Transcript FORD GLOBAL BRANDS

Ford Motors
“Virtual Integration”?
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ASIAN INSTITUTE OF TECHNOLOGY
INSTRUCTOR: DR. SHINGHA CHIAMSIRI
RED GROUP:
• TRAN THI LAN ANH
• NGUYEN THI THANH HA
• NGUYEN ANH TUAN (VACO)
• TRAN VIET DUNG
• NGUYEN XUAN TIEN
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Ford Motors Profile
Pros Group:
“Virtual Integration”: reduce working capital & expose to inventory obsolescence
Cons Group:
Important & sustainsive difference between auto business & others
COMPANY BACK GROUND
•Based in Michigan, world 2nd largest industrial Corp. (Rev:$144 billion; employ
370,000 employees, operation spanned 200 countries)
•Core business: design & manufacture auto for sales
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Ford Motors Profile
•In 1995: Ford embarked plan “ Ford 2000” called for:
•Dramatic cost reduction
•Eliminate organizational & process redundancies
•Ford new global approach required: IT was placed in the
process of reengineering. In supply chain area:IT used to
enhance material flows, and reduce inventories.
•Mid 1995: launched a public internet (>1 million
visits/day in 1997)
•Mid 1996: launched company-wide intranet
•Jan 1997: had in place B2B capacity connecting Ford
with supplier
•End 1998:profited $6.9 billion, ranked 4th overall
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Ford Motors Profile
FORD EXISTING SUPPLY CHAIN & CUSTOMER RESPONSIVENESS
Ford Existing Supply Base
•In 1980: several thousand of supplier picked based on cost rather than overall
supply chain cost
•In 1990: a shift toward longer-term relationships with a subset of every capable
suppliers.
•Organisational difference: powerful force within Ford.
Ford Production System (FPS)
•Modelled roughly on Toyota Production system.
•Focus on key attributes of production process: move to pull-based system
Order to Delivery
•A key process of Ford reengineering: 15 days of delivery
•OTD vision: to create lean, flexible, predictable process
Ford Retail Net work
•1 Jul. 1998: launched 1st FRN
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•Goals: consumer to receive the highest level of treatment.
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About Dell
www.dell.com
A Global Supplier in Computer Industry
Found in 1984
Valued by 12 $ billion after only 13 years of operation
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About Dell
Direct Business Model/ Virtual Integration
Order
Suppliers
Dell
Customers
Delivery
Value Added
Conduit for Suppliers
Customization
Create & Expand Market
Rapid and Convenient Delivery
Hold Inventory
Low Costs
Customer Service Mngt Processes
High Margin
Source of Market Knowledge
Pull Approach
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Technologies and Relationship
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FORD ANALYSIS
Ford business model:
Suppliers
Manufacturer
Distribution
Channel
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order
Customers
delivery
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FORD ANALYSIS
Strength:
– High ranking and large scale in automobile industry
– Reduce cycle times through OTD and FPD system:
• OTD relies on: ongoing forecasting of customer from dealers, increasing of
manufacturing stability, optimizing schedules and deliveries, developing
order amendment process
• FPS aims at making Ford manufacturing leaner, more responsive, more
efficiency
• Strong investment in IT
– Lower cost by restructuring, reducing inventories, pressing cost reduction from
suppliers, improving quality continuously
– Assist suppliers in improving their operation through JIT inventory, TQM, SPC
and sharing information via the extranet
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– Set up Ford Retail Network and Ford Investment Enterprises Company
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FORD ANALYSIS
Weakness:
– More focus on supply chain approach, less focus on demand chain:
• Value chain is not derived from customer expectation directly but
through retailers
• Supply chain management based on cost, little regard of value chain’s
costs as a whole
– Less collaborative with automakers, suppliers, retailers
– Complexity in supply chain structure: large network of suppliers and
retailers
– Unclear integrated system in term of internal processes between
procurement and product development
– Aggressive and Push approach strategies
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OPPORTUNITY and THREAT
Opportunities:
– Globalization trend and market opportunities
– Customers trust in Ford’s brands
Threat:
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Competition
Complexity
Customization
Excess capacity
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DELL AND FORD COMPARED
Comparative Metrics ( see OHP slide)
– Ford has larger business size & scale:
• Assets, employee, manufacturing facility
– Dell has much fewer physical assets, lower revenue
but profits achieve market capitalization well in excess
of Ford’s
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DELL AND FORD COMPARED
