An analysis of the current situation revealed the following issues in the current spply chain: Information flow impaired beyond level one suppliers. Development of Information Technology in the supplier base. Competitors headed to a virtual organisation. The decision to be taken is whether to virtually integrate the supply chain (create a virtual marketplace accessible to authorised personnel) or carry on operating the traditional way automakers have. The recommendation is to virtually integrate by creating an online centre where for a small fee, using only an Internet browser suppliers will have access to the centre’s large database. This facility will be extended to dealers and customers. The implementation costs will be approximately, but there will be significant amount of savings by the way of purchase discounts and lower transaction costs on materials, and parts. Also as there is reduced buffer stock due to speedy real time information flow leading to reductions in inventory and storage costs. Additional revenue will be generated from transaction fees and advertisements placed. CURRENT SITUATION ANALYSISPHYSICAL FLOW OF GOODSFord has a large supplier base for material procurement in a complex network of business relationships. The supply base consists of several tiers of suppliers. Ford directly deals with tier one suppliers and these deal with the next tiers. If feasible the lower tier suppliers ship materials directly to Fords’ manufacturing unit.Long-term contracts with suppliers have been negotiated to ensure uninterrupted supply and minimum inventory levels.Ford has provided its suppliers with techniques like Just-In-Time, (JIT) Total Quality Management (TQM) And Statistical Process Control (SPC). Ford benefits by procuring materials at reduced cost and supplier involvement in the company operations like design process, leading to cost saving for both parties.The Ford Production System (FPS) is designed to mak...
