Essay on Ford Motor Company

2319 Words Jan 1st, 2015 10 Pages
Executive Summary
Upon studying Ford’s existing supply chain it is not hard to see the high level of complexity within. This level of complexity blended with other internal and external factors have made Ford realize they need to explore solutions to deal with the supply chain challenges leading to cost and the reality they are facing and may continue to face in the future. The majority of issues in Ford’s present chain result from inefficient control of their large supplier base and the complexity of their supplier network in addition to inability to communicate to server their end customers. Ford has realized the urgent need to change their supply chain in order to be more cost effective and more profitable for its shareholders.
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1) Ford’s current supplier base:
a. Ford has recently decreased their supplier base to have a better long-term relationship and closer relationship with fewer suppliers called ‘Tier 1’ suppliers. The Tier 1 suppliers provide Ford with complete vehicle sub-systems. The Tier 1 suppliers work with multiple Tier 2 suppliers who provide the components that make up the vehicle sub-systems.
b. The Tier 1 suppliers do not have the capital to invest in the new technologies that Ford seeks to get into. However, the Tier 1 suppliers do have fairly solid IT capabilities, but these capabilities severely drop when dealing with the Tier 2 suppliers. Ford has also made it expertise available to support the Tier 1 suppliers through tools like Just-in-Time inventory, Total Quality Management and Statistical Process Control. 2) Purchasing organization:
a. Ford’s purchasing department is independent of the product development area. However, purchasing has a strong dominance over the product design price negotiations because “a very slim reduction in purchasing cost could result in very significant savings” for the company.
b. Dell’s vertical integration has these areas working very closely together. Could Ford also successfully merge these two areas to get reach a common goal?

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