...Outsourcing and its Effects on the Automotive Industry Abstract This paper will explain the history, current issues and future issues of outsourcing and its effects upon the automotive industry. Outsourcing has become a huge topic in recent years as our economy has begun to struggle. However as our automotive companies become more strained with increased wage expenses, shorter product life cycles and a higher cost of capital outsourcing is being utilized according to Parry and Roehrich (2009). Outsourcing can help to solve many of these problems by bringing wages down and bringing more resources and expertise in. This will help to soften the blow of these increasingly tough economic times. In order to do this they will have to reduce their on-site functions. Although as more and more core functions are being outsourced, the companies are at a larger risk of becoming “hollow”. Our essay will explore the history so that we can learn from our past mistakes and apply what we learn into the issues that we are facing currently and will face in the future. What exactly is outsourcing? Well Ledford (2006) describes that outsourcing is often used to describe situations where corporations move part of their operations out of the country. However these companies can also subcontract with in the same country and this would still be outsourcing. Now off shoring is a type of outsourcing which relocates business processes to another country in the hopes of keeping as much as...
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...the internal and external environments to certain people in the corporation (Wheelen & Hunger, 2010). Conducting an environmental scan for the two following companies will offer a background to increase chances and distribute the resources in expectation of the changes in the environment. The competitive advantage, measurement guidelines, and the effectiveness of the measurement guideline will be reported on for Ford and Dell. Ford The Ford Motor Company has been a force in the automotive industry since the early 1900’s. Ford has been a company that has endured trials and tribulations and has even recently been able to prevail in our economic downfall. An analysis of their standards, views, missions and values, we can understand how it is that they have remained a strong force within the automotive industry. Ford takes a unifying approach in their business stance when concerning their mission. Their mission is to work as "ONE Ford" with the focus, team work and a single global approach, aligning employee efforts towards a common definition of success" (Ford n.d., para. 3). They also incorporate a “One Plan” approach addressing Ford’s approach to their products. The four-point business plan consist of; aggressively restructure to operate profitably at the current demand and changing model mix, accelerate development of...
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...supply chain management at Ford Automobile Company. Some of the issues identified includes: traditional supplier base which extends to thousands of suppliers, technology is not kept abreast and huge inventories. Further, virtual integration model as implemented in Dell Computers is discussed and its pros and cons to implement at Ford. Clearly, Ford operations make it difficult to gain all the benefits of virtual integration that Dell Computers have reaped. Recommendations are made to implement certain aspects like reducing suppliers, outsourcing non-core activities, direct sales, technology improvement, and production standardisation. In addition, key metrics are used to monitor and control the success of these measures. Table of Contents Executive summary………………………………………………………….2 Issue Identification ………………………………………………………….4 Root Cause Analysis…….……………………………………………...….. 5 Alternatives and Options…………………………………………….………7 Recommendations…………………………………………………………...9 Implementation……………………………………………………….…….11 Monitor and Control………………………………………………………..12 Conclusion…………………………………………………………….…….13 Issue identification: * Long Lead time * Organisational and process redundancies * Traditional supply chain model and outdated technology * Huge supplier base * Huge production network and social responsibility * Large retail network of private dealerships * Large finished good inventory * Independent purchasing body within Ford Environmental and root...
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...Ford and the world automobile industry in 2012 At the beginning of 2012, the Chief Financial O cer of Ford Motor Company, Lewis Booth, was reviewing his nancial forecasts for 2012-16. Ford’s turnaround since the crisis of 2007-8 had been remarkable. After a loss of $14.7 billion in 2008, Ford earned net pro ts of $6.6 billion in 2010, and it looked as though Ford’s pro t for 2011 would exceed this. The recovery had been much more rapid than Booth had expected. Ford’s business plan of December 2008 projected that it would not break even until 2011.1 Booth attributed the speed of the turnaround to three factors: rst government measures in North America and Europe to stimulate demand through incentives for scrapping old cars and subsidies for purchasing new, fuel-e cient models; second, the recovery of demand in several major markets including China, India, Brazil and the US; third, Ford’s own restructuring. The “One Ford” transformation plan introduced in 2006 had closed plants, cut Ford’s workforce from 295 000 at the beginning of 2006 to 148 000 at the end of 2011, sold Jaguar, Land Rover and Volvo and a large chunk of Mazda; integrated Ford’s global activities; and accelerated product development including an increasing emphasis on smaller cars. Despite these successes, Booth looked to the future with much trepidation. Ford’s performance over the next ve years would depend on three main factors: Ford’s ability to continuing success with its One Ford strategy, the state of the...
