scm - ford final
TRANSCRIPT
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Ford MotorCompany: SupplyChain StrategyCase Study Analysis
Group 4
SameerRounika
Aditya D
Chirag RSiddhar
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Company and Industry Background
FORD MOTOR COMPANY A Brief
Growing global competition and Industry consolidation
FORD 2000 Single Global Organization
Information Technology A critical enabler
The Internet revolution Intranet, ANX
The success phase
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Problem definition
Key Issues:
Address the viability of implementing a virtual integration model througsupply chain similar to Dell
Many internal and external factors involved based on the nature of auto
industry and Fords current operations
To leverage current information technology and create a closer relationwith customers and suppliers
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FORDs Existing Supply Chain
Fords Existing Supply Base
Supplier selection primarily on the basis of
the cost
Shift of focus from being cost centric to
establishing long term relationships
Motto was to make supplier operations
easier via a range of techniques like JIT,
TQM and SPC
Ford Production System
Aimed at making Ford manufacturingoperations leaner, responsive and effi
Synchronous Material Flow (SMF)Vehicle Sequencing (ILVS)
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FORDs - Existing Supply Chain
Order To Delivery
To reduce the time from a customers order to delivery of thefinished product from 45-65 days to 15 days
Based on following elements:1. Ongoing forecasting of customer demand from dealers
2. a minimum of 15 days of vehicles in each assembly plants order
bank to increase manufacturing stability3. Regional mixing centers that optimize schedules and deliveries
of finished vehicles via rail transportation
4. A robust order amendment process
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FORDs - Existing Supply Chain
Ford Retail Network
FRN Launched under the newly formed Ford Investment
Enterprises company (FIECo.)
2. Primary goals of FIECo. To be a test bed for best practices in retail distribution and drive those practices thro
the dealer network
To create an alternate distribution channel to compete with new, publicly owned retchains such as AutoNation
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DELLS Supply Chain
Use of Direct Model without the use of retail channels.
Build to order strategy
Just in Time Inventory system 6 day Inventory 6 day Cycle
Integrated Supply Chain Rapid Product Design
Fabrication
Assembly
Direct Shipment to Customer
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Benefits of Dell Supply Chain
Bring Ford close to customers
Meet customer needs faster and efficientlyInternet
Lower inventory, distribution costs Convenience for customers
Develop relationship with customerBuild to
order
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Comparison of Dell and Ford Supply chain
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Similarity Dell vs Fords system
Dell Process
Suppliers own inventory
Suppliers maintain ship points
Customers frequently
steered
Demand Forecasting critical
Demand pull through out value
chain
Strategic Partnership with supplier
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Enterprise Model Comparison
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Model Difference
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Moving from Push to Pull
Design StrategyVehicle combination
Please everyoneMore is better
Mainstreamcustomer
Minimal
Marketing Pricing strategyVehicle PurchaseIncentives
Budget drivenHigh
Market driveLower
Manufacturing andsupply
Capacity Planning
Schedules
Driven by programbudgetMake whatever you
can
Market drive
Schedule fro
customer
Dealer network Ordering
Order to delivery
Inventory
Model
Based on allocationsand constraintsLonger
High with lowturnover
Independentdealership
Based on cusdemandShorter
Low with rapturnover
Company co
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Pros and cons
Advantages Disadvantages
Customization to clients requirement Need to change traditional process of
Needs met faster Costly and time consuming activity
Minimal Inventory Loss of dealership loss of business
Ability to forecast better Emotionally sensitive issue
Improved relationship with customers andsuppliers
Directly control customer service
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Problems with Dell Supply Chain
Ford has complex network of suppliers and many of them does not suthe necessary infrastructure
Cars requires more components than a computer and cannot be easilshipped in a box
Full disclosure of the purchasing information might conflict Fordspurchasing power
Very difficult for Ford to eliminate it dealers as it has a set distributionchannel
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Possible Solutions & Recommendation
1st Solution
Keep existing supply chain as it is and not make any major changes May fall behind in IT and may become outdated in their industry
2nd Solution
Extend Fords E-business strategy with customers and suppliers and make a partial jumvirtual integration
Internet could serve as a primary tool for dealing with suppliers and make partial jump tpartial integration.
It would also allow customisation of automobiles by customers
This would incorporate many of Dells supply chain activities.
Only cars sold over the Internet would be build to order and rest would remain the samenormal distributor centres.
Therefore, ensuring partial adoption of Dells virtual integration model thereby creatingthe customer
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Thank You!
Questions