Ford Motor Company Supply Chain Strategy
Background
In 1913, Henry Ford revolutionized product manufacturing by introducing the first assembly line to the automotive industry. Ford's hallmark of 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 stagnation and profit erosion. Foreign-based automakers, such as Toyota and Honda, have expanded operations onto domestic shores and, in turn, have wrestled 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.
To answer these threats, Ford has made recent attempts to transform its dated vertical integration production model into a maneuverable, efficient supply chain. Emphasizing methods such as Just-In-Time (JIT) inventory, Total Quality Management (TQM), and Synchronous Material Flow (SMF), Ford has derived a multi-tiered system of supply. The tier system consists of numerous generic suppliers, "tier two" and below, who are managed by "tier one" vehicle sub-system suppliers. The "tier one" suppliers, by nature, are completely dependent upon Ford's survival since the provided sub-system component is specific solely to Ford.
Dell and Virtual Integration
Despite the revamping effort, Ford remains plagued with prolonged Order-To-Delivery (OTD) time periods, congested inventories and error-ridden procurem ...