Ford Motor Company: Supply Chain Strategy
Discuss and evaluate Ford’s Existing Supply Base in regards to the following three
requirements of Supply Chain Coordination:
1) Need for coordination both within firms and across firms
Ford’s existing supply base was built over a long period of time with an emphasis on
product pricing, not overall supply chain costs that are positively impacted by
coordination between the Ford organization and its supply network. As the case study
points out, “suppliers were picked with little regard given to overall supply chain
costs, including the complexity of dealing with such a large network of suppliers.”
While Ford initiated efforts to reduce the number of suppliers in the 1990s, focusing
on “tier one” suppliers who would manage a larger base of lower tier suppliers,
inadequate technology was an obstacle to effective coordination. In 1997 a company-
wide intranet was extended beyond company boundaries to its suppliers. This led to
the Automated Exchange Network (ANX) and improved interaction between Ford
and its suppliers.
2) Supply chains must be managed across organizational boundaries
In addition to a complex network of suppliers impacting supply chain management,
Ford also had internal challenges. Unlike Dell, Ford’s purchasing department was
organizationally independent of product development, yet integral to every product
decision. While product engineers interacted with suppliers, these interactions were
