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Ford Motor Company Ford Motor Company started as a 10 -man operation, with Henry Ford, in 1903. In 1905 Ford Motor Company of Canada, Ltd. started operations, positioning Ford for the future globalization in the automotive markets. Since then, Ford has held 13 % of the world market and is "the second largest producer of cars and trucks, with active manufacturing, assembly or sales operations in the thirty countries on six continents. With respect to sales, Ford ranks second on Fortunes list of the largest U. S.
industrial corporations. Although Ford is know as a manufacturer of cars, trucks and tractors, it now produces a wide range of other products including engines, construction of machinery, glass and plastics. (Bateman, 18) Ford also is established in a wide range of other business, including financial services, insurance, automotive replacement parts, electronics and land development. Its automotive-related services include Ford Financial, Hertz and Quality Care. Although the company has a variety of other businesses, the companys core business has remained the design and manufacturing of automobiles for sale on the consumer market. Its automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo.
Fords focus on the internet may have been premature. Today Ford is focus on using the greatest capabilities of the internet and other technology toward improving quality, responding faster to the consumers to increase the value they can deliver to them and to establish closer relationship with them. Some of the technology / internet programs Ford is utilizing to transform itself into a consumer driven company are: Dash Portals- Telematics used to monitor fuel costs (only in Fords delivery fleet) Retailing e-strategy: Ford Direct site, run by dealers generated net leads which generated car sales. Service - Quality Improvement: Net-enabled factory verification systems to cut service cost, track defeats and fix them-before cars leave plant.
In the past an automaker would need four to five years to transform a vehicle concept into production. Now Ford uses IT to break the production speed barrier. Ford has also created a Business Analytics System to gather and analyze data from a variety o sources like the warranty processing offices, emergency call centers and their 6000 dealers. Marketing: Develop a Ford-only customer data center from 50 million customer records and let all Ford business use it. (Milkman, 64) Supplies -Intranet/Web-based communication: The company world wide intranet allowed Ford to be connected to their suppliers beginning a viable Business-to-business (B 2 B) network called Covisint. In the past senior management would have flied to Fords headquarters for meeting. Now Ford operated a worldwide leadership meeting through its videoconferencing. (Milkman, 68) Global Parts & supply: Reducing Order to Delivery (OTD) -logistic information system to increase speed at which service repair parts are delivered to dealers.
Ford & dealers to share parts inventory in real time. Foreign-based automakers, such as Toyota and Honda, have expanded operations onto domestic shores and, in turn, have wrestled market share from American automakers. As a direct result, unit over-capacity has steadily risen, while heightened competition and diverse product lines have led to increasing customer demands. To answer these threats, Ford has made recent attempts to transform its dated vertical integration production model into a maneuverable, efficient supply chain.
Emphasizing methods such as Just-In-Time (JIT) inventory, Total Quality Management (TQM), and Synchronous Material Flow (SMF), Ford has derived a multi-tiered system of supply. The tier system consists of numerous generic suppliers, tier two and below, who are managed by tier one vehicle sub-system suppliers. The tier one suppliers, by nature, are completely dependent upon Fords survival since the provided sub-system component is specific solely to Ford. Fords Problem Despite the revamping effort, Ford remains plagued with prolonged Order-To-Delivery (OTD) time periods, congested inventories and error-ridden procurement processes. Upon investigation, these troublesome issues appear to be well addressed by the radically new direct business model of the Dell Computer Corporation. Dell differentiates itself through the utilization of virtual integration, an efficient and effective direct business model facilitated by electronic business providing Build-To-Order (BTO) products directly to customers.
The process begins with the customer specifying exactly which features are to be included in the desired computer. Dell, then, buys components from several different suppliers via Internet-based JIT ordering. (Finch, 119) By using Dells process of JIT ordering, misallocation of company resources is avoided and unnecessary inventory is limited resulting in a core competency of considerable cost reduction. By substituting information for inventory, Dells lean business structure offers mass-customized machines that are ordered, assembled and delivered with reduced lead times without sacrificing margins or maintaining inventory. The auto industry had grown much more competitive over the last decade and the past few years have been tough times for Ford Motor Company. Ford had led in a quality revival based management philosophy of W. Edwards Deming in the eighties; know as Total Quality Management (TQM), which is now out of fashion.
