 plan aimed to restructure many of their keyprocesses like Order to Delivery (OTD) and Ford Production System (FPS). They wa

nted toreduce the OTD from 60 or more to 15 or less days. FPS was created to convert the supply chainfrom a push type to a pull type. Ford aimed at reducing the number of supplierswhich hadgrown to several thousands of different suppliers over the years as the companygrew. Ratherthan focusing on selecting suppliers based on costs they wanted to develop closelong-termrelations with the Tier 1 suppliers who in turn managed and handled Tier 2 and T


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ier 3 suppliers.The aim was to create a more cost effective supply chain. Ford provided its suppliers with itsexpertise and techniques to help them better manage their operations. Another importantinitiative taken by ford was the Ford Retail Network (FRN) to reduce competitionamong itsdealerships in the same locality by having only one unified dealer who providesthe best possiblelevel of customer experience. The director of supply chain system, Takai has totake an informedand well thought decision if they should implement the Dells integrated supply chain or not.Team 4 Critique 3Critique and analyze team 5.We think that the overall presentation on Ford was good and a lot of informationover andbeyond the case was discussed and presented. Even then we feel that there were plenty of issuesthe team could have handled in a better manner. The first area they lacked was describing thespecific initiatives by Ford like the Ford Retail Network (FRN), Ford ProductionSystem (FPS)and Order to Delivery (OTD) in more depth. Secondly they left the main issue qui

te open todebate and not specific in terms of the recommendations and the suggested courseof action atdifferent levels of the organization and how exactly to integrate the emerging technologies intoits supply chain. If we were the presenting team we would have approached this case in a verydifferent way.An important part of analyzing any case is to elaborate on the alternatives thecompanyhas, delving the implications of each and exploring ways how best it can be implemented.Therefore we have enlisted the alternatives with a brief description of the pros

and cons. Thenwe also go ahead and recommend the best alternative according to us and discussthe reasonsbehind it. Alternatives with their pros and cons: -1) Keep its existing supply chaina) Advantages: No major changes and additional costs involved.b) Disadvantages: Fords IT will eventually become obsolete.2) Form a mix of online and offline operations and lay procedures to enable customization andordering by customers over the internet but maintain physical dealerships as well.a) Advantages: Customization to clients, start of vertical integration,b) Disadvantages: Costly, time consuming, requires internal and external changes

whichare not easy to handle and integrate with other operations.Team 4 Critique 43) Create a virtually integrated supply chain based on Dell s model. Ford and all its supplierswould share information between their systems and the Internet to coordinate theflow ofmaterials and production. All customer orders would be taken either via Ford s web site orby phone and then built. A pull system would be implemented completely.


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a) Advantages: Customization to clients, start of vertical integration in the supply chain.b) Disadvantages: Ford s traditional processes and production methods would haveto bechanged to take advantage of this new form of supply-chain management. Since itis avery costly and time consuming activity, the difference in the two industries makes it arisky option.After more careful examination and review of the alternatives we came to the realization thatthe long term implication of the first and third option is the company going outof business.Keeping the existing supply chain would continue to deliver the same dismal results anddeclining profits for the company which eliminates option 1. The third option seems illogicalwhen we take into account the fact that Ford is an automobile manufacturing company and Dellassembles customized computers for its customers via the internet, eliminating dealerships allacross and relying on website for its sales will put it at a great disadvantagewith other automakers. In spite of the recent loss of trust and quality issues with Toyota we w

ill base ourrecommendations and critique comparing Toyotas usage of information technology inmakingtheir process and operations lean. Toyota has been the forerunner in implementing many of thebest practices in manufacturing industries like JIT (Just in Time), Kaizen, Poka-yoke, Jidoka andother techniques which are solely dependent on their ERP (Enterprise Resource Planning)system. Since the production at Ford is based on a predetermined schedule it isa push basedsystem. One way to move from a push based system to move towards a pull based system is by

producing at a uniform level by the use of IT modules enabling MIXED model sequencingTeam 4 Critique 5(Appendix B shows an example of a car producer trying to plan for September sales forecastusing batched production (not flexible) versus mixed production (flexible).So we would recommend Ford to extend its E-business strategy by partiallyimplementing the Dells model of supply chain. The part of the Dells model which does not fitwith Ford need to be discarded. The dealers would still play a role in the distribution since wesaw in the classroom discussion how the buying experience of a car from a dealercannot be

substituted by something virtual like a 3d model on a computer or images and description online.The IT systems should be centralized since its Tier 2 and Tier 3 suppliers mightnot be able toupdate their IT infrastructure as frequently as Ford. Suppliers can have accessto central designdatabase while Ford controls the access and functionality as per the requirements. The wholecoordinated system would ensure a smooth flow of materials and reduced bottlenecks and


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enhance the efficiency of the supply chain giving a competitive edge to Ford. And lastly we feelthat dealers can play a more involved role in forecasting customer demand and Ford shouldexplore the option of outsourcing it to a firm which specializes in forecastingdemand and canwork with each dealer or network of dealers.Evaluate participation and ways to improveWe believe that our team was more prepared and ready for this case following recommendationsto improve from the previous case critique. We wrote down the questions for theteam to ask buttheir time management was not the best which limited us. Even though we could not participatewith the intensity we intended in the class, all members came up with insightfulideas andthought provoking comments. One way we could further improve our team performance isthrough having a team discussion prior to class on the case so we can focus on important issuesmore carefully and having a more clear idea of our expectations.Team 4 Critique 6Appendix A: Glossary Lean production: doing more with less through a whole integrated system that eli

minateswaste and focus on continues improvements of operations that add value. Just In Time: smoothing the flow of material arrive just as it is needed. Kaizen: a system for continuous improvement. Poka-yoke: A foolproof mechanism that prevents defects from occurring. Jidoka: Authority to stop the production line.Appendix B: Car producer forecastTeam 4 Critique 7Works CitedDoubrava, K. (n.d.). Ohio University. Retrieved 04 12, 2010, from Oak and the world of the web:Ford Case analysis: oak.cats.ohiou.edu/~kd636398/esp/Ford_CaseAnalysis.docEd Davis, B. A. (200, 05 10). University of Virginia. Retrieved 04 14, 2010, fro

m Fords EBusinessStrategy: http://faculty.darden.virginia.edu/gbus885-00/documents/ford_ppts.pdfLynda M Applegate, R. D. (2008). Corporate Information Strategy and Management:Text andCases. McGraw-Hill/Irwin.Roberta Russell, B. W. (2007). Operations management: creating value along the supply chain.Wiley.

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FORD MOTOR Strategy