Supply Chain Management in Ford Automobile - Research Paper Example

? (Assignment) Supply Chain Management in Ford Automobile Introduction Modern business firms heed exceeding emphasis on their supply chain activities along with their fundamental objectives like internal productivity, economic cost of production, and high profitability. The trend is attributed to the growing concept that effective supply chain management operations would benefit the whole business unit. Supply chain optimization strategies can play a vital role in improving the functionality and viability of automobile industry. This paper in particular will analyze various supply chain strategies and practices of Ford Motor Company. Supply chain optimization strategies in automobile industry Supply chain optimization is the application of different strategies and processes which are aimed at the effective supply chain operations at manufacturing and distribution (IMEC). In order to achieve supply chain optimization in automobile industry, it is necessary to ensure uninterrupted and optimal placement of inventory within the supply chain and minimize various operating costs including manufacturing costs, distribution costs, and transportation costs. In modern times, computer software plays a crucial role in developing mathematical modeling techniques which can well contribute to the supply chain optimization especially, in automobile industry. In the automobile supply chain system, supplying industries provide rubber, electronics, glass, steels, and other materials to the manufacturers. The manufacturing, stamping, and casting processes take place at the factory (innovative engineering techniques are applied in this phase); once the manufacturing process is completed, the different vehicle parts are moved for final assembly that gives final shape for the vehicle (The geography of transport systems). The completed automobile is then transferred to consumer market in order to make available to ultimate consumers. Traditionally, supply chain managers take all efforts to improve the profitable operation of their supply chain both at manufacturing and distribution sectors (Anderson, Britt, and Favre, 1997). The main supply chain optimization strategies include maximization of gross margin return on inventory invested, minimization of operating expenses, and maximization of gross profit of products which are marketed through the supply chain. The concept of supply chain optimization assists the automobile industry to identify various difficulties that would arise while delivering products to customers at various market conditions. Ford Motor Company Ford Motor Company is one of the members of the group “Big Three” including Chrysler and General Motors as the other members (Levine, 2009). The Ford Motor Company is a well established car manufacturer in the automobile industry and the company started its manufacturing operations in 1903. The Ford Company introduced the first “dominant design” in automobiles which became the fundamental framework for other manufacturers to design their models. It is observed that the most powerful feature of the Ford is its flexibility to integrate with various market situations. This extreme feature has assisted the company to vie with many severe competitive markets. Ford possesses an efficient management team which effectively forecasts the market and changing consumer tastes and thereby designs innovative car models (Salton, 2010). Supply Chain Management in Ford Automobile Industry The most fascinating feature of Ford’s supply chain management is that it possesses large number of suppliers. The company is characterized with three tiers of suppliers which add value to the company’s supply chain operations. Since the Ford is a $150 billion company, it practices significant leverage over its suppliers. The Ford’s trend of the past 30 years shows that the firm moves toward increasing outsourcing of materials, components, and services with intent to achieve lower costs and increased flexibility. This practice would certainly contribute to Ford’s mass production strategy. Ford practices virtual integration technique that allows the organization to take advantages of vertical integration without incurring additional overheads. Recently, Ford has employed most modern internet techniques so as to interact with its suppliers. The Ford greatly emphasis on recent developments in technology and has set Dell as an appropriate model for company’s business. The Ford Motor Company also maintains effective services as well as outstanding inventory management features. For instance, the company provides improved services to its customers and dealers; and this attractive quality has greatly assisted the company to exist over 100 years in the field of automobile industry. Similarly, as compared to other similar companies, the Ford meets the changing requirements of the customers at greater phase. The company always keeps adequate stocks so as to ensure uninterrupted flow of goods and thereby consumer satisfaction. Likewise, “Lean marketing is a whole-systems approach that creates a culture of continuously improving processes” (Business901.com); and which is evidently applied in the Ford Motor Company. The company gives great priority to environmental safety in addition to its traditional goal of profit maximization. The Ford designs its products environment-friendly in order to address global warming and the severe climate changes. The company also exercises effective optimization strategies that have been largely contributing to the company’s faster economic growth. When the 2008 economic crisis led many corporate giants like Chrysler and General Motors to bankruptcy, Ford could successfully defend the crisis (Hercules, 2008). Since the company maintains large number of supplier groups, it has potential bargaining power over its suppliers. It would assist the company to purchase raw materials at lower costs. The diverse supplier groups are also beneficial for the company to assure the quality of its products. When the company makes bulky purchases of raw materials, suppliers would be forced to deliver quality materials on time. In addition, the company collects feedbacks from its customers after launching all new product models. This practice would certainly aid the company to take future business decisions. Obviously, the Ford also conducts market researches prior to the launch of new automobile models in order for making effective forecast on market demand. Conclusion To sum up, supply chain optimization strategies can largely enhance the economic growth of automobile industry. The Ford Motor Company is the best example, for it efficiently practices different optimization strategies in order to promote its business. The company’s environment-friendly product designs are highly notable for their increasing significance in the modern automobile market. Works Cited Anderson, David. L., Britt, Frank. F and Favre, Donavon. J. “The Seven Principles of Supply Chain Management”. 1997. Web 18 May 2011 Hercules, K. “GM is a Mess but We Still Need to Bail GM out”. Nov 11, 2008. Web 18 May 2011 Lean marketing. Business901.com. Web 18 May 2011 The geography of transport systems. Web 18 May 2011 Levine, Carrie. “What’s Good for GM?” Corporate Counsel. Oct 1, 2009. Web 18 May 2011 http://www.law.com/jsp/cc/PubArticleFriendlyCC.jsp?id=1202433679497> “Supply Chain Optimization: How to make your Company More Valuable to Your OEM Customer”. IMEC: Business Improvement Specialist. Web 18 May 2011 Salton, Jeff. “Microsoft and Ford Team-up on EV Energy Management”. March 31, 2010. Web 18 May 2011 Read More