Ford Motor Company: Supply Chain Management

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Ford Motor Company Supply Chain Management

• MIS 524
• Cheryl Ansel
• John Kremer
• Anthony Gianfermi

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Agenda

• Dell Ford
• Analysis Diagnosis
• Recommendation
• Questions

• Cheryl
• John
• Anthony
• All

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• The following question is being asked of Teri
  Takai, Director of Supply Chain Systems, Ford
  Motor Company
• How should the company use emerging
• information technologies and ideas from new-high
• tech industries to change the way it interacted
• with suppliers?

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Dell

• Began in 1984 with concept of bypassing the
  dealer channels and selling directly to customers
• Eliminates resellers markup which reduces cost
• Reduces the costs and risks associated with
  carrying large inventories of finished goods
• Better able to focus on providing customer value
• Dells runs fast and lean
• 3 manufacturing facilities, 16,000 employees
• Low inventory, can respond quickly

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Dell

• Direct Model leads to Virtual Integration with
  suppliers
• Looks for partners who provide high quality,
  provide long term commitments
• Demand is real, consistent and information is
  shared directly with suppliers
• Suppliers deliver components directly to
  manufacturing centers
• Eliminates high levels of inventory, which is
  viewed as a risk
• Contracts service technicians, who appear to work
  for Dell

Direct Model
Suppliers
Dell
Customers
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Dell

• Virtual integration allows Dell to provide
  better value
• Pre-load custom software during production
• On-site employees to better understand needs
• Internal support tools available online
• Platinum Councils with largest customers
• Regional meetings to discuss issues, future
  products, trends
• Views role as a technology navigator
• Sorts through the technology for the customer

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FordEnvironment
Traditional Model
Distribution Channel (Dealers)
Suppliers (Thousands)
Manufacturer (Ford)
Customers

• 2nd largest industrial corporation in the world
• 360,000 employees, 200 countries, 180
  manufacturing plants
• Heavy competition from both domestic and
  foreign-based manufacturers
• Must improve quality and reduce cycle times
• Must lower costs of developing and building
• Industry is facing overcapacity

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Ford Chronology

• 1995 Ford 2000 launched globalization of
  corporate organizations and processes
• 1996 Ford launches company-wide intranet
• 1997 B2B capabilities in place, Intranet gt
  Extranet
• Automotive Network Exchange
• 1998 Leader in profit per vehicle, record
  profit sharing
• Ford Retail Network venture launched
• 1999 Jac Nasser takes-over as CEO

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FordFord 2000

• A Corporation Wide Reengineering Plan
• Vehicle Centers Product Development
• Ford Production Systems (FPS) JIT Supply
• Order to Delivery (OTD) Reduce Time
• Ford Retail Network (FRN) Distribution Channel
• Supplier Base Virtual Integration

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AnalysisPorters Model
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AnalysisProduct Complexity
Ford
Dell
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AnalysisInventory
Ford
Dell
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AnalysisSupplier Relations
Ford
Dell
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AnalysisDistribution Channel
Ford
Dell

• Delivers vehicles to dealerships
• Dealerships interact with the customer
• With OTD plan, dealers involved in forecasting

• Deals directly with the customer
• Direct customer contact is key to Dell strategy
• Forecasting is derived from sales database and
  customer interaction

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AnalysisPurchasing
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Diagnosis
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Recommendations

• Pilot virtual integration with one Tier 1
  subsystem supplier
• Develop processes and solid communication plans
  to address potential issues early
• When pilot succeeds, continue roll out to other
  trusted Tier 1 suppliers
• Reduce number of suppliers
• Need to be lean and able to react quickly
• Sell off other production plants
• Focus on core business of designing and building
  vehicles

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Recommendations

• Continue to implement the Ford 2000 processes
• Eliminate redundancies, globalize processes when
  possible to reduce costs
• Enable FPS and OTD to enhance material flow and
  reduce inventories
• Develop a process with the dealers to better
  forecast and minimize inventory
• Closer relationships with dealers enable Ford to
  better understand the retail environment

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Value Information Move Quickly Focus on Core
Business
E X T E N D
E N H A N C E
E X P A N D
EX I T
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Questions?Comments?Thank you!