Presentation

Distribution & supply Chain Management

of Ford Motors

Automobile
Industry
Team •
Members •
 • Abha Yadav P57
Group
 E • LeenaSingh P19
-Automotive
Industry • AvinashNair P59
• Kavita Shetty P16
• Smita Kamble C33
• Pralhad Walve P56


•
 Overview of Auto Industry
• Share in GDP of India – 2.1%
• Expected growth of share in GDP by 2020 -
3.6%
• OEM’s & Tier –I suppliers have to handhold
other suppliers

*Source – Interview – Mr Srivats Ram, “Small

Auto parts cos need help, ”The Economic
Times ,Issue 2nd October 2010.
Automotive Industry Current Status
Company Sep 2010 Sep 2009 % Change
Maruti 95,148 71,594 33
Hyundai 31,751 27,803 14
Tata 23,877 18,176 31
Mahindra 16,537 15,296 8
GM 8,617 7,654 13
Ford 8,380 3,405 146
Honda 6,164 4,281 44
Mercedes 663 414 60

*Source – Top Gear, Times Business, TOI issue 2nd Oct

The Ford Motor Company
• American Multinational Corporation
• Headquarters : Dearborn, Michigan, USA
• Founded by : Henry Ford
• Incorporated on: June 16, 1903
• Net income :▲ US$ 2.717 billion.
•
 Introduction …. continued
• Ford Motor Company designs, develops,
manufactures, and services cars and trucks
worldwide.
• It operates in two sectors,
– Automotive and Financial Services.
• Ford
• Mercury
• Lincoln
• Volvo
– The Financial Services sector offers a various
automotive financing products to and through
automotive dealers.
 Ford

• Ford also owns a small stake in Mazda in

Japan and Aston Martin in the UK.
• Ford's former UK subsidiaries Jaguar and
Land Rover were sold to Tata Motors of
India in March 2008.
• In 2010 Ford sold Volvo to Geely
Automobile.
 Fact File
• Henry Ford's methods came to be known
around the world as Fordism by 1914
• Ford is currently the second largest
automaker in the U.S.
• Fourth-largest in the world based on
number of vehicles sold annually,
directly behind Volkswagen Group.
 Fact File
• Ford received more
initial quality survey
awards from J. D.
Power and
Associates than
any other
automaker.
• Five of Ford's
vehicles ranked at
the top of their
categories
• Fourteen vehicles
ranked in the top
three.
 Last Two Decades
(Industry Grew more Competitive )
• Big Three U.S. automakers—General
motors (GM), Ford, and Chrysler
• Foreign-based auto manufactures
– (i.e.,Toyota and Honda)
• Facing increasing overcapacity
• Advantage in the industry was fast
becoming global
Ford Motors-SWOT
Ford Motors-SWOT
Ford’s Traditional Supply
chain
The Traditional Supply Chain

Traditional Model Order

Suppliers Manufacturer Distribution Customers

Channel

Delivery
 THE FLASHBACK……1980’s
• As Ford Motors grew, so did its supply base
• Thousands of Suppliers
• Dealing with a large network of suppliers
became cumbersome
• Criteria governing supplier selection
– Purely based on cost
– Absolutely no importance given to overall
supply chain costs
– Complexity of operating such a large supply
chain was never considered
–
–
 The Need for a change
• Necessity to reduce cycle time
•
• Supply chain costs had to be cut down
•
• Costs incurred in developing & building
cars had to be reduced dramatically
 The CHANGE….1990’s
• Ford reduced the number of suppliers it
directly dealt with
• A Strategic shift in focus
– from “strong price competition” to “long
term relations with suppliers”
• Ford assisted suppliers by implementing
– Just-in-time (JIT) inventory
– Total Quality Management (TQM)
– Statistical Process Control (SPC)
–
 Supplier management

Closer Relationships
Long term commitments

10/04/10 Ford Supply Chain 18

The “Ford 2000”-An Ambitious
Restructuring Plan
Creating new possibilities for
reengineering processes within and
between enterprises
 Ford Production System(FPS)
• FPS is an integrated system aimed at
making operational activities
– More lean
– More responsive
– More efficient
• To transform into a more “pull based
system”
• FPS SMF ILVS



 FPS-Key Features
• Ensured continuous flow of materials
• Built an “ordered sequence system”
• Supplied parts only when needed
• Significantly reduced buffer stocks
• Forecasting became simpler
•
 Order To Delivery(OTD)
• OTD Vision
– To create a lean, flexible and predictable process which
provides the consumers the right product at the right
place at the right time
• A Holistic approach to re-engineering
• Reduce delivery time from 45 days to 15days
• Indentify bottlenecks in
– Marketing
– Material planning
– Manufacturing
– Transportation
• Involved dealers in the forecasting process
• Study of historical buying patterns to fill gaps in demand and
supply
Distribution Strategy
 Launch of Ford Retail
Network(FRN)
– 1st July1998,Oklahoma
– Under the Ford Investment Enterprise
Company(FIECO)
– Key Objectives
• To test the best practices in retail
distribution
• To drive selected practices throughout the
retail network
• To create an alternate distribution channel
which would compete against the publicly
owned retail chains


–
 Core Principles of FRN
• Buy out all Ford dealers
– To ensure that dealers were competing
against the real competition (Toyota, Honda)
• A consistent look for all Ford Showrooms
• consolidated showrooms to create a superior
selling experience
• Increased number of service outlets near
customer population centers
• Increased business opportunity in terms of
spare parts, services, body shop operations
and Ford Credit
–
–
Enterprise Model
Comparison Ford
Breakthrough Objectives/Key Initiatives

Customers

Dealers Ford Retail Network

OTD
Order
Mgmt

Bill of Material

Outbound
Logistics Supply chain
Leadership
Plan/Site
FPS Operations

FPS Inbound
Logistics

Suppliers
  Inbound logistics
 Responsive
 Synchronous material flow
 ILVS
 Forecasting
 Inventory reduction  JIT
 Manufacturing
 FPS  TPS
 Streamlining manufacturing operations
 Lean manufacturing
 Forecasting
–
10/04/10 Ford Supply Chain 31
  Outbound logistics
 OTD 60  15
 Identifying bottlenecks
 Rail transport
 FRN
 FIECo (Ford investment enterprise Co)
 Buy out of dealers
 Superior selling experience

10/04/10 Ford Supply Chain 32

 After Sales Service
• Launch of The New Figo – March 2010
• New fuel efficient petrol engine
• Regular service is important
• Competitive parts pricing
• The Figo will carry a two year/1,00,000 km
warranty
• The vehicle also comes with two-year Road Side
Assistance, a programme that Ford pioneered
in India.

 Roadside Assistance provides


q Free 24-hour service

q Two years
q National toll-free number
q Provides on-site assistance for minor repairs
including fuel delivery, jumpstart, vehicle
unlocking and towing on flatbed trucks.
q Quick Service bays - cabinet
•