Dell: Supply Chain Strategy

EXECUTIVE SUMMARY

My decision is to implement the supply chain strategy of virtual integration and use the model made popular by Dell computers. There are several key differences between the way these two companies do business but Dell’s direct business model can be applied to many areas of Ford’s operations. Ford will have to carefully manage their unique relationship with their tier one suppliers while making this transition. Modifications will have to be made to Dell’s supply chain model to apply to their tier-one suppliers. Lower tier suppliers can be managed by the Dell model quiet easily.

STATEMENT OF ISSUE:

The main issue in this case relates to the fact that Ford is finding it increasingly difficult to maintain and expand on its market share and profitability. New competitive threats, namely Honda and Toyota have expanded into the domestic market contributing to increasing inventories and a shrinking customer base. To address the changing landscape Ford has made recent attempts to update their vertically integrated model into a more efficient supply chain. Recent implementation of total quality management, just in time inventory and synchronous material flows are a step in the right direction but a more radical overhaul of the supply chain is needed. Ford will face many challenges in the implementation of the virtual supply chain. First, the complexities of the product and their rigid and inflexible tier supplier network. New ways to communicate and purchasing procedures will need to be introduced. The historical dealership networks and the traditional way consumers had purchased vehicles will make it difficult for Ford to take advantage of Dell’s virtual integration philosophy.

CRITERIA

A good decision in this situation can be judged by the potential benefits of implementation. There are several areas of concern that could make or break this plan. First would be to successfully implement the virtual system while maintaining...