Ford Motor Company: Supply Chain Strategy

3061 words 13 pages
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Executive Summary
As director of Supply Chain Systems, Teri Takai recommends implementing virtual integration strategies from companies like Dell to portions of Ford’s supply chain strategy. Although there are several key differences between the companies, the restructuring plans of Ford 2000 have set a viable foundation to implement Dell’s virtual integration strategy in inventory management, customer service and support and suppliers’ management. The redesign of the process must include design not only of the supply chain but also of fulfillment, forecasting, purchasing, and a variety of other functions that historically been considered independently within the Ford hierarchy. Teri
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Challenges that Ford faces that are not issues for DELL: * Segregated Departments—Purchase department independent of the Product Department. The purchasing department historically to present is a powerful force within Ford and has full control and responsibility over price negotiations. Whereas, at Dell, purchasing reports into the product development organization. * Large number of suppliers with many layers—3 tiers—is complicated to manage effectively. In its efforts to reduce suppliers from thousands, Ford has shifted from purchasing individual components to creating long-term relationships with a subset of “tier one” suppliers that provide entire vehicle sub-systems. However, the inherent complexity of automotive parts (30,000+) requires more suppliers unlike DELL which has only 50 components to assemble with about 8-10 of them being critical and a maximum permutation of 100. This also makes it difficult to implement a true build-to-order model for so complex a product as an automobile. * Incompatible systems—not using IT to its full capacity as not all suppliers have the financial backing to bring technology changes in line with Ford’s technology changes (particularly 2nd level suppliers and lower). The lack of supporting technology poses problems in connecting suppliers and other external parties. To address this problem Ford must think about its

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