Part I. Executive Overview Ford Motor unit Company begun by Henry Ford in 1903; the company had produced over 260 million vehicles with about 370, 000 employees today. Even though Ford acquired significant revenues and earnings from its finance subsidiaries, you’re able to send core business had remained the design and manufacture of automobiles for sale on the client market. Seeing that in the 1970’s, the automobile market had found an increase in competition, especially foreign competition, generally from Toyota & Honda which led to overcapacity within the industry (estimated at 20 million vehicles).
In order to lower cost of developing, building cars and increase efficiency in 95, Ford created a reorganization, rearrangement, reshuffling plan called Ford 2150 which included joining its North American, European, Worldwide automobile functions into a single global organization. Ford 2000 was focused on reengineering of several key jobs such as Order to Deliver (OTD) and Honda Production System (FSP) in whose primary objective was to lessen OTD by more than sixty days to below 15 days. With Ford’s classic business model, its goal was achievable yet would it ‘survive’ at the long haul?
In mid-1996, Ford attemptedto overcome details constraints in its new global approach, by simply launching a company-wide intranet, and by early 1997, Ford had extended upon that system to add Business-To-Business (B2B) capability by which the intranet could be extended in a secure manner over and above company restrictions, potentially attaching Ford using its suppliers.
As a result of this, Ford collaborated with Chrysler and General Motors to work on the Automotive Network Exchange (ANX) whose goal was to make consistency in technology requirements and
operations in the distributor network we. e. providing a unified communications standard through the internet to enable its suppliers provide common technology for any manufacturers just like Dell’s version.
Ford’s emphasis was to increase its supply chain & delivery method by making information concerning its web site more accessible and useful built on a version implemented by Dell computers known as “Virtual Integration. Digital Integration is a term used to describe the use of net to replace physical components of a company with info (http://www.businessdictionary.com/definition/virtual-integration.html).
Dell’s vertical integration system will help improve info centre effectiveness by answering selected organization requests in split just a few seconds. It also helps to improve detailed costs simply by controlling the difficulty of the industry’s infrastructure and improving its speed of response. This reduces inventory and increases speed and overall, provides the advantages of firmly coordinated supply chain. “Virtual integration means you fundamentally stitch jointly a business with partners which have been treated as though they are portion of the company ” Michael Dell.
The issues Kia faced was mainly keeping large inventory which led to low earnings and at the same information writing was a challenge. Ford could hardly communicate efficiently in and outside the company since the lacked the data technology capacity for that.
As Teri Takai, my decision would be to implement the supply sequence strategy of integration using the model of Dell computer. Dell’s direct unit can be applied to many aspects of Ford’s operations. Ford will need to manage their unique relationship with their tier one suppliers when making this move as well as modifying Dell’s supply chain version to apply to its tier one suppliers. In order to conquer this concern; three choices were proffered which are: 2. Do not change the current business process
2. Improvement their information Program on the basic principle of Buy management system to reduce inventory and increase RETURN. *Streamline the number of its current suppliers to hold inventory low and improve quality Portion II: Problems Identification ” Large Products on hand ” Honda currently retains a high products on hand which will in return tie down its working capital for example the financial loan received from the bank may well affect it share price as a result of rate of interest. ” Cycle time reduction ” the organization current In an attempt to Deliver (OTD) process is usually between 70 and two weeks. ” The company’s reduction in their supplier bottom to have a long run relationship with fewer suppliers known as Tier one suppliers. These tier one suppliers have no capital to invest in the new technology that Ford tries to get into which might have a direct impact on the recommended I. Capital t. ” Not enough flow details ” Ford is a global company as well as the flow details between Ford and its different locations is still a challenge in which information can be not quickly transported.
Portion III. Alternatives / Choices
1 . Honda should continue with its current system of business and change nothing- The Company will not have to deal with change. Pros: Honda doesn’t have to teach its personnel and avoid the trouble of looking to persuade their suppliers to use new application which means everyone is “happy being in their comfort zone Disadvantages: Business will stay unprofitable, bad and inadequate which will not really maximize the wealth of its share holders.
2 . Boost its info system which will enable the company’s current system to combine easily with independent dealers and suppliers. (a). Online “real time system is needed to enable incorporation of the business software with its suppliers and dealers; for example , when a consumer orders on-line, the dealers & suppliers can see the order in split secs and obtain the required to build the vehicle e. g. configuration. Advantages: There’ll be an easy flow of information between the company and its partners i actually. e. suppliers, dealers and employees. Cons: Security ” The accessibility to the company information by the suppliers & dealers may compromise the info security from the company. (b). Adopt purchase management system to lower the time it will require between placing a customer order & delivering the vehicle to the consumer. Pros: This will help the company obtain its aim of reducing OTD time from much more than 60 days to less than two weeks. Cons: Employees will need to be educated on the fresh software & might not be receptive to schooling. (c). Honda should increase its organization process and information program on the basic principle of In an attempt to deliver (OTD) & ongoing improvement.
Positives: By organising its business process about these concepts (OTD), Honda will be delivering value to customers at a competitive price. The organization will also obtain cost decrease at the same time making the customer happy through implementation of smarter business method. Cons: This will require comprehensive training.
a few. Streamline the latest suppliers simply by evaluating all their competencies and ranking as a way of professionalism. The best suppliers should be chosen which will offer quality item & solutions for Ford in order to take full advantage of profit and reduce inventory. Positives: This will permit Ford to deal with best in course suppliers whose quality can reflect inside the final item of Ford which will consequently improved customer satisfaction. Cons: Will probably be time consuming in carrying out this method.
Part 4. Recommendation Depending on the current circumstance, alternatives a couple of and three or more are recommended. Ford will likely need to improve its business processes & information system around the principle of Order to Deliver (OTD), top quality and constant improvement that will deliver value to the customer in competitive selling price. This will likewise result in price reduction and low inventory. In addition , Honda will need to retain their Rate 1 suppliers on track with them and develop immediate links towards the other suppliers and should purchase setting up a more web-based source chain program that would allow the Tier 1 suppliers to work with information technology capabilities.
Part V. Implementation To implement the above mentioned alternatives, the points beneath should be considered.
1 ) The company has to identify the integrated software program that will aid the virtual incorporation process. The risk here is that, the company may well not use the right one and this is one of those things want to get proper the first time. 2 . There might be teaching issues since the employees must be trained (may not want to get out of their particular comfort zone). There should be sufficient provision for training the staff on the new business process so that everyone can land on the same web page. 3. Re-evaluation of the selected option(s) is needed to measure the desired goals to help keep low products on hand, ROI & improved conversation through it is information system within and out of doors Ford Organization.
Part VI. Conclusion Because Teri, We would consider making use of the same method Dell Pcs because it assists improve info centre productivity by addressing selected business requests in split just a few seconds. It also really helps to improve detailed costs by simply controlling the intricacy of the company’s infrastructure and improving their speed of response. (I. T) It reduces inventory and improves speed and overall, provides the advantages of snugly coordinated supply chain. It provides an avenue being competitive and still go above BEP (break-even point).