ford strategies of supply chain case study

SUBMITTED BY PAVAN CHARAN TEJ (1226114108) MOTURU OOHA SREE ( 1226114127) SHARON SERA THARIYAN (1226214106) SHRUTHI SHANMUKHAN (1226114136)KHAN MOHAMMED NASEER (1226114117)POTNURI RAKESH (1226114128)

“To provide sustainable transportation that is affordable in every sense of the word: socially, environmentally and economically.”

Ford Motor Company’s Vision

Short Term

Long Term

Corporate Goals

In transforming Ford’s vision into reality, strategic directions are set out as follows:

◦ Integrate with customers, with supply base, and internally

◦ Change from old sequential process

◦ Share information in real time over the web.

◦ Drive the excess cost out of supply chain

◦ Transform information flow from cascade method to parallel by Integrating the supplier tiers.

◦ Align IT with Ford’s Goals

Strategic Direction

Threat of New Entrants

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threat of Substitutes

Rivalry

Competitive Forces

Who?

Ford motors, was the second largest industrial corporation in the world

Revenue of more than $114 billion, about 370,000 employees and operations in

about 200 countries.

Fords core business is the design and manufacture of automobiles for sale on the

consumer market.

What?

Ford is considering Dell’s model as an example:

In order to be competitive

to reach high levels of productivity and low cost.

For the improvement and simplification of supply chain.

About industry

Where?

Complexity of Ford’s supply chain integration requires:

Changes in fundamental operations

Push and Pull models in Ford’s business functions such as design, marketing, supply and dealer network.

When?

Determination of short, mid and long term Supply Chain implementation improvements

Why?

In order to keep Ford’s productivity and lean supply chain cost

This will simplify the supply chain, reduce the cost and increase productivity.

As the company had grown over the years, so had the supply base

In the late 1980s: there were several thousand suppliers of production materials in a complex network of business relationships

Suppliers were picked primarily on the basis of cost, little regard was given to:

overall supply chain costs

complexity of dealing with such a large network of suppliers.

Ford 2000 initiative produced five major, corporationwide reengineering projects

One was Ford Production System (FPS)

Aimed at making Ford manufacturing operations:

Leaner

more responsive

more efficient

Aspired to level production and move to a more pull-based system, with:

synchronized production

continuous flow

Stability

throughout the process

ORDER TO DELIVERY

• Another key process Ford reengineering initiative was Order to Delivery. • The purpose of the OTD project was to reduce to 15 days the time from a

customer’s order to delivery of the finished project.• A significant reduction versus the present performance of 45-65 days.• Pilot studies in 1997 & 1998 identified bottlenecks throughout Ford’s supplychain, including its marketing, material planning, vehicle production.

• Ford’s approach to implement an improved OTD process relied on severalelements:

1. Ongoing forecasting of customer demand from dealers.2. A minimum of 15 days of vehicles in each assembly plant’s order bank to

increase manufacturing stability.3. Regional “mixing ccnters” that optimize schedules and deliveries of

finished vehicles.4. A robust order amendment process to allow vehicles to be amended for

minor colour and trim variations.• The OTD vision was to create a lean, flexible and predictable process.

Ford Retail Network

Recommendation onford Retail Network

• Allow product & car customization both online and offline

• Collect customer data from dealers to

– Segment customers

– Accurately forecast demand by individually work with local dealers

• Implement a support network where parts can be exchanged and delivered in a short time.

Push and pull originated in logistics and supply chain management. A push–pull system in business describes the movement of a product or

information between two subjects. On markets the consumers usually "pull" the goods or information they demand

for their needs, while the offers or suppliers "push" them toward the consumers. Push production is based on forecast demand and pull production is based on

actual or consumed demand. PUSH – Node performs order planning for succeeding node. PULL – Succeeding node makes order request for preceding node. Preceding node

reacts by producing the order, which involves all internal operations, and replenishes when finished.

Current Issues of Ford

• Wide spread supplier network

• Lower tier suppliers : No access to IT infrastructure

• Indirect control on end users

• Forecasting Issues

Ford Dell

Product complexity High: 30,000+ parts Low: 300+

Product cost and life span High / long term Low / shorter term

No of suppliers / sub-

suppliersLarge (1000+) Multi tiers

Small (50) single

tier

Distributors/ Dealers manyNone - direct to

customers

How Dell applied VI to their business

In four main areas:•Organization Simplification

•Reduce the working capital by outsourcing

•Inventory Management•JIT via information management and flow

•Build to order, reducing the cost of storing finished goods

•Customer service and support•Finer customer segmentation, more tailored solutions

•Faster response time

•Supplier Collaboration•Information and feed back sharing

•Product development, R&D

Dells VI Ford Possibility

Organization Simplifying ✗

Inventory Management ✓

Customer Service and Support

✓

Suppliers management ✓

How VI could work in Ford

•ALTERNATIVE I: Having a mixture of online and offline operations•ALTERNATIVE II : VIS

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