Ford Motors Business and Supply Chain Strategy - Case Study Example

4/20/16

Abstract

With advance in technology organization efficiency have been improved to incredibly high levels. Manufacturing skills are no longer much needed to step up competitiveness like it was in yester century. It is no longer the internal structure of the organization that is being focused much on but the supply side and supply chain strategy. Outsourcing has become the common norm of big corporations with only the main activities remaining within the company’s headquarters. In this regard the supply chain management is becoming more crucial to the running of organizations.

This paper looks into the relationship between supply chain strategy and business strategy and importance it will bring to ford motors; furthermore it will also look into the actual supply strategy by administering questionnaires to the organization and suppliers (Ireland, Hoskisson, & Hitt, 2008). Moreover the paper brings forth the tangible solutions to the ford industry that help to reduce the supply chain risks and give suggestion on the best backup to the internal organization decision making strategy.

The following is the conclusion that the paper draws: that many organization sees supply chain as a cherished asset and thus they invest a lot in it. Supply chain managers should strive to prove to the organization that supply chain is central to the running and success of the organization and that if strategic and efficient supply chain systems put in place the overall effect on the operations will be huge (Ireland, Hoskisson, & Hitt, 2008). Also in order to realize growth and be competitive there is no choice but to invest heavily in effective and strategic supply chain programs that will drive growth. To be industry leader, you have to align or rather integrate the supply chain strategy with business strategy such that it improves procurements programs. The basic objective of investment in supply chain is to reduce cost of operations.

Here are recap of the papers innovations: First, the paper choose the sample data from Ford Corporation, the research outcome is more directing; Second, the paper strategies to study more similarity to supply chain, which is more similar to ford corporation actual operations (Ireland, Hoskisson, & Hitt, 2008). And it also comes up with the practical strategies for enterprise supply chain management.

Body

First ford motors should come up with integration of both online and offline operations that will enable ordering of products by customers online while still maintaining physical dealership. This will open up new markets that have not been fully exploited, and will attract customers who are used to online shopping. There will also be great drop in inventory cost. This model will also enable greater control of customer service experience.

It will also be prudent if the company come up with virtually integrated supply chain similar to the one for general motors. There should be central sharing of information between ford and suppliers’ thus ensuring smooth running of materials and manufacturing (Miller, 2013). Customers should be able to place order via phone or internet and be able to get the exact specifications.

If the company continues using the same supply chain strategy in place the results will not be good and company will continue registering losses therefore there is a dire need for change in plan by adopting online supply chain strategy. Ford should invest in virtual business strategy by specifically designing supply chain that is similar to that of general motors’ or dell and any specification that won’t fit into fords strategy should be eliminated (Miller, 2013). The physical buying however would continue because the experience is not the same with online purchasing. To implement this, the IT system should be shared by both ford and supplier so that update becomes effective, either side can update ahead of the other. Ford should be the one controlling access only whereas suppliers are allowed to access the database.

Supply chain plays a key role in the success of each and every organization. Supply chain plays a crucial role to ensuring the value of organization improves (In Ramanathan, U., In Ramanathan, R., & SpringerLink, 2014). There are myriad of supply chain activities in an organization each of which is crucial to the success of the organization, this activities includes, management of inventories, procuring warehouse products and distribution. What guides all activities in an organization is the supply chain strategy, with good supply chain strategy in place every activity and processes within an organization will flow smoothly with minimal problems. Business strategy in place is what gives value to an organization. Combination of the two therefore is essential for the general success of the organization.

There is therefore need to ensure that ford motors supply chain strategy is properly aligned with the organizations general business strategy. For example we can look at the overall business strategy from four different hierarchical levels perspective and then try to link together certain supply chain strategy to those levels. These are functional, competitive, network and corporate strategy levels.

Corporate strategy is involved more with the investment section of an organization; how to acquire investments and the choice of investments together with the process of acquisition (In Ramanathan, U., In Ramanathan, R., & SpringerLink, 2014). Even for small organization there are portfolio decisions to be made like for example the type of market that should be targeted. Network strategy defines the relationship and connections that exist between different enterprises and the degree of competition and togetherness that defines them. Competitive strategy defines the level an organization is relative to others. It shows organization position in terms of inventions and innovations and extent of its originality. It also looks into the position of the firm in terms of producing the same products or services with other firms but at lower costs. Functional strategy deals with the internal structure of the organization, in terms of how people are organized and how systems are arranged.

