CASE ANALYSIS ù FORD MOTOR COMPANY: SUPPLY-CHAIN STRATEGY
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 reservations about the appropriateness of the virtual integration model for the company. The primary source of their reservations is the vast difference in complexity between manufacturing a personal computer and manufacturing an automobile.
The emphases at Ford Motor Company at the time of this case (1999) were (1) shareholder value and (2) customer responsiveness. Vertical integration at Dell Computer produced outstanding results in these emphasis areas. The issue in this case is the li...