2) WHAT IS/ARE THE PROBLEM(S): 3) IDENTIFY THE BASIC ISSUES OR ROOT CAUSES OF TH

Question

2) WHAT IS/ARE THE PROBLEM(S):

3) IDENTIFY THE BASIC ISSUES OR ROOT CAUSES OF THE PROBLEM(S).

4) AS TONY BROWN, HOW WOULD YOU PROCEED WITH IMPLEMENTATION OF ABF.

5) HOW WOULD YOU BUILD TRUST WITH YOUR SUPPLIERS AND ADDRESS THEIR CONCERNS REGARDING THE NEW RELATIONSHIP BETWEEN FORD AND ITS SUPPLIERS?

hree e of Case 2-3 Ford Motor Company: Aligned Business Framework? Tony Brown, senior vice president of global sourcing long-term financial stability and profitability. The question at Ford Motor Company (Ford), was putting the finish- ing touches on his plan for the company's new supply remained, however, how he would convince Ford's supplier chain strategy"Aligned Business Framework" (ABF). community to commit to the principles of ABF. ABF was a boli step that would significantly change the relationships between Ford and its suppliers. Tony FORD MOTOR COMPANY described his motivation: "We want to operate a supply chain management system that delivers on the dimen- Founded in 1903, Ford was the no. 2 U.S. automaker with sions of quality, technology, delivery and cost, while global sales of approximately $177 billion. In 2005, its executing programs in a disciplined fashion with faster global brands included Ford, Lincoln, Mercury. Jaguar. Land Rover, Aston Martin, and Volvo. In recent years all time-to-market. "3 of the "Detroit 3" (General Motors, Ford, and Chrysler) It was August 10, 2005, and Tony was expected to re- automakers were struggling under intense global com- view the final details of his proposal with company chair- man and CEO William Clay (Bill) Ford Jr. before making petition, rising fuel prices, and steep product discounts and rebates. In the most recent quarter, Ford reported a a formal public announcement the following month. ABF $1.1 billion operating loss and the company's debt had would substantially reduce the number of suppliers and give those that remained long-term contracts and early involve- recently been downgraded to junk-bond status. To turn around company performance, Ford had announced plans ment in new product development programs. Tony expected to cut its salaried workforce, reduce capacity by closing that the strategy would provide benefits to Ford through plants and selling the Hertz rental car division, and ramp overall lower costs, while suppliers would benefit from up production of hybrid vehicles. 2 This case has been written on the basis of published sources only. Consequently, the internretation and an- in this caca ara nnt na

Explanation / Answer

2. The problems that caused failing performance of Ford Motors included strenuous relationship with the huge number of suppliers, who supplied over 2500 production and 9000 non production items. The company shared confrontational relationship with suppliers, forcing them to cut the costs, causing delayed payments which gave rise to communication issues, quality related problems, financial distress of suppliers and cost issues to name a few. Collectively, it was a huge mess that was causing the company to perorm badly.

3. Basic problem was the inefficient suply chain strategy of the company where too many suppliers supplying a large number of products were making the work difficult for the company, giving rise to issues related to cost, quality and communication.

4. The most appropriate strategy would be the shortlisting of prominent suppliers who are indispensible to the company's supply system, and can grow into strategic partners and be an asset for the company in the long run. Next would be their integration into the new supply framework through collaboraive relationship, sharing of expertise and best practices and turning them into reliable and long term associates by taking care of their issues and gaining insights from them.

5. Trust will be established by making the processes of financial and other transactions prompt and hassle free, making the work easy for supplier who would focus on punctuality and quality of supplies rather than worrying about payments. The relationship be transparent and mutually fruitful, where each party will be benefitting by collaborating with the other.

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