Ford Motor Company: Supply Chain Strategy

734 words - 3 pages

HistorySince the Ford Motor Company's incorporation by Henry Ford in 1903, its strategic focus has remained on automobile design and manufacturing. Up until 1970, competition was from the two other manufacturers making up the Big Three Automakers; General Motors and Chrysler. However, starting in the 1970's, foreign competition, mostly from Toyota and Honda, eventually lead to overcapacity within the industry. As more and more developing and industrial nations encouraged development into the automobile industry, overcapacity in the automobile markets reached an estimated 20 million vehicles.In 1995, in an effort to reduce cost and increase efficiency, Ford developed a restructuring plan called Ford 2000 that was to focus on globalizing corporate organizations and taking advantage of the economies of scale in purchasing and manufacturing by consolidating the North America, European, and international automobile operations. Ford 2000 also called for a complete reengineering of several key company processes including Order to Delivery (OTD) and Ford Production System (FPS). One of the primary strategic goals of Ford 2000 was to decrease OTD from 60+ days to less than 15.To help overcome information constraints in Ford's new global approach, they launched a company-wide Intranet in mid-1996. In addition, Ford further expanded upon that system to include business-to-business (B2B) capacity by January 1997 which also comprised the Automotive Network Exchange (ANX). Ford's public Internet site went live in 1995. Internet usage exploded, and by mid-1997, Ford's website was getting more than 1 million hits per day. During this revolutionary time, Ford was honored as the most improved automaker in the 1997 JD Power Initial Quality Study; listed as number 4 overall behind Honda, Toyota, and Nissan.With an eye on the global market, each automobile manufacturer was looking to expand their global reach. By mid-1998, Chrysler merged with Daimler-Benz. Several months later, Ford announced that it would acquire Sweden's Volvo. Rumors of other mergers began to surface. By the end of 1998, Ford surpassed Chrysler in profit per vehicle ($1770) while total profit hit $6.9 billion.In 1999, Jack Nasser, who was second in charge since Ford 2000 was initiated, took over as CEO. Mr. Nasser had a reputation of being a cost cutter, a capable leader, and a...

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