Sustainability and the Green Supply Chain in Ford Motor Company - Essay Example

?Sustainability and the Green Supply Chain in The Ford Motor Company Table of Contents Introduction 3 The Marketing Channels and Logistics Frameworks, Models and Theories and Latest Trends 4 The Role of Technology, Globalisation and Environmental Concerns on the Supply Logistics of the Modern Business World 6 Ford Motor Company Adopting the Principles of Environmental and Social Sustainability 9 Conclusion 14 References 16 Bibliography 20 Introduction In relation to the automobile industry, it can often be viewed that the demand for the vehicles has been constantly increasing throughout the globe. Correspondingly, The Ford Motor Company is regarded as one of the leading and renowned automobile companies in the world. The company is based in Michigan, US and operates in excess of 200 nations across the world. The company also employs 370000 personnel in diverse locations of its operations spread globally. The company is primarily engaged in manufacturing vehicles for the purpose of selling them to the general customers. The company was originally established in the year 1903 by Henry Ford and since then, the company has produced more than 260 millions of vehicles (Austin, 2001). It is worth mentioning that the automobile industry has grown to be much competitive in nature over the preceding few decades, particularly after the advent of the globalisation process. At the same time, the continuous advancement in the technological aspects has also contributed towards altering the business models and forcing the companies like Ford to incorporate radical changes in their respective supply chain and logistics operations for sustaining business in this competitive landscape. The company, during the year 1995 has initiated a plan to restructure its business model and other key areas of its activities such as Order to Delivery (OTD) and Ford Production System. The company with new structuring plan indented to reduce OTD and further desired to convert its supply chain based operations from push type to pull (Cao & et. al., 2010). In its structuring plan, it can be viewed that the ultimate aim of the company is to perform effectual supply chain along with logistics operations in a cost-effective manner (The Saylor Foundation, 2013; Ha, 2008). Correspondingly, this essay intends to discuss the sustainability and the green supply chain in the context of The Ford Motor Company. The Marketing Channels and Logistics Frameworks, Models and Theories and Latest Trends The marketing functions generally focus upon developing the tasks that are executed by the distribution systems and also the associated utilities of these functions. In this similar concern, marketing channels are viewed as the set of inter-reliant organisations that are engaged in the process of making certain products or services for consumption purpose. The marketing channels eventually draw attention to certain group of members such as wholesalers, distributors and retailers among the prime. These members are commonly engaged in the distribution system and are generally responsible for deliverance of products or services from the point of inception to the point of final consumption. It is worth mentioning that management of such marketing channels requires planning, organizing, coordinating, directing along with controlling efforts of channel members. For example, Ford Motor has articulated certain global terms and conditions especially for its suppliers that are duly required to be abided by them in order to conduct business with the company. Any supplier, who do not abide by the established sets of code of conduct which formulated by the company is liable to be terminated from the contractual arrangement (Borade & Bansod, 2007). In the contemporary business environment, most of the organisations are involved in providing customer-oriented view of marketing channels. The domain of marketing channels typically includes market channel structure, governance and relationship management. In this regard, it can be firmly stated that the effort of one group in the marketing channel impose considerable impact on the other group within the channel. In pursuit of insight and understanding, varieties of theories and methodologies have been propounded (Sarkis & et. al., 2010). For example, Ford Motor Company has developed Aligned Business Framework (ABF) in order to sustain its business successfully along with meeting the requirements of its suppliers. The concepts along with the theories related to supply chain management (SCM) can be vividly derived from the ground of marketing, industrial operations along with logistics management, information management and international business. Correspondingly, the concepts and the theories that are derived from the marketing ground typically encompass customer relationship management and buying strategies. Similarly, making or buying decisions and procurement supplier customer evaluation are fundamental to industrial concepts and theories. On the other hand, Logistics based concepts as well as theories can be viewed in the context of SCM in the form of distribution and transportation management. Specially mentioning, partnering, strategic alliances and strategic analysis can be related with the concepts along with the theories of international business. Moreover, electronic data interchange and online bidding can be associated with the concepts and theories related to information technology (Gundlach, & et. al., 2006). It is worth mentioning that the organisations are forced to undertake and follow effective environmental management framework due to the imposition of unfavourable impacts upon their respective business environment. This framework eventually represents extensive involvement of organisations in displaying their corporate social responsibilities (Ha, 2008). Similarly, the organisations such as Ford are required to undertake social along with environmental responsibilities for ensuring greater environmental excellence during product development, logistics and waste management. Correspondingly, a new concept of Green Supply Chain Management (GSCM) has widely been gaining popularity amid the manufacturers almost in all the sectors. The implications of GSCM can also been identified in the global automobile industry (Luthra & et. al., 2011; Hervani & et. al., 2005). It has been ascertained that the complying with the aspect of GSCM, organisations such as Ford are able to integrate the aspect of environmental management with SCM. It has been ascertained that GSCM has facilitated Ford in identifying the adverse environmental impact on its supply chain procedure or operations. The effectiveness of GSCM can be better understood from the below represented pictorial illustration. Fig.1: Green Supply Chain Management (Source: Ravishankar, n.d.). The Role of Technology, Globalisation and Environmental Concerns on the Supply Logistics of the Modern Business World Logistics is simply related with inbound and outbound flow as along with storage of products or services followed by information exchange within and between the organisations. It is worth mentioning that before 1980s, logistics was predominately concerned with the outbound flow of finished products and was primarily focussed on physical distribution. However, during the year 1980, the aspects such as transportation deregulation and globalisation had contributed towards expanding the concept of logistics outside the notion of outbound flow and these further facilitated in incorporating management along with physical distribution as a crucial component of logistics management (Cetinkaya, 2011). Long-term trends often pose challenges for supply chain managers and make growing requirements on the strategic management capability of today’s company like Ford. These trends can be categorised as ongoing globalisation, rapidly augmenting intensity of competition, increasing demand of security, environmental protection along with resource scarcity and finally the need for reliable, flexible and cost- effective business model(Kumar & Chandrakar, 2012). In this regard, it can be argued that the supply chain managers in the current contemporary business environment are encountered with growing challenges of business dynamism along with complex supply chain structure. Thus, it can be further admitted that in the coming years, the supply chain activities will emerge as to be much complex than it is at the present business context. Therefore, in order to remain competitive in the market place and to sustain business profitably, the supply chain managers are required to identify and understand the need for new sustainability issues while rendering their services. Notably, this calls for the supply chain managers not only for performing highly proficient supply chain based operations, but also developing competent networking skills that can be incorporated to meet the sustainability demands (Zhu & et. al., 2008; Ashayeri & Kampstra, n.d.). Furthermore, it has been ascertained that the issue of sustainability has accorded paramount importance in the context of corporate social responsibility (CSR). At the same time, clear relationship has been noted between the procedure of SCM of any organisation and environmental performance (Croom & et. al., 2009). Responsively, in recent times, the area of SCM has accorded significant attention from the perspective of natural environment. There has been constant social pressure regarding the supply chain risks and their increasing impact especially on the environment. As the result of this increasing social pressure, the concept of Green Supply Chain Management (GSCM) has evolved lately. Correspondingly, most of the organisations throughout the globe felt the necessity of greening requirements to upstream along with downstream of supply chain activities in order to maintain sustainability of business by a greater degree (Hazen & Cegielski, 2011). In this regard, Ford tends to seek that all its suppliers are ISO 14001, ensuring that the operations which perform by the supplies are effectively met with internal standards (Simpson & Samson, 2008). Specially mentioning, the significant concern of sustainability is duly considered to be an emerging market trend, which contributes in causing radical change in this competitive landscape and has quickly been acting as one of the primary drivers of innovation in several industries throughout the globe. Correspondingly, the businesses in almost all the areas of supply chain are making efforts to include wide range of sustainability initiatives so as to attain greater competitive position at the marketplace. It can be advocated that environmental sustainability relating