StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Supply Chain Management at Ford Motor Company - Report Example

Summary
The paper "Supply Chain Management at Ford Motor Company" highlights that the strategies applied by the company have not only been successful for the Ford Motor Company, but others have also made use of similar strategies to increase efficiency in their process of production…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER92.7% of users find it useful

Extract of sample "Supply Chain Management at Ford Motor Company"

Supply Chain Management at Ford Motor Company Supply Chain Management at Ford Motor Company Innovation has always been a significant part of the automotive industry since the inception of the engine in the 18th century. By the 20th century, the technological developments further progressed and the more efficient vehicles were designed. The beginning of the ‘motor cars’ formally began in 1906 when Ford’s Model T was launched (Bradley, et al., 2005). As technology advanced, so did the manufacturing process and Henry Ford’s assembly line was introduced in 1913. The company has since been operating as an automotive giant in the industry. On the other hand, General Motors continued expanding its business by acquiring other companies like Chevrolet and new companies, such as Lincoln Continental, Volkswagen, etc., began entering the market and thus began the competition between the automakers (Aherne, 2007). By this time, General Motors began introducing a variety of vehicles, giving it an edge over over Ford. The present automotive market is much more complex than it used to be a century back as the customers have become more educated, increasing the buyer power. The rivalry in the global automotive market is intense, the threat of substitution is high, there are many barriers faced by new companies trying to enter the market, and it’s mostly in favor of the buyers due to the available options, lower cost of switching brands, and the standardization of the commodity associated with the product (Bradley, et al., 2005). In order to get a competitive advantage in the industry, the companies have no choice but to bring down the manufacturing cost, especially since players from Asia have entered the global market (BERA, 2004). This is where the supply chain management comes in. Supply chain management is defined as “management of material and information flow in a supply chain to provide the highest degree of customer satisfaction at the lowest possible cost” (Business Dictionary, 2013). The companies in the automotive industry are much dependent on external suppliers for their materials before the vehicle can be assembled together (Helper, 1990). One supplier may be supplying to multiple companies at the same time and may have multiple suppliers themselves. It is estimated that that there are a minimum of six stages in the supply chain from supplying the raw material to assembling the final product (Olhager, 2002). It is thus crucial to ensure a smooth flow in the supply chain to ensure efficient manufacturing. Some of the popular theories in the supply chain management include the following: Just in time (JIT) theory refers to the efforts and strategies applied by the management in order to increase revenue by reducing the cost of manufacturing within the company (Bongiorni, 2004). The theory suggests that improvement in the manufacturing process is continuous. By being in a continuous process of improvement, a company can increase its return on investment as the manufacturing process keeps getting more and more efficient (Alternburg, et al., 2003). The theory advocates that all unwanted inventory present in the company is a hidden cost and not an asset (Bongiorni, 2004). It is thus suggested that the company must get rid of the unwanted inventory and continuously improve its process of manufacturing by adopting methods that require lesser amount of inventory (Slack, et al., 2012). Material Requirement Planning (MRP) is another theory that can be applied to the supply chain and it implies that the best way to improve efficiency of the manufacturing process is through planning and control of the inventory system (Wuttipornpun & Yenradee, 2006). The theory focuses on the availability of the materials required to manufacture a product and the availability of the product to the customers. However, the materials and products must not be present in an excessive amount and must be controlled according to the demand. Finally, there must be a proper plan of production, i.e. how and when the product will be delivered to the customers and how much of it is purchased. Total Quality Management (TQM) is perhaps one of the most popular theories of management and has been widely used in many organizations over the years. The theory proposes that in order to gain competitive advantage over other companies, one must make efforts to increase the quality but decrease the cost of that quality (Nicoleta, 2010). The main purpose of the theory is to achieve customer satisfaction which would benefit the company in the long run (Hackley, 2003). Moreover, the theory suggests that the process of improving quality of the product is not only dependent on the management, but it is something that must be taken in to consideration at every step through every employee involved (Lewis, et al., 2006). Ford is a company that either has applied all of the above mentioned theories in its process of manufacturing at some point. In fact, Henry Ford has made many contributions to the development of the JIT, even though it is said to have been developed by Taichi Ohno, mainly because the theory was not popularized until the Japanese company, Toyota, began applying it during the 1980’s (Casey & Dodge, 2010). In reality, the foundation of JIT had actually been set much earlier by Henry Ford in his book, Today and Tomorrow. The JIT was initially developed to maintain a smooth flow of material on the floor at “the right time, the right place” and in right quantity (Pride, et al., 2011, p. 230). An example of the reduction in the number of workers at Ford can be used to explain this as it took a total of 15 workers to complete one car back in 1919, and the number came down to 9 in 1921 as more efficient methods of production