Business model: See more details on slides
Ford:
Dell:
- Traditional model
- New model
- Mainly indirect sale/ customer
relationship
- Direct sale &marketing/
strong customer relationship
- Focus on design and
manufacturing/ core business
- Focus on customer : quality,
cost saving, accurate response,
after sale service, integration
solution
- Control/ Push to Pull
movement processes
- Empower/ Pull processes
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- Virtual integration oriented in
the whole value chain/
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outsourcing
VIRTUAL INTERGRATION
IMPLICATION
Characteristics: Maximize and ensure the mutual stake
holder value in the whole value chain:
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Excellent performance in whole value chain
Technology Network on e-contacts
Trust relationship
No borders : more coordination, cooperation & collaboration
Success factors
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Simplicity
Flexibility
Speed
Innovation
Integration
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RECOMMENDATIONS FOR TRANSITION TO VIRTUAL
ORGANIZATION
Ford Motor Company should:
1. Develop strong Demand Chain to meet & exceed customer
satisfactions in term of:
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Design Currency: variety of styling & engineering
“Exclusivity”: flexible for customization
Performance, reliability
Service: intervals, cost and convenience
Competitive price
Low depreciation
Operating economies
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RECOMMENDATIONS FOR TRANSITION TO VIRTUAL
ORGANIZATION
2. Better Relationship Management through out the value
chain by:
– Better segmentation strategies: to drive the value chain and to
utilize the strength of brand.
– Procurement & R&D: Integrate current separate procurement
function with R&D function to focus on consumer surplus rather
than cost only. Develop multi-skills between procurement &
product development.
– Better utilize the Internet to facilitate sharing information/ fast
response to customers
– Remove the layers of suppliers for more value-added & simplify IT
(Electronic Data Interchange links) so that more suppliers can joint
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the value chain
RECOMMENDATIONS FOR TRANSITION TO VIRTUAL
ORGANIZATION
2. Drive the organization from traditional OEM to ODM & OBM&S:
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RECOMMENDATIONS FOR TRANSITION TO VIRTUAL
ORGANIZATION
3. Drive the organization for more efficiency:
– Maximum the value of supplier network & continuous
improvement the value added of each partners in value chain.
– For more effective operation & coming over the exceed capacity
issue: the outsourcing production/ co-production are good
alternatives.
– In applying direct selling approach (from B2B to B2C): Instead of
investing a lot of $ for buying all Ford Dealers: outsourcing &
utilizing internet technology as Virtual Dealer are also alternatives.
– Reducing the complexity by applying standardizing criteria for part
supplier network-More availability, more flexibility & faster in OTD.
– Recruit, Training & Develop high skills work forces that can sense
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& response to rapid shift. Red Group
DISCUSSION:
In the transitional process to virtual, how the automotive
industry, especially FMC will face with this challenges:
How to coordinate through the value chain to satisfy customer
expectations in fast & frequently changing fashion in term of:
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What processes addressed new approach to customers?
Which & how new competencies obtained?
How to improve the capability of customization?
What is the new infrastructure required?
Can we seek a new response from suppliers?
How to shorten time-to-market?
How to reduce complexity to change veh. spec. while manufacturing?
How to build, communicate & measure scorecard based
performance?.
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Virtual Integration-The way to success
Our Vision
•To become the world's leading consumer company for automotive
products and services.
Our Mission
•We are a global family with a proud heritage passionately committed to
providing personal mobility for people around the world.
•We anticipate consumer need and deliver outstanding products and services
that improve people's lives.
Our Values
•Our business is driven by our consumer focus, creativity, resourcefulness,
and entrepreneurial spirit.
•We are an inspired, diverse team. We respect and value everyone's
contribution. The health and safety of our people are paramount.
•We are a leader in environmental responsibility. Our integrity is never
compromised and we make a positive contribution to society.
•We constantly strive to improve in everything we do. Guided by these
values, we provide superior returnsRedtoGroup
our shareholders
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Virtual Integration
Suppliers
Customers
“No Boundaries”
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