Ford Motor Company
To: Jac Nasser, CEO, Ford Motor Company
From: Teri Takai, Director of Supply Chain Systems
Date: February 10, 1999
Re: Supply Chain Strategy
It is my recommendation that the Ford Motor Company continue to optimize the benefits of the five, corporate-wide reengineering projects that are already in place rather than to attempt adaptation to a virtual integration model at this time. The structure of Ford’s existing supply chain is too large and too complex for virtual integration to be successfully introduced.
While Dell began as a small company which structured itself to virtual integration from the start and throughout its growth, Ford faces many more challenges in its supply chain structure, the scale of which Dell never had to consider. Customers purchasing a vehicle from Ford also have very different expectations than those purchasing a computer from Dell (see Exhibit 1). The commodities sold by Dell differ greatly in scale from those sold by Ford, both in terms of product complexity and price. While design changes can be almost instantly incorporated in computer production, they usually need to wait for the next model year in automotive manufacturing and can be pushed out even further when affected parts are subject to by government regulation, which is often the case when it comes to vehicles. Gains realized by Dell through rapid incorporation of technological advances in component parts would not provide the same gain in the automotive world.
I propose that data continue to be collected from managers of all business units to measure the level of success of our corporate reengineering projects as these projects will directly affect both shareholder value and Ford’s ability to increase customer responsiveness. Targets include reducing the numbers of suppliers, creating leaner, more responsive and more efficient manufacturing lines, dramatically reducing OTD, and development and growth of the Ford Retail Network....