Ford Supply Chain Strategy

Group 3:
Bhaskar Jain, 105 Abhimanyu Maheshwari, 109 Prannoy Pillai, 114 Pranjal Saiwal, 115

Q1: What are your experiences of buying any product online vis a vis buying it from a shop or a dealer? Ans1: There are many experiences that differentiates both the kinds of sales both from customer and sellers perspective: Online sales, in my personal experience, generally results into a considerable savings in terms of money, i.e. saving in the travelling expenses, general trend of discount while opting for eshopping etc. The main disadvantages lies in the lack of primitive look-n-feel that one generally gets while shopping directly from shop.

Challenge lies in the hands of service industry, where look-n-feel factor plays a very crucial role in sales. This feature is very hard to replicate while opting for online sales.

Q2: What advantages does Dell derive from virtual integration? How important are these advantages in the automotive business? Ans2: Virtual Integration has enabled Dell to aggressively reduce working capital and greatly reduce obsolete inventory. Correct forecasting, a product of virtual integration has led to considerable preplanning of inventory and finished product manufacturing. Dells virtual integration has enabled them to implement a more direct business model, which eliminates and significantly reduces the cost of thirdparty distribution. Direct personalized dealing of the customer with the company has helped in creating a 24/7 reachable image with the customer. Automotive industry, though, cannot directly implement and incorporate most of the strategies of virtual integration, as it relies heavily on third party suppliers and retailers. All the points stated above, are very crucial for any industry, i.e. loyal customer, heightened customer satisfaction, minimizing middle level suppliers and distributors etc.

By implementing indirect form of virtual integration, any automobile industry may hope to have a better flexibility in its supply chain and dependency on suppliers. Virtual integration will enable having faster communication between suppliers, manufacturers and customers in the value chain.

Q3: What challenges does Ford face that are not faced by Dell? How should Ford deal with such changes? Ans3: The challenges faced by Ford while implementing virtual integration like Dell are: Cost of automobile being very high relative to computers, thus exponentially reducing chances of customer buying an automobile online!!! Significantly larger amount of components in automobile thus increased dependency on third party suppliers. No touch-n-feel in e-selling, which is essential while buying an automobile. Ford and Dell being of two different contrasting domains, so same replication of virtual integration is not suggestible.

Ford should not directly replicate Dells model of virtual integration to bask in high sales and profit glory, as it would not be possible for the automobile giant to implement and maintain an exact replica on the Dells direct selling model. A much more complex multi-tier architecture of Ford needs a customized approach. FPS (Ford Production System) OTD (Order to Delivery) FRN (Ford Retail Network) Implementing JIT, TQM

Q4: If you were Teri Tekai, what would you recommend to the senior Executives? To what degree should Ford emulate Dells business Model? (Time Frame: 1999-2000, as given in case study) Ans4: There is no doubt that Ford has to make changes in its supply chain with the changing environment of the informational Technology. Incorporating the basic structure of Virtual Integration with customized tiers while taking into considerations the complex supply chain of Ford. Different points can be summarized as below: Customer Intimacy:- Demand to delivery/ FRN Demand Pull:- FPS/OTD Virtual Integration:- Fixed to variable Cost shift/Modular Assembly/Extended Enterprise