SUPPLY CHAIN MANAGEMENT IN AUTOMOTIVE INDUSRTY
MARCH 13, 2015
TABLE OF CONTENTS
OVERVIEW OF SUPPLY CHAIN STRATEGY: 3
FORD: LOGISTICS AND SUPPLY CHAIN STRATEGY 3
About the company 3
Features of Ford system of manufacturing 4
Supply chain Design 4
Push Pull Strategy 5
Best practices 6
TOYOTA: LOGISTICS AND SUPPLY CHAIN STRATEGY 6
About the Company 6
Supply chain design 7
Key features of Toyota business model 7
Drivers of supply chain 8
Parts Ordering 9
Parts and Supplier Master 9
Toyota distribution model 10
Best practices 10
THE INDUSTRY CAN BE FURTHER DIVIDED INTO SIX MAIN SEGMENTS
* Engine Parts - Engine assembly, fall into 3 broad categories: core engine parts; fuel delivery system; and others.
* Electrical Parts - The main products in this category include starter motors, generators, spark plugs and distributors.
* Drive Transmission & Steering Parts- Gears, wheels, steering systems, axles and clutches are the important components in this category.
* Suspension & Braking Parts – These include Brakes, Leaf Springs, and Shock Absorbers
* Equipment – This includes headlights, Dashboard Instruments
* Others - Sheet metal components and plastic moulded parts are two of the major components in this category.
INDIA AUTOMOBILE SECTOR:
As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second (after China) fastest growing automobile market in the world the same year. According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 4 million by 2015, not 5 million as previously projected.
OVERVIEW OF SUPPLY CHAIN STRATEGY:
FORD: LOGISTICS AND SUPPLY CHAIN STRATEGY
About the company
Ford Motor Company is one of the best companies in the world. Ford was established by a visionary Henry Ford in 1903 and it has been in business ever since. Its main competition till 1970’s was with General Motors and Chrysler. However with the entry of Japanese companies like Honda, Toyota and Nissan the firm faced stiffer competition with the auto market being over capacitated.
In 1995 Ford initiated the Ford 2000 plan aimed to restructure many of their key processes like Order to Delivery (OTD) and Ford Production System (FPS). They wanted to reduce the OTD from 60 or more to 15 or less days. FPS was created to convert the supply chain from a push type to a pull type. Ford aimed at reducing the number of suppliers which had grown to several thousands of different suppliers over the years as the company grew. Rather than focusing on selecting suppliers based on costs they wanted to develop close long-term relations with the Tier 1 suppliers who in turn managed and handled Tier 2 and Tier 3 suppliers. The aim was to create a more cost effective supply chain. Ford provided its suppliers with its expertise and techniques to help them better manage their operations.
Another important initiative taken by ford was the Ford Retail Network (FRN) to reduce competition among its dealerships in the same locality by having only one unified dealer who provides the best possible level of customer experience.
Features of Ford system of manufacturing
* Standardization of products, components, equipment, process, tasks and tasks of control.
* Time and work study, to identify the optimum conditions for carrying out a particular operation and job...