Ford Motor Company was founded by Henry Ford in 1903, in Dearborn, Michigan. It is one of three leading automotive manufacturing companies in United Sates and grew to reach revenue of more than $144 billion with 370,000 employees and operation spanned 200 countries. In the 1970’s, the automobile market for the major auto-makers, General Motors (GM), Ford and Chrysler was crunched by competition from foreign manufacturers such as Toyota and Honda. The automakers faced the need to continue to improve quality and reduce cycle time while dramatically lowering the developing cost and looking for ways to take advantage of their size and global presence since the industry was fast becoming global. One element that helps them in achieving this is to become the biggest automaker and Ford has announced to acquire Sweden’s Volvo. There was a need to change in accordance to fast technology changes in order to have advantage over other automakers. Ford’s Director of supply chain system intended to change to virtual integration model in Ford supply chain and has used Dell as the benchmark for the change. However, there are difference in Dell and Ford operation and network system that need to be taken into consideration.
Ford has come up with restructuring and reengineering plan by merging its North American, European and International automotive operation into a single global organization called Ford 2000. This is done in order to reduce the cost and globalizing corporate organizations and processes. By globalizing the processes Ford intended to eliminate organizational and process redundancies and realize huge economies of scale in manufacturing and purchasing. This new global approach required new technology in order to overcome the geographical constraints in information flow. Teams from different continents needed to be able to communicate with each other easily and all information need to be spread easily and received by all parties. Since the internet technology has grown very fast, Ford 2000 made it possible to achieve. They also intended to expand the process to the suppliers to enhance materials flow and reduce inventories. They also worked together with Chrysler on Automotive Network Exchange (ANX) with the aim to create consistency in technology standards and processes in supplier’s network in making good interaction between all automakers in the same means.
SUPPLY CHAIN MANAGEMENT
Previously, Ford has thousands of suppliers that supply all the materials to them. All these suppliers were chose based on the lowest price offered. But then Ford begins to reduce the number of suppliers by building longer-term relationships with subset of very strong suppliers who could provide the entire vehicle sub-systems. Ford also made its expertise available in dealing with the suppliers in order to improve their operation via Just in Time inventory, Total Quality Management and Statistical Process Control. By this close and longer relationship, Ford expected reducing in price every year. By using Dell as benchmark, the supply chain system team has found out that there are different in its nature and complexity of supply base. One of the differences was the purchasing activities. Dell’s purchasing activities happen in the product development organization which mean centralized while for Ford it is decentralized activity as the purchased was made in accordance to product development. All purchasing is made during each product development. One of Ford 2000 initiative was Ford Production System. FPS is integrated system that aimed at making Ford manufacturing operations learner, more responsive and more efficient. One important part is Synchronous Material Flow which is a system that produces a continuous flow of material and product driven by fixed, sequenced and leveled vehicle schedule, utilizing flexibility and lean manufacturing concepts. One of the important things is that the system will assure that...
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