What historical factors affect Ford’s ability to move to a built to order (BTO) model?
Few of the historical factors affecting Ford’s ability to move to BTO are as follows:
1. Large number of suppliers:
The fundamental issue for Ford is the management and control of their large database of their business partners, particularly suppliers and sub-suppliers. Unlike Dell, which has only about 50 suppliers, Ford has several thousand suppliers and operates in a more complex network of business relationships. Ford didn’t had systematic plans for the supply of parts rather it has purchase cheaper parts on occasion of demands, resulting in complicated and diverse supply chains. Managing both suppliers and customers in a single efficient supply chain had always been a challenge for Ford.
2. Powerful Independent dealer network:
In addition to large database of suppliers, Ford also has a large number of dealership networks that are widely spread in large geographical areas around the world. Due to the use of independent dealership networks to sell their products, Ford lacked control on their product end users. This has also created competition between each individual dealer as they work independently. Such lack of control, combined with dealer markups had negatively impacted their ability to build a BTO model.
3. Lack of up to date IT Infrastructure:
Ford has a 3 tier of supplier network. Tier 1 suppliers provide Ford with complete vehicle subsystems. They wholly depend on these suppliers for components such as dashboards and drive trains, which are tailored to meet their specifications. Tier 1 depends on Tier 2 and 3 Suppliers for generic items. The inability of Ford’s first and lower level tier suppliers to keep up to date with IT technology that is need by Ford to stay up to speed in managing their production operations as intended is a major bottleneck within the supply chain. The lack of proper IT technology could result in miscommunication and...
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