Ford

SUPPLY CHAIN STRATEGY

FORD MOTOR COMPANY

Executive Summary:

There is pressure for Ford to adopt a supply chain strategy based on the “virtual integration” concept develop by Dell for their business. This strategy employs a process where suppliers and consumers share information in real time and speeds the ordering, development and shipping of the product from factory to consumer. Though highly effective in the selling of PC’s, adopting it for the business of producing and selling cars will not be effective and will create its own problems which may not be entirely solvable. It is recommended that Ford not go to a complete virtual integration strategy but adopt certain specific parts of the strategy that can improve what is currently in place.

Key Assumptions:

• Consumers will adopt the approach to purchasing a car through the Internet as opposed to visiting a dealership.

• Dealerships will accept the Ford’s new way to shop for a car. Dealerships will not have to spend time with customers, negotiating pricing and terms.

• The move from a push to pull supply strategy will benefit not only the consumer as they will get exactly the car they want, but speed the process during the process.

Statement of Issues:

There are two main issues facing Ford regarding the implementation of a direct relationship with its customers. The first deals with Supplier integration. This entails developing a close relationship with the company’s suppliers. It is relationship that allows the free flow of information such as demand forecasts and design decisions. Its impact would be felt greatly as Ford would have to review its relationship with each one of its suppliers. These relationships are not all positive and they would need a renewed sense of trust.

The second issue is customer integration. This is developed when Ford begins to develop a closer and direct relationship with its customer base, however, not through its dealers....