After carefully analyzing Ford’s existing supply chain, I realized the main issues that Ford have are its large base of suppliers, suppliers does not have enough IT capability to support the requirements of Ford and it appears that Ford and their dealers have not too much communication in obtaining the accurate forecast. Meanwhile I am also aware of its highly complex nature of auto manufacturing comparing with computer industry. It would be applicable for the customers to place order online as all their concerns are the price and specification. However with several 10 thousand dollars’ car, the customers would prefer to go to dealership to do test drive. Thirdly, I also realized it is an urgent need to modify their supply chain to make it more cost effective and more profitable. Therefore my decision is the partial implementation and execution of the virtual integration direct business model that has been used by Dell. Through this model, Ford will use the emerging information technologies and internet as well as new ideas from high tech industries in order to provide forecast and replenishment plan to their suppliers and allow end users to place order directly and make modification. Furthermore, Ford can boost its sales by providing better customer service and by having faster communication between suppliers, manufacturers, and customers in the value chain. This proposed system will have to run concurrently with the existing supply chain so that Ford will cover both market segments at the same time. Ford should set up a special department in order to handle this new business process. Investment in new high tech IT equipments is required as well as training should be provided before the new project’s kick off date. Suppliers’ computers should be linked to Ford’s master computer network and customers should be made aware of this new shopping experience for buying an automobile. To measure the performance of this model, Ford should schedule periodical review and evaluation meetings. Recommendations for improvements should be noted along the way in order to be evaluated. The improvement of customer service and shareholder value should be the main aim of the whole project.
Issue of Identification:
Large data base of their suppliers, no too much partnership relationship with suppliers, no design involvement from suppliers Ford has several thousand suppliers and operates in a more complex network. Well Dell has only about 50 suppliers. Meanwhile Ford needs several thousands of parts to produce a product while Dell needs less than hundred parts. Suppliers were picked primarily based on cost and little regard was given to overall supply chain cost. There are already lots of good component manufacturers out there. Ford should focus the field where it could create value such as introducing the best product in the market and set up partnership via key suppliers instead of developing the components or managing the component suppliers. With the partner relationship and involvement of suppliers in design phases, the key suppliers will feel more secure and will bring new design to Fords, will take initiative to manage JIT inventory, trouble shoot the quality issues on site and etc to ensure Win-Win. This will benefit Ford to reduce inventory, increase return on the asset and reduce the cycle time. Meanwhile Ford could put on more focus to the consumer to be able to forecast the demand accurately.
Supplier lack of up to date IT infrastructure:
1st Tier suppliers had well developed IT capabilities but not able to invest in new technologies at the Rate Ford itself could. And IT maturity decreased rapidly in lower tiers of the supply chain. While Ford need up to date IT infrastructure from suppliers to stay up to speed in managing their production operations. The lack of proper IT technology could result in miscommunication and lack of coordination between the supply partners and the outcome...
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