TEXAS TECH UNIVERSITY 2010 Case 2-3: Ford Motor Company: Supply Chain Strategy Case Critique for

ISQS 5231 - IT for Managers Professor: Dr. Qing Cao Team # 4 Dalal Ahmad Sayed Almohri Aliza Levinsky Andy Rupp Avinash Sikenpore Team 4 Critique 1 Contents Summarize the case ............................................................. ........................................................ 2 Critique and analyze team 5. ................................................... .................................................... 3 Evaluate participation and ways to improve ..................................... .......................................... 5 Appendix A: Glossary ........................................................... ...................................................... 6 Appendix B: Car producer forecast .............................................. ............................................... 6 Works Cited .................................................................... ................................................................ 7 Team 4 Critique 2 Summarize the case The case 2-5 deals with the hurdles, implications and the extent of virtual inte gration in one of the worlds largest automobile manufacturing company. Ford Motor Company: Su pply Chain Strategy case focuses on the viability of implementing a supply chain strat egy following Dells model. There are several factors which affect how an auto industry is managed and the w ay important decisions in regard to the company are taken. Ford was established by a visionary Henry Ford in 1903 and it has been in business ever since. Its main competition till 1970s was with General Motors and Chrysler. However with the entry of Japanese companies l ike Honda, Toyota and Nissan the firm faced stiffer competition with the auto market being overcapacitated. In 1995 Ford initiated the Ford 2000 plan aimed to restructure many of their key processes like Order to Delivery (OTD) and Ford Production System (FPS). They wa nted to reduce the OTD from 60 or more to 15 or less days. FPS was created to convert th e supply chain from a push type to a pull type. Ford aimed at reducing the number of suppliers which had grown to several thousands of different suppliers over the years as the company grew. Rather than focusing on selecting suppliers based on costs they wanted to develop close long-term relations with the Tier 1 suppliers who in turn managed and handled Tier 2 and T

ier 3 suppliers. The aim was to create a more cost effective supply chain. Ford provided its supp liers with its expertise and techniques to help them better manage their operations. Another im portant initiative taken by ford was the Ford Retail Network (FRN) to reduce competition among its dealerships in the same locality by having only one unified dealer who provides the best possible level of customer experience. The director of supply chain system, Takai has to take an informed and well thought decision if they should implement the Dells integrated supply ch ain or not. Team 4 Critique 3 Critique and analyze team 5. We think that the overall presentation on Ford was good and a lot of information over and beyond the case was discussed and presented. Even then we feel that there were p lenty of issues the team could have handled in a better manner. The first area they lacked was d escribing the specific initiatives by Ford like the Ford Retail Network (FRN), Ford Production System (FPS) and Order to Delivery (OTD) in more depth. Secondly they left the main issue qui te open to debate and not specific in terms of the recommendations and the suggested course of action at different levels of the organization and how exactly to integrate the emerging t echnologies into its supply chain. If we were the presenting team we would have approached this c ase in a very different way. An important part of analyzing any case is to elaborate on the alternatives the company has, delving the implications of each and exploring ways how best it can be impl emented. Therefore we have enlisted the alternatives with a brief description of the pros and cons. Then we also go ahead and recommend the best alternative according to us and discuss the reasons behind it. Alternatives with their pros and cons: 1) Keep its existing supply chain a) Advantages: No major changes and additional costs involved. b) Disadvantages: Fords IT will eventually become obsolete. 2) Form a mix of online and offline operations and lay procedures to enable cust omization and ordering by customers over the internet but maintain physical dealerships as wel l. a) Advantages: Customization to clients, start of vertical integration, b) Disadvantages: Costly, time consuming, requires internal and external changes which are not easy to handle and integrate with other operations. Team 4 Critique 4 3) Create a virtually integrated supply chain based on Dell s model. Ford and al l its suppliers would share information between their systems and the Internet to coordinate the flow of materials and production. All customer orders would be taken either via Ford s w eb site or by phone and then built. A pull system would be implemented completely.