Let’s have a look at how ford can develop supply chain capabilities at the above strategy levels: first at network level there is need to court strong partnership with reliable suppliers with great reputation instead of having partnership with many suppliers that cannot be relied upon. This will ensure high quality products. At corporate level the organization should run different supply chains that will support various offerings in the market (In Ramanathan, U., In Ramanathan, R., & SpringerLink, 2014). This various supply chains should reflect or be in support of different market dynamics. For example in regions where consumers are price sensitive there should be low cost supply chain in place, agile supply chain should be in place with high competition whereas high quality supply chain should be but in places with main product brands.

At competitive level the organization should position its supply chain such that it become the organization basis for competition, and it should offer thousands of items in just days (In Ramanathan, U., In Ramanathan, R., & SpringerLink, 2014). It should also come up with regular inventions and innovations to step up competition. At functional level, the organization should invest a lot in technology, which is blended with IT. Several software’s should be put in place for example the one that detect demand and transportation optimization software. Transportation optimization software will improve the organizations efficiency and effectiveness and operational cost will be reduced greatly. Supply chain must be flexible to meet the ever changing customer needs and tastes. There is need to know customers need and preferences to be able to come up with clear strategy going into the market. Therefore every organization have to recognize the effect of coming up with a flexible, strategic, aligned and up to date supply chain programs and the overall effect it will have on the operations (In Ramanathan, U., In Ramanathan, R., & SpringerLink, 2014).

Each level of supply chain offers an insight into the desired business strategy. By coming up with supply chain along these four levels you will be able to link together supply chain together with business strategy in four different ways thus creating a strong connection between the two. Proper alignment between supply chain and business strategy is imperative to organizations overall value and performance.

Aligning supply chain strategy with business strategy in this way will greatly improve business Performance and organization will be on the right path to becoming business leader. Any organizations that recognize supply chain as an integral part of business often realize improved performance. This organization with improved performance and higher value are recognized as leaders in the market. For example through designing of right supply chain management system, it will be able to improve in its logistic, procurement and in management of inventory (Hines, 2004). This will also play crucial role in ensuring that prices are kept low. Improved supply chain will ensure that the organization delivers on time and in right quantities products and thus resulting in high inventory turnover. Every indication shows that companies with supply chain strategy aligned with business strategy serves customers with efficiency and effectiveness to their greater satisfaction. On the other side of the coin companies with ineffective supply chain strategy realize low sales turnover and they are behind in terms of market competition (Hines, 2004). Their margins are extremely low. These companies also operate at abnormally higher cost and in most cases their turnover doesn’t make up for operational cost and their survival is uncertain. Many organizations see supply chain as a cherished asset and thus they invest a lot in it.

Ford Supply chain managers should strive to prove to the organization that supply chain is central to the running and success of the organization and that if strategic and efficient supply chain systems put in place the overall effect on the operations will be huge (Hines, 2004). To realize growth and be competitive there is no choice but to invest heavily in effective and strategic supply chain programs that will drive growth. To be industry leader, you have to align or rather integrate the supply chain strategy with business strategy such that it improves procurements programs. The basic objective of investment in supply chain is to reduce cost of operations. The result should be a perfect order delivery that is not only being effective and strategic but should be cost effective (Hines, 2004). And taking into consideration the volatility in today’s market the supply chain strategy in place should be flexible. And as a market leader one has to respond to customers need with speed and therefore investment in technology, supply chain and general operation should be paramount, it will improves flexibility and delivery schedule.

Conclusion

There is need for more focus on the supply chain strategy of an organization rather than paying much attention the internal structures. Big corporations across the world are now investing millions of shillings in the supply chain strategy in a bid to integrate it with the overall business strategy. In this regard the supply chain management is becoming more crucial to the running and success of organizations (Lebreton, 2007). Many organizations see supply chain as a valued asset and thus giving attention it deserves. Supply chain managers should strive to prove to the organization that supply chain is central to the running and success of the organization and that if strategic and efficient supply chain systems put in place the overall effect on the operations will be huge. Also in order to realize growth and be competitive there is no choice but to invest heavily in effective and strategic supply chain programs that will drive growth. Aligning supply chain strategy with business strategy in this way will greatly improve business Performance and organization will be on the right path to becoming business leader. Any organizations that recognize supply chain as an integral part of business often realize improved performance (Lebreton, 2007). It is evident that the organizations with supply chain strategy integrated together with business strategy runs with efficiency and satisfy customers and clients. Contrary to that organization with dysfunctional supply chain strategy realize low sales turnover and they are dubbed market laggards. Their sales turnover is abnormally low. This company also operates at significantly higher cost and in most cases their turnover doesn’t make up for operational cost and thus don’t last for long. This is the reason why every organization have come to recognize the effect of coming up with a flexible and strategic supply chain programs that will set up the industry in the right direction (Lebreton, 2007). Indeed supply chain is the future of each and every organization going forward; organization either invests in it or it risk losing market competition.