Ford Case
Introduction
Ford Motor Company is the second largest industrial corporation in the world, employing 370,000 people in 200 countries across the world with revenue over $144 billion.
The auto industry has become very competitive on a global level, forcing automobile companies to cut costs and stay competitive. In trying to remain competitive, Ford introduced a plan called Ford 2000. This was done to cut costs, streamline the organization and processes globally, and increase economies of scale.
The current issue concerning Ford is that it has seen companies much smaller achieve market capitalization much greater than Ford’s. Corporate staff began looking at other business models, such as Dell, to understand what Ford could be doing differently to increase shareholder value.
Staff were divided on the different views. Some believed that the new technology was needed and virtual integration, based on Dell’s business model, was essential for the continued success of Ford. Others were more cautious. They felt that the automotive industry and businesses like computer manufacturers were very different. Ford’s supplier network was much more complex.
A decision needs to be made on how Ford will use the current information technologies to interact with their suppliers.
Issue Identification
1. Ford is not able to have a complete pull system as Ford’s Independent Dealerships and Suppliers have limited IT Capabilities.
2. Ford’s Complex Supply Chain.
3. Ford is unable to devise an accurate forecast as it does not have a direct connection with its end customers as dealerships were independently owned.
Root Causes and Environmental Analysis
1. Ford, being one of the largest companies in the world, have the ability to keep up with the fast pace of technology. Ford’s suppliers and Car Dealerships are much smaller, therefore cannot keep up with the technological advances Ford is able to keep up with. Ford has independent car dealerships and 3
Ford Motor Company is the second largest industrial corporation in the world, employing 370,000 people in 200 countries across the world with revenue over $144 billion.
The auto industry has become very competitive on a global level, forcing automobile companies to cut costs and stay competitive. In trying to remain competitive, Ford introduced a plan called Ford 2000. This was done to cut costs, streamline the organization and processes globally, and increase economies of scale.
The current issue concerning Ford is that it has seen companies much smaller achieve market capitalization much greater than Ford’s. Corporate staff began looking at other business models, such as Dell, to understand what Ford could be doing differently to increase shareholder value.
Staff were divided on the different views. Some believed that the new technology was needed and virtual integration, based on Dell’s business model, was essential for the continued success of Ford. Others were more cautious. They felt that the automotive industry and businesses like computer manufacturers were very different. Ford’s supplier network was much more complex.
A decision needs to be made on how Ford will use the current information technologies to interact with their suppliers.
Issue Identification
1. Ford is not able to have a complete pull system as Ford’s Independent Dealerships and Suppliers have limited IT Capabilities.
2. Ford’s Complex Supply Chain.
3. Ford is unable to devise an accurate forecast as it does not have a direct connection with its end customers as dealerships were independently owned.
Root Causes and Environmental Analysis
1. Ford, being one of the largest companies in the world, have the ability to keep up with the fast pace of technology. Ford’s suppliers and Car Dealerships are much smaller, therefore cannot keep up with the technological advances Ford is able to keep up with. Ford has independent car dealerships and 3