a) Advantages: Customization to clients, start of vertical integration in the su pply chain. b) Disadvantages: Ford s traditional processes and production methods would have to be changed to take advantage of this new form of supply-chain management. Since it is a very costly and time consuming activity, the difference in the two industries ma kes it a risky option. After more careful examination and review of the alternatives we came to the rea lization that the long term implication of the first and third option is the company going out of business. Keeping the existing supply chain would continue to deliver the same dismal resu lts and declining profits for the company which eliminates option 1. The third option se ems illogical when we take into account the fact that Ford is an automobile manufacturing comp any and Dell assembles customized computers for its customers via the internet, eliminating d ealerships all across and relying on website for its sales will put it at a great disadvantage with other auto makers. In spite of the recent loss of trust and quality issues with Toyota we w ill base our recommendations and critique comparing Toyotas usage of information technology in making their process and operations lean. Toyota has been the forerunner in implementin g many of the best practices in manufacturing industries like JIT (Just in Time), Kaizen, Poka -yoke, Jidoka and other techniques which are solely dependent on their ERP (Enterprise Resource Pl anning) system. Since the production at Ford is based on a predetermined schedule it is a push based system. One way to move from a push based system to move towards a pull based sy stem is by producing at a uniform level by the use of IT modules enabling MIXED model seque ncing Team 4 Critique 5 (Appendix B shows an example of a car producer trying to plan for September sale s forecast using batched production (not flexible) versus mixed production (flexible). So we would recommend Ford to extend its E-business strategy by partially implementing the Dells model of supply chain. The part of the Dells model which do es not fit with Ford need to be discarded. The dealers would still play a role in the distr ibution since we saw in the classroom discussion how the buying experience of a car from a dealer cannot be substituted by something virtual like a 3d model on a computer or images and des cription online. The IT systems should be centralized since its Tier 2 and Tier 3 suppliers might not be able to update their IT infrastructure as frequently as Ford. Suppliers can have access to central design database while Ford controls the access and functionality as per the requirement s. The whole coordinated system would ensure a smooth flow of materials and reduced bottlenec ks and

enhance the efficiency of the supply chain giving a competitive edge to Ford. An d lastly we feel that dealers can play a more involved role in forecasting customer demand and Fo rd should explore the option of outsourcing it to a firm which specializes in forecasting demand and can work with each dealer or network of dealers. Evaluate participation and ways to improve We believe that our team was more prepared and ready for this case following rec ommendations to improve from the previous case critique. We wrote down the questions for the team to ask but their time management was not the best which limited us. Even though we could no t participate with the intensity we intended in the class, all members came up with insightful ideas and thought provoking comments. One way we could further improve our team performanc e is through having a team discussion prior to class on the case so we can focus on i mportant issues more carefully and having a more clear idea of our expectations. Team 4 Critique 6 Appendix A: Glossary Lean production: doing more with less through a whole integrated system that eli minates waste and focus on continues improvements of operations that add value. Just In Time: smoothing the flow of material arrive just as it is needed. Kaizen: a system for continuous improvement. Poka-yoke: A foolproof mechanism that prevents defects from occurring. Jidoka: Authority to stop the production line. Appendix B: Car producer forecast Team 4 Critique 7 Works Cited Doubrava, K. (n.d.). Ohio University. Retrieved 04 12, 2010, from Oak and the wo rld of the web: Ford Case analysis: oak.cats.ohiou.edu/~kd636398/esp/Ford_CaseAnalysis.doc Ed Davis, B. A. (200, 05 10). University of Virginia. Retrieved 04 14, 2010, fro m Fords EBusiness Strategy: http://faculty.darden.virginia.edu/gbus88500/documents/ford_ppts.pdf Lynda M Applegate, R. D. (2008). Corporate Information Strategy and Management: Text and Cases. McGraw-Hill/Irwin. Roberta Russell, B. W. (2007). Operations management: creating value along the s upply chain. Wiley.