The supply chain is an activity that involves movement of business or company’s products from producer to the consumers. It does not involve the producers, consumers and the consumer only, but it also includes the other parties that facilitate the movement. These parties include transporters, warehouses and the customers themselves. Many factors are considered in the choice of a supply chain by the company. The aim of the paper is to analyze the supply chain of Ford Automobile and to discuss management and strategy of the firm.
The figure above represents a simple diagram of the supply chain the company is aiming at reducing the existing complex supply chain. There is a strategy to build the firm’s facility in different countries. Firm's facilities will replace the culture of selling product to customers from a regional office. The nature of the existing chain is complex and leads to challenges.
Ford is one of the firms with complex supply chain because of the nature of the products. Ford deals with two types of the supply chain. In the first supply of raw material used for the manufacture of its products. In this supply model, it acts as a customer to the firms that produce the spare parts of the assembling. In the other type, it serves as a manufacturer of the automobiles and supplies it to the customers. The paper will aim at analyzing the chain used by the company to fulfill the needs of its clients. The fulfillment can be achieved through different ways, including the elimination of intermediaries.
Various intermediaries happen to exist between the Ford and the customers of the automobile. Many advantages are related to the various types of the supply chain. Every firm has a strategy for reducing the costs that are involved in the supply chains. The interest of this paper is a study of the supply chain of the Ford Company widely discussing the strategic objective of reducing the cost of providing its products thus reducing the cost involved. The management made a decision to start marketing the goods direct to the customer. The middlemen can be eliminated through optimization.
The profit margin eventually decreased because there was a different markup set up at each phase. The implication of this strategy was an increase in profit the company is making. The managerial decision done to curb this was reducing the number of intermediaries by marketing its products such as the direct use of websites. The management of Ford made the decision of reducing double marginalization last year after it discovered that most of the produce were reduced by the number of intermediaries involved. Lessening the number of intermediaries also led to a phenomenon called disintermediation which is a process of reducing the intermediaries in the supply chain between the consumers and the producers (Chopra & Meindl, 2015). The primary objective of the firm is to reduce the cost of supplying its product to the customers. This can be achieved by reducing the number of the intermediaries in the supply chain.
The corporation can target this by pursuing the strategic goal by optimizing the supply network. The company has adopted a model that is classified as a system optimized model. Optimization of the supply chain can be done by studying the regional data. Among the data obtained is the market for every region, tariffs, the impact of economies of scale, and tariffs. Patterns of demand and the taxes of each region again have to be studied. From the study of the data, the company can identify the areas where there is a need for attention, and that will help the company to minimize the supply costs (Chopra & Meindl, 2015). The decision will contribute to optimizing the supply by establishing a firm’s facility in every region that has a high demand for the product.
In so doing, the middlemen involved in the sale and shipment of the products will be reduced because the company will always ship the good to the facility that are in the grassroots customers. Cooperation, coordination, and corporation are the other theme that the company is adopting with the aim of achieving its supply objective of reducing the supply cost.
Cooperation can be extended to two parties that are involved in the movement of the product for the consumer. In other words, the parties that participate in fulfilling the need of the customer (Chopra & Meindl, 2015). The company has made a decision to explore the automobile industries in each region through their regional facility located in those areas. There are many advantages that the company has acquired from Corporation with the enterprises that purchase a reasonable quantity of their products.
The company is expected to coordinate all the bodies that are involved in the supply of goods to different destinations. Coordination of the head office and other departments, especially in the marketing, will reduce the resistance. Therefore, changes in the supply will easily be made and implemented.
Aggregation is another component that the company is trying to establish to understand the volumes of the goods to send to their facilities in different locations of the world. Aggregate demand in business refers to the total demand of the companies good at the set price. The company has been able to identify the aggregation of demand by use of its agents in different regions. The agents advise the company on the amount of the products the company should make. This decision is an important because the company will not have a lot of surpluses or unmet demand, thus avoiding the possibility of making a mistake.
Double marginalization is a problem that occurs mostly in the monopoly type of the market. There are only a few firms in the market, and they set their prices according to the marginal profits they make. Ford Company made a decision to reduce the effect of double marginalization in the firm because it reduces the profit of the enterprise.
All these changes and strategies made by the management have different benefits. They have the major aim of reducing the cost incurred by the company due to the presence of many intermediaries. The supply chain of the company currently delivers the products of the companies near the customer. Besides reducing the supply cost, the final price of the products has reduced, thus there is a possibility of increasing the sales of the company.
Two major steps that have helped the company to achieve the goals include; setting up a facility in different regions. The other strategy is shipping its product to these establishments that are near the consumers to reduce the middlemen.
Chopra, S., & Meindl, P. (2015). Supply Chain Management: Strategy, Planning, and Operation. Pearson.