ABF FORD - Ford Motor Company Aligned Business Framework PDF

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Ford Motor Company Aligned Business Framework...

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Case 2-3: Ford Motor Company Aligned Business Framework

CASE SUMMARY: Tony Brown, senior vice president of global sourcing at Ford Company, created a new supply chain strategy called the Aligned Business Framework (ABF). In 2005, Ford was struggling with the global competition, and reported a $1.1 billion operating loss. They decided to cut salaries and reduce costs by closing plants and selling the Hertz rental car division and increase the production of hybrid cars. The new strategy implemented was mainly created to reduce costs by reducing the number of suppliers and give those that remained long-term contracts and involvement in new product development programs. Tony was also creating this strategy to improve their relationship with the suppliers, because he believed that their business model was not working for neither of them. ABF was sure a really difficult thing for the other suppliers, but those chosen were benefited from higher capacity utilization as a result of the increased production volumes. WHAT IS/ARE THE PROBLEM(S): The problem was that Ford was failing since the beginning. The business model was not wellstructured, since they were wasting so much money in transportation, ordering from different suppliers instead of just getting more volume of products from one supplier. As the global competition increased, Ford had to make changes in their company, and they created the ABF strategy. Ford was ranked second last in North America supplier survey with a score of 157 out of 500. Since they were having problems with their suppliers, and their relationship was not strong enough to create an impact in the company, Tony created the ABF strategy to fix their supplier relationship. IDENTIFY THE BASIC ISSUES OR ROOT CAUSES OF THE PROBLEM(S) The root of the problem, as I said before was that the main plan of the company was not well designed, their suppliers were too many, and the quality of their products was not giving them an advantage with their competitors. The relationship with the suppliers was not good enough because the company was not giving them enough attention since they were too many. Tony Brown discovered that this matter needed to be fix, because the suppliers were a part essential to the company. He believed that building strong supplier relationship would give them the ability to impact production. SUGGESTED SOLUTIONS AND THEIR SUPPORT (WHY IS THIS A GOOD FIX?) 1. As Tony Brown, how would you proceed with implementation of ABF? Implementing the ABF strategy is a matter of getting first the CEO on board and convince him that this plan would work. Tony Brown’s ABF strategy seems to me well established. The first thing to do as the reading says, is to talk to the existing suppliers about the changes in the

business model and choose the top suppliers. As Tony Brown, I would try to apologize with all my suppliers for any inconvenience and try to make them understand that this is the best option for the company. I would explain also the benefits that the preferred suppliers are going to have, and that this will benefit them with more sales, and new opportunities such as innovation, and product development. 2. How would you build trust with your suppliers and address their concerns regarding the new relationship between Ford and its suppliers? I would just try to make my suppliers know that the company appreciates them, and that we want them to succeed with us. That their success is our success and that we need to work together to achieve our mutual goals. I would talk to them, about our mainly goals, and ask them if they are willing to work with us and offer them benefits in order to give them more motivation. Their motivation means more innovation, more profits, and more development of resources for us. I would encourage them to ask any questions regarding of our new system, to make sure that they understand the concept of the strategy. We will try to build trust by being able to communicate with transparency and honesty....