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...Ford and the World Automobile Industry Ford and the World Automobile Industry In 2008, the Ford Motor Company and the world automobile industry as a whole, was struggling financially. The slumping economy had a significant effect on US automobile sales, with a 50% reduction year over year, negatively impacting company earnings. (Grant, 2010, p. 46) Reduced sales, emerging markets and increased competition created a changing landscape and financial sustainability issues amongst the market. These forces and Ford’s growth created excess capacity beyond consumer demand resulting in inefficient use of resources. Synopsis of the Case Ford and the collective automobile industry were faced with challenging times due to a US recession, resulting in reduced demand. This decline caused a focus shift from existing markets to new growth markets, such as Asia, Europe and Latin America. (Grant 2010, p. 48) Companies partnered with outsourced providers and adjusted operational methods in an effort to reduce costs. This growth partnered with a decrease in consumer demand resulted in high carrying costs across the industry. Relevant Factual Information about the Problem or Decision the Organization Faced The US automobile industry experienced a boom in the early-mid 1900’s, resulting in Ford and the industry growing rapidly. (Grant, 2010, p. 48) In order to meet the demand, capital investment in manufacturing capabilities was occurring. In the late 1900’s the industry began to see...
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...Topic 1: Introduction to Change Management Case Study Format for GM Powertrain Develop a history of the company. The case study covered the GM Powertrain Unit of General Motors as it existed in the mid-90’s, and specifically that period (1996 – 1998) when it was managed by Joe Hinrichs. The Division was beset by a variety of issues and resulted in an inability to manage to a budget, and that was problematic to management. Budgetary and ineffective or inefficient functions of the plant occurred due in part from numerous factors including continued use of old machinery, denominator management, i.e., management of human capital by attrition, inappropriate use of incentives, collective bargaining limitations, and a general lack of managerial creativity. These effects were felt throughout the GM organization during the ‘90’s , as a new chairman was installed in a “bloodless coup,” barely four years earlier, when in late October of 1992, John Smale, the chairman of the GM`s executive board, forced GM Chairman John Stempel to resign by issuing a statement that did not give chairman a vote of confidence. "Boardroom Coup At GM, A Chilling Message For U.s. Execs." Mateja, J., and Franklin, S, October 27, 1992. http://articles.chicagotribune.com/1992-10-27/news/9204070415_1_gm-directors-gm-chairman-robert-stempel-john-smale Things appeared to be looking up as a take charge guy in John (Jack) Smith assumed the position of CEO in November of 1992, and eventually Chairman in 1996. ...
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...SOCIETIES PROJECT POLICY PAPER #2 The Economics of Outsourcing: How Should Policy Respond? Abstract Outsourcing is a central element of economic globalization, representing a new form of competition. Responding to outsourcing calls for policies that enhance national competitiveness and establish rules ensuring acceptable forms of competition. Viewing outsourcing through the lens of competition connects with early 20th century American institutional economics. The policy challenge is to construct institutions that ensure stable, robust flows of demand and income, thereby addressing the Keynesian problem while preserving incentives for economic action. This was the approach embedded in the New Deal, which successfully addressed the problems of the Depression era. Global outsourcing poses the challenge anew and calls for creative institutional arrangements to shape the nature of competition. Thomas Palley Economics for Democratic and Open Societies Project Washington DC 20010 e-mail: mail@thomaspalley.com March 2006 1 “A wild horse can do a lot of damage, but a bridled horse can be an invaluable asset.” Posted by Proud UAW Member in response to “Politics of Globalization” at www.thomaspalley.com, December 27, 2005. I. Understanding outsourcing Outsourcing is a central element of globalization, and policymakers need to understand its economic basis if they are to develop effective policy responses. The practice of outsourcing should be understood as a new form of competition...