But as the years rolled on at Ford and the mangers who had embraced the TQM retired, the new replacement had other priorities. The companys old slogan quality is job one which was attained when they were consistently utilizing TQM is under fire. Fords hard won reputation for quality was being tarnished by a series of setbacks from controversy over deadly rollovers of Ford Explorer equipped with Firestone tires to costly recalls of several models and delays on the introduction of others. Overall quality and customer satisfaction for Ford cars lag behind its competitors. Fords poor customer satisfaction rating was also attributed to Fords major focus on the internet. Fords president in 1999, Jacques Nasser said Go back 100 years, Henry Ford put the world on wheels, today Ford Motor Company will put the internet on wheels.
Nasser followed the hype of the internet era and rushed to do everything e-business. They placed a lot of energy into their front-end systems and did not put that energy into improving the real core processes and systems that really run the business. Under Nasser's leadership Ford placed more emphasis on the internet than on automobiles. His futuristic vision was placing in cars Webb access, satellite phone services and e-mail capabilities to collects millions of Net services revenues; creating a Buyer Connection Web site to let Ford buyers bypass dealer markups and order cars factory direct; creating Owner Connection Web site to improve service and collect customer data by letting owner manage their own warrant service. Although the direct business model of Dell is most attractive, there are several key differences between the computer and auto industries which serve as barriers to Fords implementation of uniform, supply chain virtual integration.
Ford must tackle many diverse obstacles that were, simply, not a factor with Dells implementation. These obstacles range down the delivery chain from the supplier to the manufacturer to the dealer and, ultimately, to the customer. Overall, the intricate and historic process of manufacturing and selling automobiles contradicts the technological innovation necessary for a true virtually integrated system to exist. First, product complexity and supply channel constraints are key limiting factors of lean manufacturing that must be addressed. Due to the generic nature of computer parts, Dell possesses the ability to negotiate and procure necessary items for plant assembly from several independent purveyors. Therefore, Business-To-Business (B 2 B) transactions are accomplished with relative ease and minimal cost.
Although generic items, such as spark plugs and windshield wipers, are provided to Ford by lower tier suppliers, wholly-dependent, tier one partners supply components, such as dashboards and drive trains, that are tailored specifically for Ford, alone. Thus, the flexibility of Fords chain of supply is vastly compromised. The combination of product complexity and a rigid supplier network adds complexity to the task of introducing virtual integration to Fords dated process. Secondly, the communication channels and procurement procedures of Ford and its tier network are bound within the limits of traditional phone and fax methods resulting in delaying procurements, clogging inventories and affording errors typical of a manual process. Unlike the fully automated online system of Dell, Fords manual ordering and accounting procedures waste manpower, amass stock and, in the end, prolong OTD. Furthermore, many of Fords lower tier partners lack the capital to invest into an Internet Technology (IT) infrastructure that would be necessary to fully support virtual integration.
Not only do these suppliers lack the technology and funding for IT initiatives, the incentive to upgrade is, also, non-existent. (Finch, 173) Lastly, historical dealer retailing and traditional consumer buying habits, both, inhibit the full-scale implementation of virtual integration. The dealer segment of Fords supply chain has been completely omitted in Dells business model. Dell takes orders directly from the customer and delivers the product, again, directly to the customer. In the case of Ford, dealer showrooms and car lots have been the only ways of retailing a new car since the inception of the automobile. Eradication of all dealerships for the sake of advancement is, simply, impossible. First, Ford is obliged to the dealerships through legal franchise agreements, and, more importantly, consumers are accustomed to shopping for cars in first person.
Car shopping appeals to the senses of the consumer, ...
Free research essays on topics related to: b 2 b, total quality management tqm, ford motor company, supply chain, business to business
Research essay sample on Ford Motor Company Total Quality Management Tqm
