Ford Motor Company

RAJESH PATEL (09MBA59)

New Vision ANDTransformation Of The Business Using

Web Technologies• In the fall of 1999, Jacques Nasser, Ford Motor

Company’s president and chief executive officer, announced a grand new vision for the firm

• To become the “world’s leading consumer company providing automotive products and services”

• Key to that dream was the transformation of the business using web technologies.

• Executives at Ford have been considering the 'Direct Model' created by Dell Computer Corporation

• Finds that there is considerable appeal

Company History

• Founded by Henry Ford on June 16, 1903• Ford’s use of mass production was the first,

followed by the rise of the Japanese auto industry and its commitment to lean production in the 1960s and 1970s

• Ford’s large-scale plans for change began in 1995• This plan included merging north American,

European, and International automotive operations into a single global operation

• This allowed for Economies of Scale and scope, allowing ford to save huge amounts of money by reengineering and globalizing corporate organizations and processes

• Major reengineering projects that were part of ford 2000 Plan were initiated around major company processes like,– Order to delivery (OTD), – Ford production system (FPS), – Ford retail network (FRN)

Ford 2000 Plan

• The goal in the OTD project was to reduce the current 45-60 days TO in only 15 days to deliver– Continual forecasting of customer demand– Dealt with optimizing schedules and deliveries

• The Ford Production System(FPS) focused on the production process– Synchronous Material Flow (SMF)– an important part of FPS

FORD MOTOR COMPANY AND DELL COMPUTERS COMPARISON

Similarities

– Cars and computers are consumer items that are directly bought and used by consumers themselves

– Suppliers are often located close to manufacturing facilities

– Try to keep long term relationships with smaller number of suppliers

– Customers varies from large corporations, governments to individual consumers

Differences

• Challenges for ford to implement a virtually integrated supply chain like dell– Company size– Dell has 16,100 employees while ford (including

automotive and financial services) has 363,892 employees

Differences

• Company Age– Ford is a 107 years old company, Dell on the other

hand founded 27 years ago• Company Culture– Dell is an entrepreneurial, new company that can

react quickly to change– While Ford is innovative, they are slow to react to

changes in the industry

Differences

• Supplier Base– multi-tiered system of supply– complex network of suppliers to deal with– their supplier base does not have the IT knowledge

• Product Variety– variety is much higher than Dell

• Higher product variety leads to– Management of large number of individual component

inventories– Production capacity for individual components set long in

advance to meet the demand. And this production capacity plans cannot be changed quickly

Alternative Solution Proposals

• No change alternative– Make some changes in its processes and supply chain– Safest strategy as there is no risk related to the changes

• Total virtual integration alternative– Total jump to a virtually integrated supply chain based

completely on dell's model– Where production and material orders were based on

real time data from customer orders– However, many of ford's traditional processes and

production methods would have to be changed

Extending E-Business Alternative

• Hybrid solution alternative • Ford adopted dell model:– Sell direct – Mass-produce customized products – Build to order – Substitute virtual integration with suppliers for

vertical integration – All hosted and integrated on the web

Extending E-Business Alternative

• Transformation of the Customer, Dealer, and Owner Relationships

• Customer Assistance Centers and In-Vehicle Communication

Extending E-Business Alternative

• There were three new consumer sites:• Buyerconnection-where buyers could custom-order a

vehicle, receive a quote from a local dealer, and apply for financing and insurance

• Dealerconnection-where buyers could find a dealer, review dealer inventories, see dealer service specials, and make appointments for service;

• Ownerconnection-which was a virtual community of owners providing forums, maintenance schedules, and special offers from hertz.

Thank You