were applied (Peterson, 2002). Similarly, TQM is being applied in Ford Motor Company since the very beginning. The company not only controls waste, but also makes sure that quality of the product is maintained at all levels of production. Due to this quality assurance of the company, the rate of warranty repair has significantly decreased over the years (Nicoleta, 2010). Presently, the TQM is mainly applied in the company through the process of Six Sigma. The company is making use of the DMAIC process which stands for “define, measure, analyze, improve, and control” (Scheid, 2011). The DMAIC allows the company to detect any shortcomings or potential problems of the product before it is launched by skilled engineers and specialists (Scheid, 2011). Since the company is able to maintain high product quality it is also able to maintain a loyal customer base. The improvement in the quality also requires innovation which has helped the company apply and maintain better process of production compared to its competitors. Lastly, the MRP is maintained in the company to maintain sustainability in raw materials, assessment of suppliers, the supply chain environmental management, materials management and logistics (Ford Motor Company, 2012). A good quality product cannot be produced without making use of sustainable materials. The company makes sure that all its suppliers fit their sustainability criteria. The company routinely addresses the sustainability issues with respect to the environment and human right issues. It is important to maintain sustainability not only to avoid risk to the operations of the company but it is also important for the brand name and reputation. These issues related to sustainability are maintained throughout the process of supply chain management while the suppliers of the company are also facilitated throughout the process so that they are able to match the sustainability standards of the company (Croom & Barani, 2009). The company does not only have a sustainability criteria set, but it also has multiple suppliers so that the company is not dependent on a single source for its material. Moreover, the company is always in the continuous process of improving the methods of managing material with its suppliers, such as recycling the plastic resins so that it can be used as post-consumer recycled plastic in parts that require it (Ford Motor Company, 2012). Moreover, the company follows the concept of lean production which allows it to minimize waste and maximize profit. Ford Motor Company has been one of the leading companies of the automotive industry for more than a hundred years and it is regarded as one of the most popular contemporary brands. The reason why it has been able to last this long in the industry without facing any defeat is that it has always made use of clever strategies to maintain quality supply chain management. The three main factors that the company has been able to achieve throughout its years of existence are minimum cost, maximum quality enhancement, and efficiency in the process of production. The company has made use of both, innovation and sustainability, which has automatically given it a competitive advantage over other companies. The company has made use of innovation in its supply chain management by adopting a process of lean production and applying processes like TQM and JIT to make sure that quality of the product is maintained with minimum waste. The company has been able to eliminate all waste through the process of continuous improvement. The strategies applied by the company have not only been successful for the Ford Motor Company, but others have also made use of similar strategies to increase efficiency in their process of production, such as Toyota and the use of JIT. From the inception of the assembly in the early 1900s until the adoption of DMAIC through Six Sigma in 2010, the company has kept up with the desired quality at the desired cost through innovation and sustainability in each step of its supply chain. List of References Aherne, W., 2007. Lessons from the American automotive industry. Student Economic Review, 21, pp. 209-217. Alternburg, K., Griscom, D., Hart, J. & Smith, F., 2003. Just in time logistics support for thr automobile industry, s.l.: Bloomfield State College. BERA, 2004. Modern Global Automobile Industry. [Online] Available at: [Accessed 28 February 2013]. Bongiorni, S., 2004. All in the timing, s.l.: The Greater BatonRough Business Report. Bradley, D. et al., 2005. Automotve Industry Analysis, s.l.: Georgia Institute of Technology. Business Dictionary, 2013. Suppy Chain Management. [Online] Available at: [Accessed 28 February 2013]. Casey, B. & Dodge, H., 2010. Henry Ford and Innovation, s.l.: The Curator. Croom, S. & Barani, S., 2009. Sustainable supply chain management – an exploration of current practice, s.l.: European Operation Management Association. Ford Motor Company, 2012. Sustainability 2011/12, s.l.: Ford. Hackley, C., 2003. Doing research projects in marketing, management, and consumer research. london: Routledge. Helper, S., 1990. Comparative Supplier Relations in the U.S. and Japanese Auto Industries: An Exit/Voice Approach. Business and Economic History, 2(19), pp. 153-162. Lewis, W., Pun, K. & Lall, T., 2006. Exploring soft versus hard factors for TQM implementation in small and medium-sized enterprises. International Journal of Productivity and Performance Management, 55(7), pp. 539-554. Nicoleta, I., 2010. Principles Of Tqm In Automotive Industry. Romanian Economic and Business Review, 5(4), pp. 187-197. Olhager, J., 2002. Supply chain management: a just-in-time perspective. Prodution Planning and Control, 13(4), pp. 681-687. Peterson, P., 2002. Fords Contribution to Just in Time. Management Decision, 40, pp. 82-87. Pride, W. M., Hughes, R. J. & Kapoor, J. R., 2011. Business. Cengage Learning: s.n. Scheid, J., 2011. TQM and Ford Motor Company. [Online] Available at: [Accessed 28 February 2013]. Slack, N., Brandon-Jones, A., Johnston, R. & Betts, A., 2012. Operations and process management. London: Prentice Hall/Financial Times. Wuttipornpun, T. & Yenradee, P., 2006. Finite Capacity Material Requirement Planning System for a Multi-stage Automotive-Part Assembly Factory. Science Asia, 32, pp. 307-317. Read More