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...changes can begin. Basically communicating with the workers can help their fears. Developing a plan that outlines the progress and advancement within the company will make the company more willing, ready, and able to make changes that are necessary. It is important to tell the employees first so they can inform the customers on what to expect, with the upcoming changes and how they can be affected by the changes before they happen. By doing this it gives individuals the chance to ask questions; so there is no confusion or problems because of unclear directions. Although challenges and problems can occur; keep the communication with people open and always remain committed to the changes. If these changes are not constructed and finished correctly; the company can lose profit, money, or customers. Time is money – if employees get discouraged or frustrated at their unclear view of the company's vision through these changes, they might waste both (Bohlander, G. W., & Snell, S. A., 2007). A small company from Richmond, Texas called Leaman Building Materials Inc. faced their technology difficulties. The company took a more hands-on tactic to the demands placed on their small company by the new technology developments. The new technology gave them as a small company a new opportunity – which includes an improved way to communicate with their customers and a bigger demand for customer service and their ability to provide better service. Leaman Building Materials...
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...------------------------------------------------- ------------------------------------------------- Ford Motor Company Case Report ------------------------------------------------- Executive Summary Ford Motor Company has a long history, starting in Michigan in 1903. They have focused on designing and manufacturing and have been very successful, however with increasing competition, global markets and over-capacity the company needs to look at ways to improve profitability. The company has implemented various programs and processes to create a lean, responsive system with better consumer forecasting. Their challenge is to continue to research ways to stay viable in current market and industry conditions. Dell Computers has been very successful with a direct model and virtual integration that may or not work well for Ford. CONTENTS * ISSUE 3 * ANALYSIS 4 * ALTERNATIVES 6 * RECOMMENDATIONS 7 * IMPLEMENTATION 8 * CONCLUSION 8 * REFERENCES 9 * ISSUE: The Ford Motor Company is facing a number of challenges including the direction of CEO Jac Nasser to focus on customer responsiveness and shareholder value to deal with increasing competitiveness, an industry with potential over-capacity and the expansion into globalized markets. Ford had begun to implement systems to reduce cycle-time, improve quality and to lower costs. Programs included consolidating product development into five Vehicle Centres (VCs), reeingineered...
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...Table of Contents Introduction 4 Core Concept – Organizational Culture 4 Core Concept – Motivation through Goal Setting 6 Core Concept – Quality Circles 7 Core Concept – Knowledge Management 8 Conclusion 8 Vanguard 9 The Ritz-Carlton 10 Gateway 11 Hewlett Packard 12 Microsoft 13 Dell 14 Ford 15 General Motors 16 References 18 Abstract Team C will contrast Intersect Investments with other companies who have shared like issues of transformation. In the overview, Intersect Investments has acknowledged a new vision to enhance the company and be competitive. Intersect Investments will try to meet the goals by creating new services and products by using the customer intimacy model. This model will assist in Intersect Investment improving customer satisfaction and increasing sales. In this paper, Team C will benchmark different organizations to provide guidance regarding the modifications needed to meet these goals. Introduction Intersect Investment Services is afforded the opportunity to company’s and benchmark successes from like similar companiesy’s and apply this insight to reach their goals and objectives. A mission statement represents the “reason” an organization exists, and an organization’s vision is a long-term goal that describes “what” an organization wants to become” (Kreitner & Kinicki, 2004). CEO Frank Jeffer’s decision to implement this vision has the makings to increase profit and regain the trust of the consumer base. This vision encompasses...
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...FORD MOTOR COMPANY’S | SUPPLY CHAIN STRATEGY | | | 11/13/2012 | *The Virtual Integration Model Analysis at Ford Motor Company, to Companies like Dell* EXECUTIVE SUMMARY As director of Supply Chain Systems, I have decided to implement portions of the new supply chain strategy of Virtual Integration and strategies from companies like Dell. Although there are several key differences between the companies, Dell’s virtual integration strategy can be applied to Ford’s supply chain operation. A modification of the virtual integration system currently used by Dell could be applied to Ford’s dependent supplier base, distribution system, dealerships and divisions. Special care will need to be taken to address the unique dependency of our custom Tier 1 supplier. The management of lower tier suppliers of general or generic components would be more effectively suited by the standard procedures used by Dell. In order to adopt the Dell Model we would: · Sell direct · Mass-produce customized products · Build to order · Substitute virtual integration with suppliers for vertical integration If we at Ford could find a solution to the obstacles of virtual integration, which I will explain in detail below. It could essentially make our supply chain run smoothly with less bottlenecking, inventory, and better overall performance. Managers could overcome the complex and error-prone manual process of forecasting and procuring parts which would result in reduced...
