Ford Company Management Essay

Introduction

The Ford Company is an American-based automaker. The company’s headquarters is located in Michigan. The company was started by Henry Ford and was incorporated later, in 1903. The company trades its commercial vehicles ad automobiles under the Ford brand. The company trades its luxury cars under the name Lincoln (Reuters, 2013). The company also produces tractors, heavy trucks, and automobile parts.

The Ford Company controls some stake in the Japanese company Mazda and the UK Company Aston Martin. The company is listed on the NYSE and is managed by the Ford family (Reuters, 2013). The Ford Company introduced models of large scale car manufactory, and the large scale management of productive resources, based on elaborately designed manufactory sequences. The sequences are characterized by moving assembly models. During the 1914, these sequential models were globally known as Fordism (Reuters, 2013).

Brief History of the Company

Ford Motor Company was launched in 1903, starting with a capital base of USD 28,000 contributed by twelve depositors. In the early years, the company produced only a few cars daily, using the parts supplied by contracted suppliers (Bryant.edu, n.d). A decade later, the company developed the refined assembly model concept. In 1908, the company introduced a revolutionary engine, the Model, which had removable cylinder heads. In 1930, the company introduced a safer car with a windshield.

Later in 1932, it launched a low-cost V8 powered car (Bryant.edu, n.d). During the 1950s, the company introduced more safety specifications, including childproof door locks. During the 1980s, the company introduced successful vehicles into the market. In 1990 and 1994 the company acquired Jaguar and Aston Martin, respectively (Ford Foundation, 2013). In 2005, the company developed survival strategies, including downsizing, dropping some models, closing 14 production outlets, and reducing employee count by 30,000.

These strategies were meant to get the company out of the slowdown (Bryant.edu, n.d). The company continued to introduce new brands. In 2009, the company sold Landover and Jaguar to Tata motors. In 2009, the company reported losses of $ 14.6 billion, depicting a challenge to profitability.

How Ford Motor Company Applied Goods, Services and Operations Management

Since the 1920s, the operations of Ford motors are embodied in a number of scientific management elements. These include standardized product designs, mass production, mechanized assembly lines, low manufacturing costs, interchangeable parts and the specialization of labor.

Through the standardization of product designs, the designing of vehicles is done in ways that are accepted. These include the use of uniform procedures, materials and dimensions. For example, during the early years, 1903 and ahead, the company produced their cars using inputs collected from the contracted suppliers (Bryant.edu, n.d). Through the outscoring and the production of standardized vehicles, the company was able to develop strong product platforms, lower supply chain expenses, and design their products faster.

Through mass production, the company produces cars in high numbers, which they supply to the market. For example, after its launch in 1903, the company produced a few cars daily, at its plant on Mack Avenue, Detroit (Bryant.edu, n.d).

Through the mechanized assembly lines, Ford Company was able to develop the vertical integration that seemed to work well for their vehicle production. The company realized the reduction of manufacturing costs, through reducing the labor force, for example, during the 2005 proposal to reduce their employee count by 30,000 (Maynard, 2006).

Through the use of interchangeable parts outsourced from the contracted producers, the company ensured that production did not delay due to the limitations of supply chain management. Through labor specialization, the Ford Company, since its start has been able to manage its human resources, ensuring that the workforce is optimally utilized. For example, after the 1903 launch, a group of two or three workers would work on the assembly of one car everyday (Bryant.edu, n.d).

Management of Value Chains

The supply chain profile of Ford Motor Company is characterized by different products, suppliers and locations that contribute to the manufactory of vehicles.

These include more than 60 countries where suppliers are sourced, 38 emerging markets where suppliers are sourced, 17 emerging markets characterized by inferior working conditions, 70 Ford vehicle production centers, and more than 1300 supplier corporations (Ford Company, 2012). There are also 4,400 supplier production centers, more than 130,000 parts under production at any time, and more than 500 manufacture commodities to be administrated (Ford Company, 2012).

The long value chain, which relies on thousands of input suppliers who deliver parts, materials and services used in the production of the end product, is characterized by a complex value chain. Many of the suppliers serve different automakers, and the suppliers also have numerous vehicle makers (Ford Company, 2012a).

At Ford, there are approximately 6 to 10 supplier levels between the source of the raw materials and the ford company. Value chain management is administered by the company through a number of strategies. This includes building strong relationships with suppliers, developing shared capacity and commitment to uphold sustainability, and aligning the business structure (Ford Company, 2012a).

These three strategies are actualized through a number of actions, including developing a global, product development model that implements product plans, enhancing the re-usability, stability and the commonality of production processes, and increasing communication levels with suppliers.

The Ford Company also allows the suppliers, contact with the company’s managers. It also fosters organizational stability in product development, manufactory and purchasing, including the improvement of order fulfillment, and engaging suppliers in discussions related to quality, process stability, and CSR (Ford Company, 2012a).

Ford Motors’ Measure of Performance in Operations

The Ford Company has identified key performance areas, where improvements in the performance of the company reflect a good or bad change in their operations (Ford Company, 2012b). These performance areas include financial health, water usage, climate change and environmental impact, vehicle safety levels, supply chain management and its relations with different stakeholders.

Under the area of financial health, effective operational performance is marked by increasing net income and revenue and sales levels, which should be accompanies by overall service and product satisfaction at the company operational points. In the area of climate change and environmental protection, improved operational performance is marked by a number of indicators (Ford Company, 2012b). The indicators include an increase in miles per gallon covered by Ford vehicles, among truck and car owners.

The indicator implies increased fuel efficiency of the cars produced by the company towards protecting the strained fuel economy. A reduction in the CO2 footprint, in grams per mile, marks an improvement in the production operations of the company’s products (Ford Company, 2012b). In the area of water consumption, a reduction in the company’s water usage marks an improvement in their operational performance.