to SCM process, which is also known as green supply chain management has gained much popularity in recent years (Simpson & Samson, 2008). Ford Motor Company Adopting the Principles of Environmental and Social Sustainability It can be firmly argued that recent trends and changing business along with technological aspects have dramatically influenced and transformed the structure and performance requirements of distribution channels in the automobile industry. It can be asserted that distribution is a key function which promotes greater value across the supply chain. It is worth mentioning that the suppliers of Ford are located in geographically dispersed locations, almost in 60 countries across the globe. Furthermore, it has been ascertained that the Tier 1 suppliers belonging to the company contribute in supplying 130000 automobile parts for the company (Bosch & et. al., 2012). The stages of the value chain of the company have been illustrated below. Fig.2: Stages of the Value Chain at Ford (Source: Bosch & et. al., 2012). As far the sustainability and green supply chain management of Ford Motor is concerned, it can be stated that the company has been working with suppliers for number of decades to improve the sustainability of its products and processes. Moreover, it can be apparently observed that the company intended towards acquiring greater support from its suppliers in improving its sustainability performance. It is worth mentioning that the company is the first automaker firm, which initiated the requirement for maintaining globally recognized standard i.e. ISO 1400, ensuring the formation of an efficient environmental based management system. The company has been constantly engaging its suppliers on mitigating the issues related with sustainability and it has been involved in following principles and practices of social along with environmental sustainability related with greenhouse gas emission, logistics and material management. It can be admitted that processing raw materials and manufacturing of needed components for the automotive supply chain causes radical life cycle energy consumption and emission of greenhouse gases (CSRwire, LLC, 2013). As a consequence of such emissions, the company imposes significant impact on the surrounding environment. It is thus essential for the company to reduce and curtail the impact of its operation on climate change. In order to understand the challenges and address them efficiently, Ford along with the student team of the University Of Michigan School Of Natural Resources and Environment has developed a strategy for considering greenhouse gas emission in the vehicle supply chain. The pictorial illustration presented below explicitly demonstrates Ford’s strategy for managing GHG emissions in the vehicle supply chain. Fig.3: Characterization of Greenhouse Gas Emissions Scopes (Source: Bosch & et. al., 2012). Ford is committed towards working closely with its suppliers in order to deliver superior products or services to the end customers and most vitally to accomplish superior competitive position in the competitive landscape. In order to address sustainability issues, the company remains much focused on establishing strong relationship with its suppliers and also developing shared obligations to sustainability across the supply chain. The company realised that establishing a strong and close relationship with its suppliers require to be based upon transparent communication and clear expectations. Thus, the company seeks to resolve the issues of sustainability by deploying a single product development process and enhancing the practice of reusability that would contribute towards maximum utilisation of available resources with minimal effect on the environment. Furthermore, the company intends to ensure that all its suppliers are committed towards performing effective environment along with social responsibilities (2Ford Motor Company, 2013). The company further ensures that suppliers are dedicated towards complying the established standards and the regulations. The company has also framed a range of resource guides that are duly coordinated to its suppliers in order to inform them about the aspects like human rights and greenhouse emissions. Moreover, the company has also provided certain tools comprising worksheets for tracking, reporting and developing code of conduct. Furthermore, the company during the year 2005 has also developed a framework, known as Aligned Business Framework (ABF) with its suppliers to increase mutual effectiveness and promote shared commitment related with the sustainability objectives and issues (2Ford Motor Company, 2013). It can be apparently observed that the physical logistics operations of Ford offer safe and efficient transportation of parts from its suppliers to manufacturing plants (inbound logistics) and also the finished products from the assembly line to its dealers (outbound logistic). In this regard, it is worth mentioning that logistics contributes relatively less in terms of vehicle life cycle emission and thus the company still endeavours to enhance its logistic efficiency and curb the impact of its operations on the environment. The department Material Planning and Logistics organization (MP&L) within the company is responsible for managing its transportation related supply chain activities. Ford MP&L implements a global approach to