Ford Case Study

Ford Case Study

In the recent years, the supply chain around the world has taken ground due to the advancement in the technologies related to computers and the scope for different companies to gain access to large amount of savings depending on the well-efficient process of supply chain (Gosling et al. 2016).

Many organisations have faced the dilemma on how to restructure the practices of supply chain and transform them into more compatible and efficient procedures with the advancement in computer technologies (Wu et al. 2017). One such company that also faced the problem of supply chain was the famous company Ford. The company was established in the year 1903 by Henry Ford. It is an American multinational automobile maker that had its headquarter in Dearborn, Michigan which is a suburb of Detroit (corporate.ford.com 2021).

The Ford automobile company had a scattered process of supply chain. Although Ford has implemented significant efforts to generate a systematic process of supply chain, they are still facing the dilemma about how to boost the overall efficiency in their supply chain procedures (Hugos 2018).

Recently, the company is focusing on how to bring the practices of supply chain to the next level of efficiency and is considering the advantages and disadvantages of the integration of the supply chain plan alike the virtual integration strategy of Dell (Rasool et al. 2016). Due to the differentiation of products that both Ford and Dell sell, Ford would require to structure its own customised supply chain with the help of virtual integration that is not similar to that of the virtual integration strategy of Dell.

Ford Company Background

Since, the foundation of Ford by Henry Ford, the company has manufactured almost 260 million automobiles. A notable feature of the company was that Ford generated a worldwide presence before the starting of the era of internet and computers (corporate.ford.com 2021).

Another factor that has boosted the development of the company over the years is the success of other manufacturers of cars within  the boundary of the United States such as Chrysler and General Motors (GM) that has transformed the domestic market more rivalrous (Bardwick 2018).

In addition to the domestic rivals, Ford has also observed the market share being effected by the foreign manufacturers of cars such as Honda and Toyota (Pardi 2017). Ford expanded itself to the foreign markets for manufacturing along with the rivals to remain rival once the process of worldwide outsourcing has gained popularity.

Due to the worldwide efforts for expansion, the company has levied Ford 2000 that had the aim of merging European, North American and worldwide automotive functions into a single corporate ecosystem. The objective of Ford 2000 was to incorporate significant reductions in the costs by redesigning and internationalising the organisational procedures of Ford (Lavine, White and Allen 2016).

Various Vehicle Centers (VCs) were constructed that was responsible for some special segments of the market with an effort of enhancing efficiency while saving on logistics costs. Different reengineering projects were structured under the Ford 2000 that incorporated Order-to-Delivery (OTD) and the Ford Production Systems (FPS) (dbrmfg.co.nz 2021). A particularly efficient point of FPS was the Synchronous Material Flow (SMF) that is a methodology to produce constant flow of products and material driven by a fixed vehicle schedule.

Ford decided to restructure its retail network. The aim of this strategy was not to bring about competition among the dealers of Ford. Rather the aim of this strategy was to engage in competition with other well-known car manufacturing companies (Hutt and Speh 2021). The consolidation of personnel and marketing was seen to be advantageous for the company.

The retail network strategy was found to be quite successful to create an efficient experience in shopping that highlighted special brands such as Mercury, Jaguar, and Ford (Shein and Bell 2017). Along with highlighting the special brands, the company tried to develop closer connection with the customers by allowing transparent feedback on the goods. The information gained from the feedback was utilised by the company to enhance the processes of supply chain and the development features of their products.

Other Options

The supply chain processes of Dell is seen to be a feasible method that can be taken into account by Ford provided that it reduces the steps generally viewed under the chain of supply. One of the major reasons behind the viability of the supply chain procedures of Dell is the foundation of the company in the year 1984 (delltechnologies.com 2021). The provided Dell an advantage in the IT industry and the evolution of supply chain  models.

The principle idea of Dell was to remove the “dealer” of the whole process of supply chain model that has a direct link with the customers. This is considerably much different than the traditional model of Ford where the supply chain moves from the suppliers to the producers to the channels of distribution and ultimately to the customers.

Another interesting difference between the supply chain of Ford and Dell is that Ford had buying organised independently of development of product. This is contrary to the strategy of Dell to have purchasing directly reported to the development of products.

The strategy behind this the realisation of the pricing negotiations with the suppliers at a considerably lesser cost by Ford. This is a crucial distinguishing factor of Ford from Dell to create more relationships in the long-run with the suppliers to pick up what products are required to fulfil the orders of the customers.

The virtual integration model of Dell (Lakshmi 2018) has been proposed in such a way that it can smoothen the processes of Ford. However, due to the complications to manufacture automobiles with a combination of the suppliers to manufacture the parts, it is not viable to consider the utilisation of this process.

Ford can learn a lot from the use of IT by Dell in the process of communication with the suppliers (Afshan, Chatterjee and Chhetri 2018). This can strengthen the bond between the company and the customers who mass order along with the customers that order single vehicle every several years. Dell uses the procedure of virtual integration to create a presence at some of the large offices of their clients.