CHECK THESE SAMPLES OF Supply Chain Management at Ford Motor Company

Supply Chain Management in Ford Automobile

This research paper describes management in automobile industry in the United States and analyzes an examples, such as various supply chain strategies and practices of ford motor company, it's internal productivity, economic cost of production, and high profitability.... This research paper discusses such objectives and also explores effective optimization strategies that have been contributing to the ford motor company's faster economic growth.... 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)....
4 Pages (1000 words) Research Paper

Honda Motors Company Supply Chain Management

supply chain management is very important in order to develop close relations with the internal as well as external business groups.... onda motor company Ltd is the international corporation from Japan which manufactures motorcycles and automobiles.... The objective of the following paper is to analyze the implementation of supply chain used in the Honda Motors Company.... The company manufactures in excess of 14 million internal combustion engines annually....
7 Pages (1750 words) Case Study

Fords Value Chain Analysis and Its Impact on Business

In order to describe it, the essay is divided into three parts, which is entirely based on ford motor company.... The paper "ford's Value Chain Analysis and Its Impact on Business" is a good example of a management essay.... The paper "ford's Value Chain Analysis and Its Impact on Business" is a good example of a management essay.... The paper "ford's Value Chain Analysis and Its Impact on Business" is a good example of a management essay....
8 Pages (2000 words) Essay

Comparisons between Commodity Chain and Sector Matrix Analysis: Ford Motor Company

The "Comparisons between Commodity Chain and Sector Matrix Analysis: ford motor company" paper tries to understand the commodity chain and sector matrix using ford motor company as an example, and contains background information on ford motor company.... In this essay, the case of ford motor company has been analyzed to draw comparative inferences using both the sector matrix and commodity chain frameworks.... An in-depth analysis of the commodity and value chain in comparison to the sector matrix will explain the strategic product market in relation to the chosen automobile industry, elaborating on the demerits of traditional linear and simplistic products and supply chains....
8 Pages (2000 words) Case Study

EProcurement and Supply Chain Technologies

This is the supply chain management which comprises all of the integrated approaches which bring products to the market and ensures customers are satisfied.... This is the supply chain management which comprises all of the integrated approaches which bring products to the market and ensure customers are satisfied.... The change in the business platform now compels to fast improve their supply chain management both manually and with technology, inform of procurement in order to enhance manufacturing and customer delivery (Kouvelis & Chambers &Wang 2006, p....
13 Pages (3250 words) Literature review

Ford & Penske Supply Chain Management

his paper looks at the benefits of improving the supply chain through the study of the case of ford motor company's collaboration with Penske.... or ford motor company, one of the world's leading automotive manufacturers, this realization began when the company hired Penske as its lead logistics provider.... The paper 'Ford & Penske supply chain management " is a good example of a management case study.... The paper 'Ford & Penske supply chain management " is a good example of a management case study....
10 Pages (2500 words) Case Study

Principles of Logistics and Supply Chain Management - Ford Company

In that regard, this thesis aims at showing the benefits that ford motor company gains after outsourcing the operation management in the logistics and supply chain management of Penske Company.... The paper 'Principles of Logistics and supply chain management - Ford Company" is a good example of a management case study.... The paper 'Principles of Logistics and supply chain management - Ford Company" is a good example of a management case study....
10 Pages (2500 words) Case Study

Supply Chain Management at Toyota Motor Corporation

From the paper "supply chain management at Toyota Motor Corporation" it is clear that to boost its operations, Toyota Motors has made some improvements in its supply chain, for example, introducing computerized shipping as well as the use of social media.... The supply chain management at Toyota is such that it comprises a vendor, manufacturer, dealer, and customer (Bernard, 2013).... With the use of information technology, Toyota has managed to ensure the strategic alignment of the company's supply chain processes; hence, improving the level of flow of goods from the company to its customers....
7 Pages (1750 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us