Supply Chain Management in Ford Motor Company: An Essay

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Supply Chain Management
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Operations management refers to the business area that is concerned with the production of
services and goods. It involves ensuring the responsibilities that operations of a business are
efficient in using the necessary resources and it is effective enough to meet the requirements of
customers. It is also concerned with process management that converts the input into an output
that is materials, energy and labor are converted into the form of goods and services
(Subramanian, and Ramanathan, 2012).
Logistic management refers to the management of supply chain component that is used for
meeting the demands of customers through control, implementation, and planning of effective
movement along with storage of related goods, services and information from the place of origin
to destination. It helps companies in reducing expenses and enhancing customer service.
Supply chain management refers to the activities’ broad range that is required for planning,
controlling, and executing the flow of product, from acquisition of raw materials, and production
through the distribution to the company's final customer in the possible way that is cost-effective
and most streamlined (Brandenburg, et. al, 2014).
Active streamlining is involved in the supply-side activities of the business for maximizing the
customer value and gaining a competitive advantage in the global marketplace. The efforts are
also represented by suppliers in developing and implementing the supply chain that is economic
and efficient as possible.
Ford Motor Company is the multinational corporation in America which is headquartered in
Dearborn, Michigan, United States. Henry Ford founded this company and the incorporation of
same was done on the 16th of June, 1903. The company is engaged in selling automobiles and
commercial vehicles under the brand of Ford and Lincoln brand is used by the company for
selling the most luxury cars. Various methods were introduced by the company for car
manufacturing at large scale and management at large scale of an industrial workforce by making
use of elaborately engineered sequences of manufacturing by moving off the lines of assembly.
The company has a joint venture in Taiwan, China, Thailand, Russia, and Turkey.
Ford Company has huge selling in the UK and is listed in the stock exchange of New York. In
the year 2017, the annual revenue of the company was 156.7 billion dollars and in the year 2018
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in the list of fortune 500, Ford was on the eleventh number. The production output of company
in 2017 was around 6.6 million vehicles. The manufacturing operations of Ford are worldwide
including Canada, China, Mexico, United Kingdom, Germany, Brazil, Turkey, Australia and
Unites States.
This essay will cover the description of the new products development and processes and quality
management. Managing quality is the process of overseeing all the tasks and activities that are
needed to maintain the excellence of the desired level. In this process, the determination is made
regarding the policies of quality, creation, and implementation of quality planning, quality
control, improvement, and assurance. The focus of managing the quality is on achieving long-
term goals through the initiatives of short-term implementation.
New product development refers to the process of introducing the product or service from the
conception stage to the market stage. Different stages are there from which the new product has
to go through beginning from the ideation stage, and passing through concept generation, that
ends with the introduction of the product to the market ((Christopher, 2016).
Issues of supply chain management
There are different issues that the supply chain management of Ford Company is facing. These
are described below-
Quality customer service- the centralization of the SCM is on the customer’s needs. It is the
challenge for the SCM of Ford to provide the right quantity and quality of products to its
customers and that too within the right amount of money. This requires the perfect setting and
timing. High pressure is being created in this globalized world to create the products of high-
quality and it should be constantly.
Risk management- The globalization and technological advancements have affected the social,
cultural, psychological, and personal factors of consumer behavior. The fast-changing market of
the consumer has bought the management challenge for the supply chain. Ford Company has to
constantly update the features of its cars. Enhancing the product features require the enterprise
from redesigning their supply chain for accommodating the changes made in the product. due to
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the constant changes taking place in the market that is being enforced by various sources
including political agenda, global outsourcing, and consumer demand, major issues are caused to
the operations of Ford.
Fast-changing markets- The flexibility is required to be maintained by the Ford Company’s
supply chain, as the technological advancements are changing the markets every day and is
creating difficulty in staying in pace and adapting to the verities of innovations in the global
market.
Managing inventory and suppliers- It is the challenge for the supply chain managers of Ford
that enough inventory is kept by the company so that the expectations of customers can be met.
