Ford - Supply Chain Management Essay Example | Topics and Well Written Essays - 1500 words

Ford - Supply Chain Management - Essay Example Logistics is the function of the organization that is responsible for movement, handling and storage of materials (raw materials) from the suppliers through the different units of the organization to the end user (consumer). Hence, logistics management is best defined as: the process of planning, implementing and controlling the cost-effective, efficient storage of raw materials, in-process inventory, finished goods, and related information flow from point of origin to point of consumption for the purpose of conforming to consumer requirements.(Cooper et al., 1997, 1) In this report, as the Logistics Director of Ford Motor Company, I have analysed the logistics activities of the organization and made recommendations on how to improve supply chain management to achieve competitive advantage. For better understanding, a brief description of background of the company is included. Ford – Background Ford Motor Company is the one of the world’s largest automobile manufacturer in the world with operations spread over continents. The primary product of the company is automobiles but it also manufactures other products such as trucks, tractors, buses and also includes financial services (Ford, 2012). Founded in 1903 by Henry Ford, the company revolutionised the automobile industry by introducing assembly line production which made large scale manufacture of automobiles possible. Ford since the very beginning has been concentrating on vertical integration and this has served the company well for a very long time. But this strategy has its drawbacks in today’s global market place and competition. Ford has around 4600 manufacturing sites around the globe and it has relationships with over 1600 production suppliers. Ford also purchases numerous other non-production supplies from over 9000 suppliers (United Nations Global Compact, 2012). The purchases include products and services such as computers, construction, marketing, machinery, health care, indust rial materials, etc. The traditional approach of the company towards supply chain management over the last century has made it difficult for the company to adapt to modern day challenges. The decentralisation of purchasing and the size of the organization are the two main roadblocks for the company to achieve effective supply chain management. Ford’s Supply Chain and Logistics Activities Ford, since the very beginning, had concentrated on vertical integration wherein the company controlled or owned literally every aspect of the business. All raw materials such as rubber, coal, and iron ore came from plantations and mines that were owned by Ford. Raw materials came from one gate of the plant and finished cars rolled out of another. This approach has been central to Ford’s success since the early years. This approach had limitations and this was exploited by the Japanese companies which adopted a lean manufacturing approach as opposed to the bloated business model of the Ford (NFS, n.d.). Due to the traditional approach and the size of the organization, Ford’s supply chain is one of the most complex supply chains in any industry. There is consistent inflow of shipments from thousands of suppliers from all over the globe to the numerous plants worldwide. Ford has a global production network which can be best understood by the following diagram. Basic Pictorial Representation of Ford’ Supply Chain The above representation does not indicate the complexity involved in the Ford’