Business organizations adopt supply chain strategies that reduce losses and increase profitability. Advanced technological approaches are crucial for effective supply chain activities. Although automated and digitized supply chain activities can be expensive during adoption, organizations reap long-term profits. Just-in-time (JIT) and lean manufacturing are utilized by many companies to reduce waste. Consequently, the companies have increased profitability and effective supply chain management. Car manufacturing is one of the highly digitized and automated industries in the U.S. Ford Motor Co. is among the leading car manufacturers in the country, and an interview with one of its operations managers gave an insight into its supply chain management. Therefore, organizations’ supply chain activities are crucial for their growth and expansion strategies.
Interview Brief
Ford Motor Co. is listed as one of the top car manufacturers in the U.S. The company sells its products to over one hundred and twenty-five countries across the world (Bremser et al., 2021). The organization has adopted complex technology to automate and digitize its manufacturing and supply chain activities. Alex Mathews is one of the company’s operations managers located in Dearborn, Michigan. Mr. Mathews responded to various questions about the company’s supply chain management system and decisions. The interview was limited to distance and time, therefore, I conversed with Alex Mathews through a phone call.
Although the interviewee failed to respond to all the questions due to his tight schedule, the information provided was sufficient to understand his company’s supply chain decisions. The interviewee shared the importance of the supply chain to Ford Motor Co. Additionally, he listed some of the partnerships that his company has made to gain a global competitive edge. Furthermore, Alex Mathews shared how the company acquires materials for production and their consequent integration into the manufacturing process. An interview with Alex Mathews of Ford Motor Co. was significant in understanding the supply chain decisions of a typical car manufacturer.
Analysis
Importance of Supply Chain to a Company
Supply chain management is one of the key business activities that determine growth and profitability. According to the interviewee, Ford Motor Co. has prioritized its supply chain management due to its importance to the company. Firstly, supply chain management and decision help in reducing production and purchase expenses. The majority of business organizations prefer purchasing raw materials from suppliers rather than using third parties (Asif, 2022). Secondly, the supply chain allows organizations to build business partnerships and alliances that support future growth (Asif, 2022). For instance, Ford Motors Co. has partnered with Volkswagen to expand its electric vehicle supply and manufacturing across European countries.
Thirdly, the supply chain is crucial for effective customer and efficient customer service. According to Alex Mathews, Ford Motors Co. has partnered with various car dealers across the world to effectively reach out to their customers. Fourthly, the supply chain is important in balancing product sales with market demand (Asif, 2022). A partnership between Ford Motors Co. and Volkswagen is crucial in meeting the increased demand for electric vehicles in European countries. Lastly, through the supply chain, companies gain a competitive edge in their particular industries. The partnerships and alliances allow organizations to develop quality products, attracting many customers. Business organizations have advanced their supply chain decisions due to their benefits.
Operations Management and Tools for Best Practice
Technological advancements have led to the development of operations management tools essential for best practices. Lean inventory is one of the tools adopted by car manufacturers to increase profitability while reducing waste (Milewski, 2022). Additionally, organizations have adopted complex software for manufacturing and supply chain best practices. For instance, warehouse management, freight handling, and supplier management systems help track routine organizational operations. Furthermore, supply chain collaboration portals help organizations provide a hub for procurement. The portals eliminate challenges such as miscommunication and bottlenecks in requisition and order. Therefore, the integration of technologically advanced tools improves organizational supply chain operations.
Alliances and Partnerships: Operations Management Strategy
Partnerships and alliances can help companies gain a competitive edge in the market. Partnerships are anchored on trust, openness, and shared risk among businesses that come together for a common purpose. Business organizations can have different types of partnerships and alliances. Joint venture partnerships and alliances are solely anchored on cost-sharing and increasing business capital (Hattori et al., 2022). Consequently, businesses start a new company and share any risks associated with it. Collaborative partnerships such as that of Ford Motor Co. and Volkswagen are crucial in exploiting the market with high demands or competition. Additionally, Ford Motor Co. has a strategic alliance with Google Inc, introducing Android system into its cars (Ford, n.d.).Partnerships and alliances benefit both parties while ensuring quality and efficient production.