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...will discuss Ford’s new product called Siesta. Our team will help Ford Auto Maker to determine the release of the new electric two door car by analyzing Ford’s primary competitor the Smart Car, and with strategic planning surrounding pricing, innovation, labor and cost structure. Siesta will be a successful innovation product for Ford Auto Maker, considering the type of market conditions today. Organization History and New Product Ford Motor Company is an American automaker by Henry Ford, and was one of the largest automaker in America based in the state of Detroit. Ford was the leading worldwide vehicle sales for the majority 1900’s and most profitable auto company in the world. But with oversea car companies entering the States such as Honda, Hyundai and Toyota, Ford sales have been trending below average due to gas prices, unemployment rate, and low competitive price points. People are looking for alternatives, which will save money in long term. Ford has produced a new product that will align with their consumers’ needs. The new product is a two door electric car, only costing under $10,000 called Siesta. Siesta is a Latin word meaning resting or taking a break. The ideal of the name of the product is allowing consumers to take a break of gas prices and the high competitive car prices in the market. Chevy, another American car maker, has come with a new electric car product called the Volt. The problem with the Volt, it has a high price tag of $28,000. The Smart Car is...
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...Ford Motor Company Table of Contents Executive Summary 3 Introduction 4 Issue Identification 5 - 7 Environment and Root Cause Analysis 8 - 9 Alternatives and Options 10-11 Recommendations 12 Implementation 13-14 Monitor and Control 15 Conclusion 16 Ford Motor Company Executive Summary As director of Supply Chain Systems, Teri Takai recommends implementing virtual integration strategies from companies like Dell to portions of Ford’s supply chain strategy. Although there are several key differences between the companies, the restructuring plans of Ford 2000 have set a viable foundation to implement Dell’s virtual integration strategy in inventory management, customer service and support and suppliers’ management. The redesign of the process must include design not only of the supply chain but also of fulfillment, forecasting, purchasing, and a variety of other functions that historically been considered independently within the Ford hierarchy. Teri believes that implementing virtual integration by building on Ford’s key initiatives and projects including Ford Production Systems (FPS), Order to Delivery (OTD) and Ford Retail Network (FRN) that are currently underway will make their supply chain run more smoothly with less bottlenecking, reduced inventory, and better overall...
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...Company Background and History In 1995, to reduce cost and increase efficiency, Ford 2000 was developed to reengineer company processes including Order to Delivery (OTD) and Ford Production System (FPS) with a primary strategic goal of decreasing OTD from 60+ days to less than 15. A company-wide Intranet was launched in 1996 and expanded to include business-to-business (B2B) capacity by January 1997 including the Automotive Network Exchange (ANX) and the public Internet site went live in 1995. By 1997, the Internet site had more than 1 million hits per day. Ford was honoured as most improved automaker in the 1997 JD Power Initial Quality Study and by 1998 it acquired Volvo and surpassed Chrysler in profit per vehicle ($1770) while total profit hit $6.9 billion. Ford Motor Company is the second largest industrial corporation in the world operating in 200 countries around the globe with 180 manufacturing plants. Issues Teri Takai, Director of Supply Chain Systems is contemplating recommendations on information technologies (e.g., Internet technologies) from new high-tech industries could alter how Ford interacts with suppliers. • One group favoring "virtual integration" like Dell. • Another group believes differences between the auto business and computer manufacturing is substantive. Relative to Dell, Ford’s supplier network has more layers and companies, and Ford’s purchasing organization was more prominent and independent than Dell's....
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...------------------------------------------------- Executive Summary As director of Supply Chain Systems, Teri Takai recommends implementing virtual integration strategies from companies like Dell to portions of Ford’s supply chain strategy. Although there are several key differences between the companies, the restructuring plans of Ford 2000 have set a viable foundation to implement Dell’s virtual integration strategy in inventory management, customer service and support and suppliers’ management. The redesign of the process must include design not only of the supply chain but also of fulfillment, forecasting, purchasing, and a variety of other functions that historically been considered independently within the Ford hierarchy. Teri believes that implementing virtual integration by building on Ford’s key initiatives and projects including Ford Production Systems (FPS), Order to Delivery (OTD) and Ford Retail Network (FRN) that are currently underway will make their supply chain run more smoothly with less bottlenecking, reduced inventory, and better overall performance. Managers could overcome the complex and inaccurate manual process of forecasting and procuring parts which would result in reduced OTD lessen costs and enhance customer satisfaction. Further improved Supply Chain management will improve Supply Chain responsiveness and increase shareholder value to keep investors interested in the company. ------------------------------------------------- Introduction ...
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