CASE ANALYSIS of FORD MOTOR COMPANY

By 1999, supply-chain management at Ford Motor Company was vastly different from the supply-chain management strategy at the company a few years earlier. The cause of the change was the implementation of innovations in the management of the supply chain at Ford Motor Company that began in 1995 and eventually evolved through the Ford 2000 initiative. Nevertheless, some Ford managers advocated further changes in the company's supply-chain management to allow Ford Motor Company to capitalize on the benefits of advances in information technology (IT).

A generally accepted premise is that vertical integration in manufacturing industries leads the efficiencies in supply-chain management. Offsetting to some extent the benefits of vertical integration, however, is the inflexibility associated with the ever-increasing asset base required to support vertical integration.

Some members of Ford Motor Company management advocate the adoption by the company of a virtual integration strategy along the lines of the approach to supply-chain management incorporated into the direct model for the distribution chain developed by Dell Computer (Dell, 1998). The high market capitalization/revenue ratio achieved by Dell Computer compared to that for Ford Motor Company is a selling point for the advocates of virtual integration.

Other members of Ford Motor Company management, however, have serious rese

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tant benefits of virtual integration already are accruing to the company. Supply-chain management involves assessing suppliers and activities in the facilities supply-chain and deciding where and how to achieve a specific competitive advantage for each product (Stein & Sweat, 1998). The Ford 2000 initiative resulted in the performance such an assessment. The virtual integration model at Dell Computer relies heavily on the productive application of IT. A major IT innovation that affects the way in which manufacturing facilities are operated is electronic data interchange (EDI). EDI lowers the cost and time associated with the transfer of information between different functional activities within the production facility. Further, EDI performs similarly between the manufacturing facility and its suppliers. Data communication networks are essential to the success of the application of EDI technology in a manufacturing facility. The application of IT to the materials management process is crucial to the effectiveness of both a JIT production and delivery system and supply-chain management (Mukhopadhyay, Kekre, & Kalathur, 1995). Ford Motor Company already is using EDI. One of the problems encountered by Ford Motor Company
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Approximate Word count = 1429
Approximate Pages = 6 (250 words per page)

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