effectively address the environmental aspects related with the company’s logistic operations. During the year 2010, the company introduced ‘green logistic’, which aimed at assisting the standardization of company’s procedures related to logistics and SCM and communicating the best practices across different departments and suppliers of the company. The major focus of the company behind the creation of ‘green logistic’ was to lessen emissions resulting from greenhouse gases. The company focused upon diminishing emissions for the purpose of attaining environmental goals along with enhancing air quality. Moreover, the fright emission reporting was created by the company in order to develop enhanced understanding regarding the impact of emissions on the environment, prioritize actions towards the reduction of emissions and raise the efficiency of the company to assess carbon footprint arising from the activities of supply chain (Ford Motor Company, 2013). Furthermore, Packaging Engineering is a department within Ford MP&L, which is focussed upon meeting the company’s function of designing, procuring and optimizing packaging. It is worth mentioning that packaging has radical impact on the environment concerning with material usage and waste disposal. In this regard, the company’s operation in the European region uses 90% of the reusable containers and is determined to increase the initiative regarding the execution of reusable containers in the upcoming years (2Ford Motor Company, 2013). In addition, it can be viewed that every supplier conducting business with Ford is required to comply with its global terms along with conditions. Specially mentioning, the core principles articulated in those terms and conditions include strictly prohibiting its suppliers from using forced labours, child labour and any other form of physical and disciplinary abuses. The articulated terms and conditions stresses that the company will have the full right to terminate the contract with its suppliers, if they are identified to violate the code of conduct articulated in its global terms and conditions (1Ford Motor Company, 2013). Thus, based on the above discussion, it can be affirmed that Ford is adopting the principles of social along with environmental sustainability in its SCM and logistics operations procedure through incorporating the aforementioned approaches or practices. Conclusion From the above analysis, it can be affirmed that supply chain is an arrangement of services and distribution channels that comprise procurement of raw materials, production of goods and assembly along with delivery of product and/or services for consumption purpose. It has been viewed that supply chain imposes considerable impact on natural environment. Hence, in order to curb the unfavourable impact of supply chain on environment, numerous practices or concepts have been undertaken by the modern business organisations. Responsively, the concept of GSCM is perceived to play radical role for transforming traditional supply chain and tackling social pressures. The continuous technological development and globalisation process have intensified the level of competition for organisations such as Ford. As a result, supply chain managers are often faced with the challenge of rapidly changing business scenario, which has further contributed towards increasing the complexities of SCM process. It has been further perceived that in upcoming years, the aspect of SCM process will become more complicated to be managed by the supply chain managers. Thus, it has been ascertained that supply chain managers are required to reveal their networking skills for understanding new sustainability competencies in order to successfully sustain business in this highly dynamic business scenario. The supply chain related activities of Ford can be viewed to be widely related with social along with environmental aspects. This can be justified with reference to the fact that the company felt the requirement of maintaining international operational standards by all of its suppliers. Moreover, the company has been identified to engage its suppliers in sustainability issues in order to draw better understanding about the impact of supply chain on the environment. The company predominately focuses on strong relationship building, forming transparent communication and developing shared commitment in order to proactively address the sustainability issues. In addition, the supply chain activities of the company are closely associated with reducing the environmental impact arising from its various logistics based operations. In this regard, the company mainly focuses upon reducing the emissions resulting from greenhouse gases emissions and maintaining efficient material management process effectively. Specially mentioning, Ford has established certain departments such as MP&L and Packaging Engineering department in order to reduce impact of logistics operations on environment, which clearly indicates that the company is adopting the principles of social along with environment sustainability in its logistics and SCM process. References Austin, R. D., 2001. Ford Motor Company: Supply Chain Strategy. Harvard Business School, pp. 1-9. Ashayeri, J. & Kampstra, R. P., No Date. Demand Driven Distribution: The Logistical Challenges and Opportunities. Introduction. 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