Ford Case Study

Discussion:

1. What historical "legacies" affect Ford's ability to move to a BTO model?

Ford has very complex production processes which affect its ability to move towards a BTO model. This means that information systems would have to be changed or adapted to the new system. This complex process is affected by the large number of suppliers who would have to adapt too to the new business model. Ford also has 3 tiers of suppliers who need to be constantly coordinated and controlled, and changing Ford's business model means changing the business models of Ford's suppliers as well. Ford already benefits from its suppliers and using the new model will make them spend a lot on training for the workers.

Furthermore, since business was mostly over the phone and with fax, changing to a BTO model will imply that Ford and its suppliers will have to use newer technology for more efficient communication.

Ford's decision might also be affected by the highly unionized labor force. Moreover, Ford has wide product varieties which have complex assembly processes and require high inventory and efficient communication with suppliers. Ford will therefore need a lot of time to adapt to a new business model.

In addition, Ford's suppliers and dealers use different information systems. The incompatibility in information systems will be a bone of contention for Ford as they switch to a new business system. Ford also has very many manufacturing factories worldwide with different information systems, and thus, a change to a new business system will mean that Ford will have to change the systems worldwide to become efficient.

Ford's powerful dealer network can also decide to be an impediment to Ford's plans by refusing to change their systems and choosing other rival companies over Ford.

2. What is virtual integration? What benefits does Dell gain from it?

Virtual integration is the elimation of barriers in the supply chain/value chain in the company, its different departments and the company's suppliers, dealers and customers using customer information, information technology. The goal of virtual integration according to Dell is the achievement of coordition and focus, efficiency and productivity at both internal and external levels with he incurrence little admistrative costs.

Dells gains from virtual integration. These benefits are:

- Effective and efficient coordination and communication in the supply chain thus an increase in value of the network

- Direct relationship with the customers and therefore easy access to customers' information that eases forecasting and categorization of their customers according to their different needs and lifestyles.

- Improvement in just in time manufacturing

- Increase in