Also, a reduction in the water used by ford vehicles, per cubic meters, marks an increase in the efficiency of the cars produced by the company, as well as a reduction of the impact caused to the environment. In the area of vehicle safety, the improvement of safety standards in Ford vehicles marks increase in operational performance (Ford Company, 2012b).

A reduction in the number of recalled cars in a year indicates an improvement in production operations. Under supply chain management, employee training on chain management and working conditions standards marks an improvement in the performance of the company. Under stakeholder relationships, employee satisfaction, improvement in dealer attitude and the company’s corporate contribution show improvements in operational performance (Ford Company, 2012b).

Ford Motors’ Operation Strategy

Ford Motors is the only vehicle producing corporation implementing a global Powertrain approach. This global operational strategy started with the production of the Ford F-150, when the company developed networks of designing transmission models and engine models that can be changed with changes in market needs (MediaFord, 2013).

The strategy is also aimed at increasing manufacturing efficiency and the quality of the vehicles produced by the company. The Powertrain manufacturing strategy is the most innovative approach since the deployment of the assembly line (MediaFord, 2013).

Among the operations that characterize the new operational strategy is the deployment of medium-sized production, which is expected to yield about 325,000 vehicles annually. The approach will enable the company to improve its efficiency, respond to changing market needs, and improve the efficiency of the company (MediaFord, 2013). The strategy also entailed the development of plant-floor layouts and manufactory equipment that are universally similar throughout the world.

As a result, the strategy will reduce the costs of capital investment in the management and the redesigning of the different production plants. The strategy is aimed at improving cross shipping, which allows for the shipping of production inputs and components between different plants (MediaFord, 2013). As a result, the company will be able to ease the startup of different plants, as well as increase the rate of product delivery to target markets.

The operational strategy is characterized by the standardization of production facilities, which is expected to reduce operating costs as well as improve the deployment of best practices. The strategy employs the use of computer-controlled machines, which are expected to increase the company’s adoption to changing customer demands and needs (MediaFord, 2013).

Ford Motors Companies Forecasting and Demand Planning Style

The demand forecasting and planning style of Ford motors are adjusted according to the company’s evaluation of customer preferences and changing product needs. Ford’s demand planning style and forecasting are exemplified by the account of Healey (2012), which notes that Ford Motors is responding to the changing needs of customers. Healey (2012) noted that Americans are increasingly changing their preferences from automatic to stick transmissions.

This is the change that has considerably shifted the demand planning of the company. From the report, the change of consumption patterns is based on the price preference on manual cars, as they come at $ 1,000 less than similar automatic transmission vehicles (Healey, 2012). The increased preference for manuals is based on the view that many drivers consider driving manual vehicles fun to drive compared to automatic transmission vehicles.

Modern manual transmission cars are more user-friendly, and the drivers that used to drive a manual transmission cars are going back to them, which has shifted the demand for manual transmission cars. In response to the changing preferences, the forecasting and the demand planning of Ford has been continually changing, from time to time (Healey, 2012).

An example is the case of the redesigned Ford focus, whose demand is rising towards 10 percent. According to the report by Paul Russel, the marketing manager in charge of the brand noted that the company had planned to offer between 4 and 4.5percent. However, due to the change in the demand for the manual transmission version, the company demand forecasts were increased to meet the 10 percent demand increase (Healey, 2012).

For instance, during March 2012, Ford started offering stick transmission cars in many brands, including the high-end Titanium edition of the Ford Focus, despite earlier projections that Titanium buyers preferred only automatics. The new projections are incorporated into the planning for Dodge, Dart compact, which the company predicts will offer 20 percent in manual versions (Healey, 2012).

Ford’s Management of Inventories

Ford manages its inventory on the basis of the Just In Time (JIT) inventory control model. The strategy aims at cutting costs and eliminating waste, through reducing inventory levels (Ford, 2008).

Through the strategy, the company ensures that they uphold the continuous improvement of their vehicles as well as eliminate any materials that are wasted due to inventory management. The wastes reduced through Ford’s JIT include those related to the usage of finished inventory and raw materials, as well as those related to stocking (Ford, 2008).

The earliest usage of JIT at Ford was practiced by Henry Ford, as an effort towards managing production materials during the period between 1903 and 1920. Among the areas covered by the JIT inventory management model of Ford are order taking, operations, purchasing, sales, distribution, accounting, Sales, Human resources, designing, and other production areas. One of the major areas covered in the JIT model of Ford is ensuring that waste through surplus inventory is reduced (Ford, 2008).

The model entails areas like eliminating unnecessary production stages, correcting defective working techniques, and reducing the idling time of company machines and plants. The JIT strategy of Ford entails the elimination of product defects, eliminating overproduction and ensuring that unnecessary transportation is not incurred by the company (Ford, 2008).

References

Bryant.edu. HISTORY of Ford Motor Company. Web.

Ford Company. (2012). Sustainability 2011/12: Supply chain profile. Web.

Ford Company. (2012a). Sustainability 2011/12: Creating a Sustainable Supply Chain: Strong Relationships, Shared Commitment, and Capacity Building. Web.

Ford Company. (2012b). Sustainability 2011/12: Performance Summary. Web.

Ford Foundation. (2013). Ford Foundation: Overview. Web.

Ford. (2008). Sustainability Report 2007/8. Web.

Healey, J. (2012). Stick shifts popular again, despite lower gas mileage. Web.

Maynard, M. (2006). Ford to Cut Up to 30,000 Jobs and 14 Plants in Next 6 Years. The NewYork Times. Web.

MediaFord. (2013). Global Manufacturing Strategy Gives Ford Competitive Advantage. Web.

Reuters. (2013). Profile: Ford Motor Co (F.N). Web.