Ford Motor Company .. case study
Ford Motor Company ~ Case Study
THE PROBLEM Despite the revamping effort, Ford remains plagued with prolonged Order-To-Delivery (OTD) time periods, congested inventories and issues with the procurement processes. After some research, these issues appear to be well addressed by the new direct business model of the Dell Computer Corporation. Dell differentiates itself through the utilization of virtual integration, an efficient and effective direct business model facilitated by electronic business providing Build-To-Order (BTO) products directly to customers. Although the direct business model of Dell is most attractive, there are several differences between the computer and auto industries which serve as barriers to Ford’s implementation of uniform, supply chain virtual integration. Ford must find a way to address obstacles that were not a factor with Dell’s implementation. These obstacles range down the delivery chain from the supplier to the manufacturer to the dealer and, ultimately, to the customer.
BACKGROUND Henry Ford revolutionized product manufacturing by introducing the first assembly line to the automotive industry. Ford's achievement proved to be a key competence for the motor company as the low cost of the Model T attracted a broader, new range of prospective car-owners. However, after many decades of success, customers have become harder to find. Due to relatively new threats to the industry, increasing numbers of cars and trucks are parked in dealer lots and showrooms creating an alarming trend of lower profits. Foreign-based automakers have expanded operations onto domestic shores and have taken market share from American automakers. As a direct result, unit over-capacity has steadily risen, while heightened competition and diverse product lines have led to increasing customer demands.
THE CHALLENGE Senior Executives asked how the company should use the emerging information technologies and ideas from new high-tech
THE PROBLEM Despite the revamping effort, Ford remains plagued with prolonged Order-To-Delivery (OTD) time periods, congested inventories and issues with the procurement processes. After some research, these issues appear to be well addressed by the new direct business model of the Dell Computer Corporation. Dell differentiates itself through the utilization of virtual integration, an efficient and effective direct business model facilitated by electronic business providing Build-To-Order (BTO) products directly to customers. Although the direct business model of Dell is most attractive, there are several differences between the computer and auto industries which serve as barriers to Ford’s implementation of uniform, supply chain virtual integration. Ford must find a way to address obstacles that were not a factor with Dell’s implementation. These obstacles range down the delivery chain from the supplier to the manufacturer to the dealer and, ultimately, to the customer.
BACKGROUND Henry Ford revolutionized product manufacturing by introducing the first assembly line to the automotive industry. Ford's achievement proved to be a key competence for the motor company as the low cost of the Model T attracted a broader, new range of prospective car-owners. However, after many decades of success, customers have become harder to find. Due to relatively new threats to the industry, increasing numbers of cars and trucks are parked in dealer lots and showrooms creating an alarming trend of lower profits. Foreign-based automakers have expanded operations onto domestic shores and have taken market share from American automakers. As a direct result, unit over-capacity has steadily risen, while heightened competition and diverse product lines have led to increasing customer demands.
THE CHALLENGE Senior Executives asked how the company should use the emerging information technologies and ideas from new high-tech