External logistic suppliers are used to manage inbound supply chain. Customers are encouraged to use computers to balance supply and demand.
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Following are the alternatives and options ford can apply Alternative 1 Design a mixture of online and offline operations and form procedures to enable customization and ordering by customers over the internet but maintain physical dealerships as well. Advantages: a) Customization to customers, start a supply chain vertical integration business model. B) Open new market segment and attract clients who like online shopping. C) Reduction in overhead and inventory carrying costs. D) Direct control on customer service experience.
Disadvantages: a) Costly, time consuming that requires internal and external changes which are not easy to handle and integrate with other operations. B) Independent dealers will complain due to internal competition. ) Suppliers' inability to keep up to speed with Fords modern IT technology. Alternative 2 Create a virtually integrated supply chain based on Dell's model. Ford and all 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 Page 2 either via Ford's web site or by phone and then build.
A pull system would be implemented completely. A) Customization to clients, start of vertical integration in the supply chain. B) Customers' needs are met faster at higher profits due the elimination of reseller's ark-ups. C) Directly control customer service. D) Minimal inventory carrying costs and higher order lead time. E) The ability to forecast demand is significantly better. F) Improved relationships with both customers and suppliers. Disadvantages: a) 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 makes it a risky option. C) Change management h as to take off etc w hi chi I s costs y and emotional y sensitive. Recommendation and Implementation: Keeping the existing supply chain would continue to deliver the same dismal results and declining profits for the company. After careful examination and review of the alternatives, we came to conclude that the long term implication of the second alternative is the company going out of business, which eliminates option 2.
This option seems illogical when we take into account the fact that Ford is an automobile manufacturing company and Dell assembles customized computers for its customers via the internet, eliminating dealerships all across and relying only on their website or its sales will put it at a great disadvantage with competitors. So we would recommend Ford to extend its Virtual-business strategy by partially implementing the Dell's model of supply chain (Alternative 1).
The part of the Dell's model which does not fit with Ford need to be discarded. The dealers would still play a role in the distribution since the buying experience of a car from a dealer cannot be substituted by something virtual like a ad model on a computer or images and description online. Implementation In order for Ford to implement option 1, their IT systems should be centralized and hared with suppliers since its Tier 2 and Tier 3 suppliers might not be able to update their IT infrastructure as often as Ford.
Suppliers can have access to central design database while Ford controls the access and functionality as per Management Information System-Ford Case Study Analysis Page 3 the operational requirements. The whole coordinated system would ensure a smooth flow of materials and reduced bottlenecks and enhance the efficiency of the supply chain giving a competitive edge to Ford. And lastly, we feel that dealerships can play a more involved role in forecasting customer demand and Ford 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.
Monitoring and Control In order for the new system to function appropriately as intended, Ford must perform the following functions: 1 . Appoint an IT specialist as a liaison to coordinate all IT activities with all suppliers in order to insure a smooth flow of information among the supply chain partners and immediately resolve issues as they arise. 2. Moon tort customers' only I nee orders by revive ewe Eng all order I dead times. The it me f mom the customer order initiation to delivery must not exceed a standard period of 3.
Initiate an online customer satisfaction program in which customers will evaluate and rate their customer experience with Ford. 4. After every 6-8 month, review the performance and make recommendations on improvements to the appropriate authority. 5. Annual executive meetings should be held to review the progress of the business model. As well, review the shareholder value to check whether it's increasing or decreasing. Conclusion: Dell has focused on entrepreneurial and flexible approach; any chance can be embedded instantly across the organization.
Ford is much bigger organization as compared to dell and has developed its operation capabilities over the period of time. Virtual integration should be implemented by ford more efficiently. It will help ford to be more efficient in term of production and quick to respond for any change in the real time. By virtual integration ford can look forward for more profitability as their overhead and inventory carrying cost will decrease. Furthermore, the over all success of this business model will depend mainly on the performance of their shareholder value
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