Products/Service Materials Components’ Acquisition
Production is a multifaceted activity that involves the acquisition of various materials. Companies receive materials of services and products through two major channels. Organizations such as Ford Motors Co. acquire some materials through third-party raw materials suppliers. For instance, the company depends on electronic materials manufactured for the acquisition of dashboard components such as radio and tracking systems. Companies can as well acquire components for their products or services by directly contacting suppliers. For instance, grocery shops and supermarkets receive their products from farmers. The choice of acquisitions is based on the profitability of a business venture. However, the direct acquisition is often more profitable and beneficial than the use of third-party suppliers (Matsui, 2022). Therefore, companies should weigh acquisition options before choosing the method of receiving their raw materials.
Integration of Components into the Production Process
The products or service components are integrated into the production process through various methods. Supply chain technology is key in integrating the components since it helps in determining their volume and demand by the company. The technology allows organizations to manage their consumer base and make purchases through delivery (Matsui, 2022). Meanwhile, lean inventory is crucial in helping companies manage the volume of components while remaining profitable. The use of automated systems is important in assembling different components into a final product. For instance, Ford Motors Co. uses robots to assemble various components to make cars. Integration of products or service components into the production process is anchored on technology.
JIT Manufacturing Tradeoffs
JIT is one of the inventory-management approaches that help the organization maximize profitability. The method allows companies to acquire production components as needed, reducing inventory holding and associated costs. One of the key tradeoffs of the approach is reduced inventory holding with improved quality, simplicity, and quality control. Additionally, JIT helps organizations to reduce waste while increasing their profitability. Consequently, the costs associated with waste management are channeled to other activities such as the improvement of product quality and shareholders’ value. Furthermore, JIT helps organizations maintain a clean and organized workplace (Milewski, 2022). Companies such as Ford Motors Co. have had to do away with employees who help in organizing and cleaning workplaces.
Outsourcing Decisions Tradeoffs
Although the direct acquisition is beneficial, outsourcing components play a significant role in an organization. The acquisition method is associated with various tradeoffs that can either be beneficial or disastrous to a company. Firstly, there is a loss of raw material quality control by a business since a third party is involved with the production process. Consequently, a company may lose clients who are driven by product quality. Secondly, outsourcing helps organizations eliminate challenges associated with transportation and the acquisition of components. The saved costs can be channeled to other operational activities, increasing organizational profitability. Lastly, can help reduce unnecessary competition for raw materials acquisition, making the organization stronger in the market. Outsourcing should be adopted by organizations only if it is beneficial and aligns with their goals and objectives.
References
Asif, K. (2022). The Impact of Procurement Strategies on Supply Chain Sustainability in the Pharmaceutical Industry. South Asian Journal of Social Review, 53–64. Web.
Bremser, W. G., Jermakowicz, E. K., & Reinstein, A. (2021). Sustainability reporting insights: The case of Ford Motor Company. Issues in Accounting Education. Web.
Hattori, T., Nam, H., & Chapman, A. (2022). Multilateral energy technology cooperation: Improving collaboration effectiveness through evidence from International Energy Agency Technology Collaboration Programmes. Energy Strategy Reviews, 43, 100920. Web.
Matsui, K. (2022). Optimal timing of acquisition price announcement for used products in a dual-recycling channel reverse supply chain. European Journal of Operational Research, 300(2), 615–632. Web.
Milewski, D. (2022). Managerial and economical aspects of the just-in-time system “Lean management in the time of pandemic.” Sustainability, 14(3), 1204. Web.
Ford (n.d.). Ford and Google to Accelerate Auto Innovation. Web.