Ford Motor Case Company

Executive Summary

As director of Supply Chain Systems, I have decided to implement some of the key components of the new supply chain strategy of Virtual Integration from the companies like Dell Computer Corporation. Though there are several differences between the companies, Dell’s virtual integration strategy can be applied to Ford’s supply chain operation. A modified Virtual Integration System can be applied to Ford’s dependent supplied base, distribution system and dealerships. Special care needs to be taken to address the issue of unique dependency of our Tier 1 suppliers. The management of Tier 2 and Tier 3 suppliers would be more suited by the standard procedures used by Dell. If we could find a solution to all the obstacles of virtual integration at Ford, it could make our supply chain run smoothly with the best inventory solutions and overall performance. Managers will be able to overcome the complex and faulty manual process of forecasting and procuring parts which result in reduced OTD, thus decreasing the costs and enhancing customer satisfaction.

Issues Identification

• Inaccurate forecasting

• Supply chain based on outsourcing dependent on large supplier network

• Ineffective communication in supplier network

• Long Cycle Times

• Dealer network structure

• Following the traditional “Push” model

Environment and Root Cause Analysis

Ford’s Supply Chain is based on Vertical Integration and Outsourcing strategy, this has created a complex supply chain, increasing inventory and OTD (Order to Delivery Times). The reorganizational efforts to date; JIT, TQM have not reduced the OTD – Order to Delivery time. This has resulted in excess inventory and error prone procurement procedures.

• Inaccurate forecasting

The company sales managers are not in direct touch with the customers. The independent dealerships interact with the customers. Thus a direct communication link does not exist.

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