Delays are prevented by the appropriate timings and insufficient inventory can be prevented
while reducing the effects of profits. Supplier’s management is also significant along with
inventory management. Ford’s SCM has to manage and responsible for knowing the need for
suppliers. They also have to handle the delays and receiving the orders. The process and thoughts
are required which is suitable for the business (Ahi, and Searcy, 2012).
Issues of operations management
Sustainability- It is the task for the operations manager to create the long-term employee and
customer strategies for acknowledging Ford's impact on the economic, social, and cultural
environment. These are known as three pillars of sustainability and operations manager should
concern themselves with each pillars’ outcome including how the communities, safety,
economic, environmental sustainability.
Corporate reporting- In case accurate or current records are not kept by the business then
challenges can arise in reporting of corporate. For accessing the long-term viability of Ford, full
record-keeping on losses and profits as well as expenses and sales are necessary (Bradley, 2019).
Managing quality
Total quality management can be used by the SCM and operations managers for improving the
processes that can help in increasing profitability. It is the holistic approaches which require
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empowered people, customer orientation, process attention, a system of good quality, and
continuous improvement. There are various tools of TQM that can be used by the logistics and
SCM of Ford for managing the quality of products. This tool helps the organization in
identifying, analyzing, and assessing the qualitative and quantitative data which is relevant for
the business. The tools and techniques that are used by Ford Company’s operations manager
include-
 Brainstorming and affinity diagrams- Creative thinking is used by the supply chain and
operations managers of Ford for identifying various aspects that surround an issue. The
affinity diagram is used by the company for organizing the ideas of brainstorming.
 Histogram- It is graphic variation summary in a set of data that enables to see the
patterns which are difficult to see in simple number tables. Histograms are used by Ford
operations team in examining and illustrating the elements of various data for making
decisions concerning them. The comparison is also made of statistical, questionnaire or
survey results (Ross, 2017).
 Run Charts- The particular process is followed by the operations team of Ford such as
rates of accrual for tracking the low and high points in company’s running operations and
ultimately identifying the shifts, trends, and patterns.
The examination of the efficiency, effectiveness, overall quality and standardization of product,
procedure and work environment is made by the TQM application in Rolls Royce as per the ISO
9000 standards. Different brainstorming tools are used by SCM manager and logistics of Rolls
Royce including-
 Six Sigma- This TQM technique is effectively used by RR for drawing the inspiration
from the methodologies of quality improvements of preceding decades including zero
defects, TQM and quality control. It helps RR operations manager and supply chain
managers improving the quality of output processes by making identification and
removing of defect causes while minimizing the variability in process of business and
manufacturing like TQM, the philosophy of Six Sigma that helps in achieving the
sustained quality improvements required from the entire organization especially the top-
level management (Kelchner, 2019).
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 Just-In-Time- This method is used by RR as a production strategy for making
improvements in the business return by reducing the associated cost of carrying and in-
process inventory. This technique helps in making the continuous improvements for
maximizing ROI of RR along with its efficiency and quality. This focus on total quality
control.
 Cause and effect diagram- this diagram helps in finding the root cause of the defect and
with the help of this diagram the relationship can be shown between problems' results and
the root cause of the problems. The diagram is also in the fish shape that is why it is also
known as a fishbone diagram (Wang, et. al, 2012).
New product development and processes
There is a prescribed stage of the product development and Ford Company has to follow that
prescribed stages to manufacture its high-quality cars.
 Idea generation- This is the first stage of the product development and various sources
are used by operations manager for developing the idea including internal sources,
SWOT analysis, market research, customers and competition.
 Idea screening- At this stage, the good and feasible ideas find out and discarding of those
ideas are made that does not suit feasible to the Ford company management. Many
factors play a vital part including the strength of the company, its weakness, customer
needs, expected ROI, affordability (Marion, et. al, 2015).
