Ford is facing a dilemma on how to adopt emerging internet technologies and ideas of high-tech industries. These are in relation to their interaction with suppliers. Proponents of embracing the new emerging technological trends in business were of the view that the company already lags behind when it comes to adopting technology, and the need to respond rapidly is apparent. There was another group that was rather cautious in their approach. They articulated on the need of considering the difference between the auto business and Dell-a different form of business emerging in a different industry- prior to incorporating any form of technology into their business framework. Shareholder value and customer responsiveness is a characteristic in Dell worth acknowledging. Ford has experienced growth in revenues, employees and operations since its inception. Effects of globalization are apparent in the auto business. Ford has embarked on a restructuring plan called Ford 2000 which calls for a reduction in costs that is to be achieved through reengineering and globalization of corporate organizations and processes. Great emphasis is placed on proper understanding of; Ford’s existing supply chain, customer responsiveness initiatives, their existing supply base, production system and retail network. The Dell integrated supply chain system is well analyzed, and its significance to the supply chain strategies of Ford determined.
The existing supply chain is the key historical legacy that has affected the ability of Ford to move to a BTO model. The supply base in place is as a result of history. In the early 1990s, Ford focused on decreasing the number of suppliers dealing with the company directly. Their interest shifted towards building long term relationships with a given number of suppliers who would manage relationships with a large number of suppliers (Ford Motor Company, 2001.). In return, these suppliers would give Ford yearly price reduction.
Another key factor hindering the shift is the organizational structure of Ford. Purchasing is independent of organizations, a powerful tool that ford has capitalized on.
Virtual integration is the application of internet technology in an organization in place of physical components. Technology has facilitated coordination across boundaries for dell. This has resulted to appropriate returns for their investors. The supply chain is well coordinated. It has greatly benefited from specialization (The Power of Virtual Integration, 2008). Dell can tailor their products to the needs of their customers. What is more, their marketing strategy is market driven. Their inventories are low with rapid turnover and have a short order to delivery time.
The practical challenges that Ford should address revolve around the organizational structure of Ford and changes in its supply network. Ford should increase competition among its suppliers instead of maintaining close relationships with a limited number of suppliers. This will make the market competitive for them hence a reduction in the cost of their operations. They should also focus on directly dealing with their customers. Changing the historical organization structure of Ford is another challenge because it has greatly capitalized on it since time immemorial.
Ford should capitalize on the benefits accruing from adopting internet technology in their business structure. Their design strategy will strictly be based on the needs predetermined by their mainstream customers. Their pricing strategy will be market driven in place of the existing strategy that is driven by the budget of the program in normal circumstances. Irrespective of the fact that there will be no maximization on production, there will be a schedule of production in place that would greatly reduce the working cycle of Ford. What is more, orders will be placed based on the demands of their customers unlike the prevailing scenario whereby orders are placed based on capacity constraints and allocation. Additionally, their inventories will have a high turnover.
Havard Business School. (March, 1998). The Power of Virtual Integration: An Interview with Dell
Computer’s Michael Dell. Retrieved from:
Ford Motor Company. (2001, March). An Interview with Dell … (n.d.). Retrieved from: