Ford Motor Company - Case Study

Ford Motor Company - Case Study -

Background (General Facts)

Ford Motors is one of three major automobile manufacturing companies in the US . Based in Michigan in 103 by Henry Ford and grew to reach a turnover of $ 150 billion and more than 370,000 employees by 1996 [1]. In 1970, the automotive market for the major car manufacturers - General Motors (GM), Ford and Chrysler- been crunched by competition from foreign manufactures, such as Toyota and Honda. In 1999, Ford purchased the Volvo Swedish model, in an attempt to compete in foreign markets and expand to other regions. In addition, Ford has launched an organization re-engineering of the complete business plan processes called "Ford 00" which aims to restore the company's infrastructure. The process meant reducing their vehicle centers (VCs) only covers five operations that have crossed 0 countries. also it meant cutting redundancies and require Information Technology (IT) to be the driving force and the relationship between Ford centers around the world.

In building the Ford IT infrastructure, the company focused on building a development which supported TCP / IP communication protocol according to the Department of Defense requirements. In those days, the Ford internal network is designed to serve the transfer of files unlike most companies that used the network primarily for email communications. During 190, Ford has developed a global process cost effective Enterprise Network Integration (GENI) to connect all its offices compromising the type of connection and cabling for full coverage. At the same time, Ford began building its Web Farm, which was basically a set of hardware and software managed by a team for the construction of Ford's public website. The work began with the publication of documents for the technical references and moved to more advanced pictures from a car show live. As a result, the site has received 1 million hits a day in less than two years after its official launch. Throughout the late '0s, Ford has established its web services, increasing the amount of information published, the building of smarter web applications and 12 weeks series, purchasing more Netscape browser for installation on machines of users, and the creation of a B2B server to allow suppliers of secure access to Ford's Intranet.

In the path towards reducing service costs and bringing more business through the web, Ford has worked closely with its competitors in the US market GM and Chrysler to establish what came to be known as " Automotive Network Exchange "(ANX) certificate. The protocols aimed at providing a unified communication standards across the Internet to enable a common technology suppliers for all producers. In addition, Ford committed to making the information on its web site more accessible and useful for deploying a team to manage the process of adding and updating information based on an analysis of how humans deal with information. A final aspect of the Ford effort was to try to build a model through its infrastructure which has benefited from the model implemented by Dell computers to improve their supply chain and delivery process. The direct model would not work well for automotive as it would with computers, following Ford has been working on his remodeling of the retail network and to identify what would give him the advantage in longer delivery times.

Enterprise Architecture Issues

• Ford's regional expansion to face competition for market share has required the cost management for updates infrastructure
• IT infrastructure sets limits on the type of application development platforms based on
• easy access to information and the rapid delivery of vital data for key people requires proper knowledge managementOrganizations reengineering and remodeling process You are required when the adaptation of new technologies to keep the costs and increase the efficiency
• errors and delays in the supply chain can heavily influence the performance of the business and the market value of the company

Analysis

upgrade infrastructure

Since the birth of the Internet in 1960, much effort has been made in standardizing how computers are connect to it. In 1982, the International Organization for Standards (ISO) realized that at that time many of ad hoc network systems have been already using the TCP / IP protocol for communications, and then adapted as a standard in its model for Internet network [2]. The main driver for IP convergence, at that time, was the growth of data traffic across wide area networks (WAN) set by local companies. In addition, in 1991, the Internet was opened for commercial use, and that required a reduction in the total cost of network management to cope with 1 million Internet hosts that materializes in only 1 year time. Telecommunications companies like AT & T understood the potential and worked on the standardization of services offering network voice over IP networks that managed the separation between voice and data transmission [3].

At the same time, Ford had launched its plan to upgrade its infrastructure, and took the opportunity brought by the global movement to integrate voice, fax transmission network with transmission of data, and has expanded its wide area network to include its offices in Europe and elsewhere. The financial benefits have also come from the fact that Ford has adapted the TCP / IP protocol from the start and made sure that all of its updated technical infrastructure up to standard. This made the transition of its system to the Internet as convenient as it could be.

Web Technologies

Intranet using hypertext and multimedia technology used on the Internet. Before 1989, when Tim Burners-Lee invented the Web [4], the majority of the applications used standard development languages ​​such as C and C ++ to create desktop applications that were owned and platform dependent. For example, applications that are running on a command-based operating system like UNIX would not run on Windows, and those who work for the PC may not work on Apple computers and vice versa [5]. The invention of HTML (Hyper Text Markup Language) has introduced a new model for the application complies with the requirements of a single program, the "Web Browser". Unlike standard applications, the browser has a unified interface that has had a very fast learning curve. Users seem to require any additional training to work with the web browser. In addition, system administrators have not had to spend time installing upgrades on user machines, since the client / server Intranet facilitated all updates through the connection to the Web server [6].

Since Ford has established its intranet, it aimed to build web applications through the initial analysis of "Mosaic", the first form of web browser. The engineering department of the Ford used web languages ​​to create the first website in 1995. In 1996, the team began building applications using the unified browser "Netscape" which was distributed on every machine in the company, and work on a standard template to cut the development life cycle. There was a substantial reduction of training costs due to the user-friendly interface of web applications. In addition, the speed of development achieved critical applications available from different individuals across the company. For example, the B2B site allowed suppliers and secure remote access to various Ford intranet sections. In addition, the development team has created an application as a virtual teardown on the Ford website where Ford engineers could examine the parts of cars competing and evaluate any new technology. The alternative would have been a real journey of a physical place where Ford car breaks down to examine the parts.

Knowledge Management

While there are many definitions for knowledge, each company can adapt its own based on how the analysis data and information to gain knowledge. The University of Kentucky, for example, defines knowledge as "a vital resource organization. It 's the raw material, work-in process, and finished product decision making. Distinct types of knowledge used by decision makers include information, procedures and heuristics, among others ... "[7].

Organizations go through different activities to manage the amount of information they collect to form the basis of the company's knowledge. Activities include the creation of databases of good practices and analysis of market information, collecting and filtering data classification, incorporating knowledge into business applications used by employees, and developing the focal points to facilitate the flow knowledge and building skills [8].

Ford was excited about the traffic it was receiving on the website and everyone was publishing all the material we have on the desk on the Intranet. However, there has been increasing concern about the usability and usefulness of the material people have been added. As a result, Ford has created a "domain knowledge Team" for the full construction information in nine areas that have been identified as vital to the business. The process took Ford was based on surveys and input specialists in how people perceive the information, and what is considered vital and what is distracting in the structure of the Ford website. The goal behind the initiative was to reduce individuals time spent in the search for information through the proper indexing of the web site content, and making sure that what was important could be achieved in due course, and what is trivial not overwhelm the researcher with thousands of results.

Business Re-engineering

In terms of the organization's re-engineering process innovation is the set of activities that realize the substantial business improvements. Companies seeking to benefit from process innovation go through the system to identify the processes, factors leading to change, the development of the vision, the understanding of the process, and construction of a prototype for the new organization. History shows that organizations that define their processes properly will have no problem handling the problems and developing the factors of change [9]. When you introduce technology, business redesign is needed. The industrial sectors have used information technology to reshape the processes, production control and manage material for generations. However, it is only recently that companies have recognized that the fusion of IT and business would go beyond automation to fundamentally reshape how business processes are undertaken [10].

When foreign companies were allowed to compete in the US market, Ford realized that to succeed in business in the competitive arena needed to implement strategies that competitors find difficult to imitate [11]. As a result, Ford bought the Swedish Volvo to enter the European market, and in part of Mazda's properties to have a competitive advantage with cars1 Japanese [12]. To get that re-engineered its development activities in production and global business organization and processes to reduce costs dramatically. Furthermore, understand that the expansion requires collaboration and alignment, and, therefore, expected to establish the IT infrastructure through a WAN that connected all of the offices. In the process of innovation and re-engineering, Ford has set the policies for managing the cost of setting up the network, models built for the continuous implementation, and organized global meetings to align all the parties with the process. In addition to this, when it came to managing the site, Ford has facilitated an awareness campaign for all branches to understand that Ford is using the Web to collaborate and search technology and adapting the information as a way to maximize value business. The goal for Ford was to maintain its leadership in the market and to do so in the most efficient and cost effective method that is there.

Supply Chain Management

Supply Chain Management (SCM) is about coordination between suppliers, manufacturers, distributors, retailers and customers [13]. The basic idea that the SCM applications revolve around providing information to all those involved in making decisions about the product or commodity to manage delivery from the supplier to the consumer [14]. Studies show that reducing errors in the distribution supply chain, revenue increases, increases productivity and reduces the period of the end-of-completion [15].

Ford often compared its supply chain process to that of Dell, in an attempt to fill the gaps in its own process and achieve the level of success Dell has achieved. The difference in distribution pattern between Dell and Ford lies in the connection means using stores. Since Ford can not jump to detail as the focal distribution point, it worked on the creation of a network of retail stores that property. Ford made sure that the stores are not influencing each other in terms of sales, and gave them a standard look and feel to succeed in the consumer market as a prestigious car retail company. In addition, extensive re-engineering initiatives have been undertaken to improve the external network eliminating Ford correlation with smaller suppliers. In this way, Ford has made sure that key suppliers have access to the forecast data of buying trends of customers and production information to allow a faster order-to-delivery cycle. Ford's vision was to create a model that allowed for flexibility, predictable processes and delivered the product at the right time to the right consumer.

Conclusions

Ford is an example of how traditional organizations can mature to adapt what is current and maximizes the business value. Ford has gone through the process that necessitated the continued support from the management. Moreover, it depended alignment between those involved as the key to success. The correlation was not limited to internal staff; It is extended to cover competitors to reach mutual benefits, to work with suppliers to maintain similar reasons and adequate infrastructure, and to create training programs to educate all on the vision and objectives.

Ford technological progress came at a time when the Internet was yet to reach its full potential. The introduction of fiber optic cables in the late '0s, and the substantial increase in bandwidth would have helped Ford and cut the cost in endured connecting its offices. In addition, ISP services that provided hosting servers were limited to only a few players, which explained why Ford preferred to manage their own web server and maintain the overhead of activities and 24 hours of backup time.

From this case study, I understand the level of commitment large companies have to maintain their market position. These companies know the revolving nature of the business in the sense of how easy it is to fall back if you do not keep up with change. The process of Ford also shows the need of rapidity of thought and in front of resources to situations that may appear to be unfavorable. The way Ford ventured into the overseas market with the acquisition of local manufacturers was a strategic decision that not only has allowed Ford to merge with different technologies, but also saved the extra cost of setting up manufacturing centers in Japan and in Europe.

Recommendations

• maintain leadership in the market requires innovative organizations willing to redesign for success.
• IT merger with the business means restructuring and remodeling to understand the role it would play to meet the business objectives
• Planning and modeling is crucial in coordinating the work with the big teams.
• Build Web sites it is not about content; It's about understanding what adds value and how humans interact with information.
• Knowledge management is a plan that companies need to develop as part of their initial process modeling business
• It is not wrong for large companies to try to adapt to the processes of successfully implemented by other companies.

References

1. Robert D. Austin and Mark Cotteleer, "Ford Motor Co .. Maximize the business value of Web technologies" Harvard business Publishing. July 10, 1997 harvardbusinessonline.hbsp.harvard.edu/b02/en/common/item_detail.jhtml;jsessionid=WDARNHINBSYKSAKRGWCB5VQBKE0YOISW?id=198006 (Accessed 30 July 08).
2. Computer History Museum, Internet History 80. 06. computerhistory.org/internet_history/internet_history_80s.shtml (accessed 30 July 08).
3. Darren Wilksch and Peter Shoubridge, "IP Convergence in the Global Telecommunications." Defense Science & Technology Organization. March 01. Http://www.dsto.defence.gov.au/publications/2400/DSTO-TR-1046.pdf (accessed 30 July 08).
4. Computer History Museum, History of the Internet 80.
5. H. Joseph Wen, "From the client / intranet server." Information management and information security (MCB UP Ltd) 6, n. 1 (1998): 15-20.
6. R. Boutaba, K. El Guemioui, and P. Dini, "A perspective on the intranet management." Magazine Communications (IEEE), October 1997: 92-99.
7. Joseph M. Firestone, Enterprise Information Portal and Knowledge Management (Oxford: Butterworth-Heinemann, 02), 169.
8. David J. Skyrme. "The knowledge management solutions - contribution IT "ACM SIGGROUP Bulletin (ACM) 19, n. 1 (April 1998): 34-39, 34.
9. Thomas H. Davenport, Process Innovation: Reengineering Work Through Information Technology (Watertown, MA: Harvard Business Press, 1993), 28.
10. Thomas H. Davenport, "The New industrial Engineering: Information Technology and business Process Redesign". Sloan Management Review 31, no. 4 (Summer 190): 11-28, 12
11. Gary M. Erickson, Robert Jacobson, and Johny K. Johansson, "Competition for market share in the presence of invisible strategic assets: The automotive market of the Member States of the 1971 -1981 ". International Journal of Research in Marketing (Elsevier Science) 9, n. 1 (March 1992): 23-37, 23.
12. Austin and Cotteleer, "Ford Motor", 2.
13. Henk Akkermans A., et al. "The impact of ERP for the management of the supply chain: exploration results from a European Delphi study." European Journal of Operational Research 146 (03): 284-301, 286
14. Thomas H. Davenport and Jeffrey D. Brooks. "The business systems and supply chain" Journal of Enterprise Information Management 17, n . 1 (04): 8 to 19.9.
15. Kevin B. Hendricks, Vinod R. Singhal and Jeff K. Stratman. "The impact of enterprise systems on corporate performance: a study of ERP, SCM, CRM and system implementations." Journal of Operations Management 25, no. 1 (January 07): 65-82.

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