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Ford Case

Ford faces challenges in expanding globally and adapting to new technologies while managing costs. It reengineered its business processes and reduced its vehicle centers to 5 covering 200 countries. Ford implemented a TCP/IP based IT infrastructure to link its worldwide operations. While Ford struggles with forecasting demand and building customized orders like Dell, it cannot fully emulate Dell's direct sales model due to its dealership network and complex automobiles. Ford addresses challenges by standardizing on TCP/IP and creating teams to improve knowledge management.

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2K views2 pages

Ford Case

Ford faces challenges in expanding globally and adapting to new technologies while managing costs. It reengineered its business processes and reduced its vehicle centers to 5 covering 200 countries. Ford implemented a TCP/IP based IT infrastructure to link its worldwide operations. While Ford struggles with forecasting demand and building customized orders like Dell, it cannot fully emulate Dell's direct sales model due to its dealership network and complex automobiles. Ford addresses challenges by standardizing on TCP/IP and creating teams to improve knowledge management.

Uploaded by

umer maqsood
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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“Ford Motor Company: Supply Chain

Strategy”
Ford Motors is one of three leading automotive manufacturing companies in the United States.
Based in Michigan in 1903 by Henry ford and grew to reach revenue of $150 billion and more
than 370,000 employees by 1996. In the 1970's, the automobile market for the major auto makers
General Motors (GM), Ford, and Chrysler- was crunched by competition from foreign
manufactures such as Toyota and Honda. In 1999, Ford acquired the Swedish Volvo model in an
attempt to compete in the foreign market and expand to other regions. Furthermore, Ford
launched a full organization re-engineering business process plan called "Ford 2000" aiming at
reestablishing the company's infrastructure. The process meant reduction in their Vehicle Centers
(VCs) to only five covering the operations that spanned 200 countries. It also meant cutting
redundancies and requiring Information Technology (IT) to be the driving force and the link
between Ford centers worldwide.

In building Ford's IT infrastructure, the company focused on implementing a setup that


supported the TCP/IP communication protocol based on the U.S. department of Defense
requirements.

CASE QUESTIONS:

1. What challenges does Ford face? How are these challenges different
than what Dell would have faced?

Challenges faced by Ford:

 Ford's regional expansion to address the competition for market shares demanded cost
management for the infrastructure upgrades
 IT infrastructure places limitations on the type of application development based on the
platforms
 Easy access to information and prompt delivery of vital data to key individuals requires
proper knowledge management Organizations reengineering and process remodeling is
necessary when adapting new technologies to maintain the cost and increase efficiency
 Supply chain errors and delays can severely affect the progress of the business and the
market value of the corporation

Ford is 100 yrs old Founded 1903, Dell on the other hand was founded 15 years ago. When we
compare Ford and Dell then old channel player’s concerns cost, forecasting what customers will
buy for Dell and for Ford and difficulties in implementing a true build-to-order model for so
complex product as an automobile. Dell’s direct relationship with customers is key to
forecasting. Dell has easy access to data useful for forecasting; most of the data are already in
Dell’s systems. In case of Ford, the dealers own most of the direct data about customer demand.
Ford has a very base of individual customer unlike Dell that has a relatively small number of
institutional customers.

2. How can these challenges be addressed?

To address these problems Ford adapted the TCP/IP protocol from the beginning and made sure
that all its technical infrastructure upgrades adhere to the standards. This made the transition of
its system to the Internet as cost effective as it could be. For proper knowledge management Ford
created a "Knowledge Domain Team" to build complete information in all areas that were
identified as vital to the business. Ford must think about its relationships not only with suppliers
but also with dealers and customers.

3. What risks does Ford face in meeting these challenges?

4. How does the model adopted by Ford depend on its type of business?

As Ford face difficulties in establishing B2B linkages and lack of technology and technological
complexity that specially prevail in the supply chain. It also faces difficulties in real time
responsiveness and inventory management, forecasting and communication and coordination.

Dell model base on “virtual integration” Virtual integration is the ability to achieve the
advantage without actually vertically integrating. Virtual integration includes design not only of
the supply chain but also of fulfillment, forecasting, purchasing, and a variety of other functions.

5. To what degree should Ford emulate Dell’s business model?

It is not wrong for large firms to try to adapt to successful processes implemented by other firms.
So the level of commitment is important for large firms to maintaining their position in the
market. These companies know the revolving nature of business in the sense of how easy it is to
fall back if they did not keep up with the change. The Ford process also shows the need for quick
and resourceful thinking when faced with situations that might seem to be unfavorable. The way
Ford ventured into the foreign market by acquiring local manufacturers was a strategic decision
that did not only enabled Ford to merge with different technologies, but it also saved it the
additional cost of establishing production centers in other countries.

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