If you were Teri Takai, what would you recommend to senior executives?

To what
degree should Ford emulate Dells business model?
Ford Motor Company:
Supply Chain Strategy

Submitted to: Prof. P M Mukharjee

Group 3
Name PTMBA No
Deepak Karnani 23
Makrand Kolekar 25
Sourav Modak 32
Kaushik Trivedi 55
Recommendations

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.
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 either via Ford's web site or by phone and then
build. A pull system would be implemented completely.
Recommendation 1

Advantages:
Customization to customers, start a supply chain vertical integration
business model.
Open new market segment and attract clients who like online shopping.
Reduction in overhead and inventory carrying costs.
Direct control on customer service experience.
Recommendation 1

Disadvantages:

Costly, time consuming, requires internal and external changes which are
not easy to handle and integrate with other operations.
Independent dealers will complain due to internal competition.
Suppliers inability to keep up to speed with Fords modern IT technology.
Recommendation 2

Advantages:

Customization to clients, start of vertical integration in the supply chain.

Customers needs are met faster at higher profits due the elimination of
resellers mark-ups.
Directly control customer service.
Minimal inventory carrying costs and higher order lead time.
The ability to forecast demand is significantly better.
Improved relationships with both customers and suppliers
Direct control on customer service experience.
Recommendation 2

Disadvantages:

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.
The loss of dealerships will mean a loss of business to competition.
Change management has to take effect which is costly and emotionally
sensitive.
Evaluation of Recommendations

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 for its sales will put it at a great disadvantage
with competitors.
So I would recommend Ford to extend its Virtual-business strategy by partially
implementing the Dells model of supply chain (Alternative 1). The part of the
Dells 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 3d model on a
computer or images and description online.
Conclusion

Ford extended its E-business strategy attempt a partial move towards virtual
integration. This supply chain strategy takes the nature of the auto industry
into consideration and adapts Dell's model to better fit Ford.
Dealers would still play a role with distribution, and core processes at Ford
would remain the same.
Nevertheless, the Internet should become a greater part of Ford's sales
methods to consumers and communications with suppliers.
Although it is not a complete adoption of Dell's virtual integration model,
utilizing these information technologies will enhance supply chain activities
for Ford and create value for the company.
Thank you!