 Concept development and testing- the third step of product development includes
concept testing and development. Here the ideas are tested in detail and the ideas that
pass through the screening stage turn down into concepts for testing. It is very significant
as the evaluation is done regarding if it will be valid and beneficial for the company to
launch the new product in the market. After testing the launching of the product is made
to the target market. The product testing is performed by selecting the customers from the
target group and information is provided to those selected customers so that they help in
visualizing the product. questions are asked from both the sides. Feedback form is filled
and feedback helps the operations and logistics manager in developing the concept
further.
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 Business strategy analysis and development- after finalizing the concept, it is analyzed
and the decision is made regarding branding, marketing and other strategies of business
that will be used by the management of Ford. Other analyses include costs involved,
breakeven point, pricing strategies, and product competition.
 Product Development- After the approval of all the strategies, the transformation of the
product concept is made into an actual tangible product. The prototype is built at this
stage or the model of the limited production is made. The testing of all the approved
strategies and branding is done that is decided previously and is applied at this stage.
 Test marketing- In the phase of test marketing, the introduction of the prototype is made
for feedback and research purpose. The changes are made by the team of management of
Ford motor company after getting feedback from the customers. the whole concept is
validated at this stage and carries utmost importance and the company prepares for its
launch.
 Commercialization- After the cars are ready the marketing strategies are established and
decided by the operations manager and advertising manager. The decision is made
concerning the markets where the product should be launched finally. Briefings of
different departments are included at this stage regarding their targets and duties. Many
decisions are made whether major or minor before the final introduction of new product
development (Barczak, and Kahn, 2012).
The triple bottom line mainly aims at measuring the social, environmental, financial, and
environmental performance of the company over time. this theory focuses on three lines
including people, profit, and the planet. This framework advances the sustainability goal in the
practices of business in which the company looks beyond its business practice for including the
environmental and social issues for measuring the full cost of pursuing business. by making of
this TBL Ford company can focus on its social, and environmental impact also along with with
finance part (Gimenez, et. al, 2012).
People + Planet = Social + Environmental Responsibility
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With this framework, the Ford operations manager can make the effective utilization of the
natural resources for the balanced system of ecology. The impact of eh activities of the
organization on people, our planet or earth, are covered through this.
The near, mid and long-term strategies have been developed by the Ford Company for reducing
the carbon dioxide emissions and improving the efficiency of fuel. The initiatives of facility-
wide and plant-wide are engaged by the company around the globe for reducing the
environmental impact and the impact on communities in which it operates.
Corporate social responsibilities are followed by the company and the company focuses on
providing the customer-oriented services so that the strong base of customers can be established.
If the company will have a strong base then it will have a good brand image which will bring
new revenue for the company resulting in gaining the high profitability. Hence, the SCM and
operations manager of Ford has to focus on all these three areas and they have to formulate the
strategy by considering these three bottom lines (Elkington, 2013).
After the detailed analysis, it can be recommended to the Ford Motors Company that Ford
Company can do better by exercising the cost control by proper execution of effective plans
through constant monitoring. This can be done by efforts in providing warehouse efficiency.
Logistics software Development Company should be hired by Ford Company management as
it would be easier for the company in managing the issues and overcoming the disruptions
caused in the operations of Ford Company.
Ford should develop a global product development system. One template should be established
for engineering, designing, and developing all the vehicles of Ford throughout the world. This
GDPS will help the company in delivering more vehicles to the customers faster which will
increase the competitiveness of the company and will deliver profitable growth.
Lean product development system can be used by the Ford Company in developing its new
products as this will help in reducing the waste and the identification of needs, designing and
production will take less time and optimum utilization of resources can be made through this
method.
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Hence, it can be concluded from the overall essay that the supply chain, logistics, and operations
of the company has to face many issues such as fast-changing needs and demands of customers
due to the globalization and development of new innovative technologies. There are various tools
and techniques of TQM that can be applied by the organization and it is significant for the supply
chain managers to ensure that the company is offering the best quality products and all the stages
of the product development should be examined by the operations manager so that the effective
launching of the new product can be done.
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