For instance, Boeing to customise the orders that are needed for the businesses of the clients and thus framing itself as the IT departments of the top clients than just a manufacturer of computers. The elements of this bond and the business model would affect the supply chain of the customer preferences which would be helpful for Ford. However, it is not the same model that Ford requires to enhance the process of supply chain.

Recommendations

Based on the differences between the supply chain models of Dell and Ford, it is suggested that Ford needs to study the supply chain model of Dell accurately. Ford should also remain consistent with the requirement of their own business. Keeping in mind, the differences between automobile manufacturing sectors and the production of computers, Ford needs to develop the best possible strategy that best suits their needs to move forward.

The major recommendation to Ford is to make necessary investment in the upgradation of Information Technology in the technology of suppliers and to boost the support of customer service to gain more important information about the customers. One of the most complicated issues about Ford is that it is an historic brand that has supplier bonding over the whole world that are fragmented.

By segregating the suppliers into different levels, Ford helped the suppliers with the capital to evolve with the Information Technology to become more efficient. However, their level two and their beyond suppliers could not engage in the same investments. In order to reinforce the suppliers that are nearer to the production centers, Ford should focus on Research and Developments that are dependent on the satisfaction of the customers and the products defects that come with the design of the automobiles.

Ford also invested a lot on the creation of retail network. Hence, it requires to incorporate the extensive strategy to incorporate the strength of Information Technology in the retail network. Firstly, Ford needs to utilise IT to predict the demand based on the dealer statistics and then use the information to segregate customers to anticipate the trends in the industry. The information can be examined against the data of the competitors and the recent events to assist Ford to foresee the trends in the process of supply chain.

In the context of repairing, the dealers can utilise Information Technology to smoothen up the delivery of parts in a short span of time as a part of the strategy of supply chain. This would boost up the loyalty of customers to the brands and allow for the long-term information that can be studied on the durability of the parts that are making an entry in the supply chain of Ford for different suppliers.

Conclusion

In conclusion, it can be said that Ford has the potential and scope to enhance the supply chains as there is development of technology. The important point for Ford is to view the existing supply chain to compare them to the new developing industries as they were evolving. Examinations of supply chain are important for Ford to remain rivalrous and move forward. Ford considered the model of Dell’s supply chain process.

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References

Afshan, N., Chatterjee, S. and Chhetri, P. 2018. Impact of information technology and relational aspect on supply chain collaboration leading to financial performance: A study in Indian context. Benchmarking: An International Journal.

Bardwick, J.M. 2018. Ford, Chrysler, and General Motors: the fall and rise of an automotive empire. The Business & Management Collection.

corporate.ford.com 2021. COMPANY TIMELINE. [online] FORD. Available at: <https://corporate.ford.com/about/history/company-timeline.html> [Accessed 3 July 2021].

corporate.ford.com 2021. OUR HISTORY. [online] FORD. Available at: <https://corporate.ford.com/about/history.html> [Accessed 3 July 2021].

dbrmfg.co.nz 2021. Theory of Constraints Production. [online] Dbrmfg.co.nz. Available at: <https://www.dbrmfg.co.nz/Production.htm> [Accessed 3 July 2021].

delltechnologies.com 2021. Our Timeline | Dell Technologies. [online] Corporate.delltechnologies.com. Available at: <https://corporate.delltechnologies.com/en-in/about-us/who-we-are/timeline.htm#:~:text=1984,time%20to%20growing%20the%20business.> [Accessed 3 July 2021].

Gosling, J., Jia, F., Gong, Y. and Brown, S. 2016. The role of supply chain leadership in the learning of sustainable practice: toward an integrated framework. Journal of Cleaner Production, 137, pp.1458-1469.

Hugos, M.H. 2018. Essentials of supply chain management. John Wiley & Sons.

Hutt, M.D. and Speh, T.W. 2021. Business marketing management: B2B. South-Western, Cengage Learning.

Lakshmi, S. 2018. Make To Order Strategy at Dell Corporation: A Case Study. Aweshkar Research Journal, 25(2).

Lavine, B.K., White, C. and Allen, M. 2016. Forensic analysis of automotive paints using a pattern recognition assisted infrared library searching system: Ford (2000–2006). Microchemical Journal, 129, pp.173-183.

Pardi, T. 2017. Industrial policy and the British automotive industry under Margaret Thatcher. Business History, 59(1), pp.75-100.

Rasool, Y., Iftikhar, B., Nazir, M.N. and Kamran, H.W. 2016. Supply chain evolution and green supply chain perspective. International Journal of Economics, Commerce and Management, 4(10), pp.716-724.

Shein, J.B. and Bell, M. 2017. At Ford, turnaround is job one. Kellogg School of Management Cases.

Wu, Y., Li, H., Gou, Q. and Gu, J. 2017. Supply chain models with corporate social responsibility. International Journal of Production Research, 55(22), pp.6732-6759.

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