Ford Motor Company: Supply Chain Strategy Analysis from HBS Case
Ford Motor Company: Supply Chain Strategy
2/11/02
Finding the Best Fit
The Ford Motor Company finds itself in a dynamic business environment where new technologies and practices offer the potential to alter in a significant way the landscape in which it operates. Henry Ford was in his time an innovator in offering 'cars for the masses'. He introduced to the car industry methods and systems innovative in their day. Ford needs once again to forge new paths to ensure future competitive advantage .
Executives at Ford have been considering the 'Direct Model' created by Dell Computer Corporation and finds that there is considerable appeal. Dell has been able to speed up inventory velocity such that there is only eleven days of inventory on hand. This has led to an inventory turnover rate of thirty times per annum . This achievement, termed by Michael Dell 'Virtual Integration' has been achieved by blurring the line between supplier, Dell and client, to the extent that third party service staff are often thought, by clients, to be Dell's own staff.
In order to see how congruent the Dell model is to Fords' business we need to examine the similarities and differences between the two companies. This will allow us to gain some insight as to whether virtual integration could work at Ford.
Ford Motor CompanyDell Computer Corporation
Similarities
*Cars are consumer items.*Computers are a consumer item.
*Suppliers are often located close to manufacturing facilities.*Ford maintains close locational links with suppliers.
*Number of suppliers is small.*Ford is working to build relationships with a limited number of strategic suppliers.
*Ford's customers range from large corporations, to government institutions, to the consumer.*Dell's clients range from large corporations, to government institutions, to the consumer.
Differences
*Cars are personal in nature and many clients want to have close contact. A showroom is usually preferred.*Computers are generic in nature and
2/11/02
Finding the Best Fit
The Ford Motor Company finds itself in a dynamic business environment where new technologies and practices offer the potential to alter in a significant way the landscape in which it operates. Henry Ford was in his time an innovator in offering 'cars for the masses'. He introduced to the car industry methods and systems innovative in their day. Ford needs once again to forge new paths to ensure future competitive advantage .
Executives at Ford have been considering the 'Direct Model' created by Dell Computer Corporation and finds that there is considerable appeal. Dell has been able to speed up inventory velocity such that there is only eleven days of inventory on hand. This has led to an inventory turnover rate of thirty times per annum . This achievement, termed by Michael Dell 'Virtual Integration' has been achieved by blurring the line between supplier, Dell and client, to the extent that third party service staff are often thought, by clients, to be Dell's own staff.
In order to see how congruent the Dell model is to Fords' business we need to examine the similarities and differences between the two companies. This will allow us to gain some insight as to whether virtual integration could work at Ford.
Ford Motor CompanyDell Computer Corporation
Similarities
*Cars are consumer items.*Computers are a consumer item.
*Suppliers are often located close to manufacturing facilities.*Ford maintains close locational links with suppliers.
*Number of suppliers is small.*Ford is working to build relationships with a limited number of strategic suppliers.
*Ford's customers range from large corporations, to government institutions, to the consumer.*Dell's clients range from large corporations, to government institutions, to the consumer.
Differences
*Cars are personal in nature and many clients want to have close contact. A showroom is usually preferred.*Computers are generic in nature and