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Ford Focuses on Flexibility at its Factories By Chris Woodyard, USA Today (2/28/2011) • A Detroit-‐based Ford Motor plant has been retooled to make small vehicles in a new way, flexible o • Required a $550 million renovation Flexible – means that the plant can make a variety of Ford models and can also install different powertrains in each model o For example, if gas prices increase and customers demand electric cars, the plant can shift from making conventional cars to electric cars. o If larger families want larger vehicles, the plant can shift its focus to making “multi-‐activity vehicles” o The plant can also produce smaller cars, like subcompacts o Flexible is harder – it requires a “management commitment and intensity of focus” (Jeffrey Liker) o Flexible adds costs – workers need more training; plants need more parts and tooling on hand; scheduling becomes more complex; managers need more buy-‐in and involvement from line workers o The costs of flexibility are outweighed by the potential risks associated with inflexibility o Requires employees to accept a new level of involvement in the process to maintain quality § Employees must be problem-‐solvers § Employees must learn many new things in order to contribute to the flexible model • These developments represent a departure from the Japanese “just in time” and lean models for efficient production; “Lean isn’t good enough anymore” • Flexibility in car production enables Ford to avoid producing lots of cars that are not in demand; also reduces the likelihood of plant shutdowns due to dropping sales numbers for a particular model • Japanese car makers like Toyota and Honda have used flexibility for years; Detroit is newer to this method of production • Top hats – creating different vehicles to sit on the same platform o • Can reduce time to create a new car by one-‐half Technological advances enable plants to be flexible through new programming, rather than retooling The Dell Theory of Conflict Prevention • Dell sells 140,000-‐150,000 computers each day • Dell has a global supply chain for its notebook computers; multiple suppliers for each component o 400 companies from 3 continents involved in the supply chain o Geopolitcal threats can affect supply chains and international relations • Notebook computers designed in Austin, TX and Taiwan • Dell’s suppliers know about orders as soon as they come in; suppliers get a signal based on every component in the machine the customer orders • Demand shaping – reshaping demand for any part of any notebook or desktop to correspond to projected supply in its global supply chain • Dell theory of conflict prevention – the advent and spread of “just in time” global supply chains are an even greater restraint on geopolitical environment than the more general rising standard of living o No 2 countries that are both part of a major global supply chain (like Dell) will ever fight a war against each other as long as they are both part of that global supply chain o War disrupts industries and economies o Countries enjoy the rising standard of living that comes with being part of the global supply chain o Doesn’t make wars obsolete, but will cause countries to think seriously before going to war if they are part of the global supply chain o Virtual caliphate – suicidal supply chain; supply chains focus on destruction (i.e. al Quaeda) Hershey Company Supply Chain Components • Raw material supplier – C&H • Hershey’s • Distributer/Wholesaler – McLane • Retailer – Safeway, etc • Customer • Product/Service flows, Cash flows, and Information flows move back and forth (up and down) the Hershey’s supply chain 3 www.LionTutors.com SCM 301 (Lutz) – Exam 1 – Sample Test Problem #61: The process by which companies develop tactical plans by integrating marketing plans for new products with supply chain management is called: a. Supply chain economics b. Strategic planning c. Causal marketing model d. Linear regression e. Sales and operations planning (S&OP) f. None of the above Problem #62: ______________ is an S&OP in which both the production and inventory levels are varied in an effort to develop the most effective plan. a. Bottom-‐up planning b. Level production plan c. Chase production plan d. Top-‐down planning e. Mixed production plan Problem #63: ______________ is an S&OP in which production is held constant and inventory is used to absorb differences between production and the sales forecast. a. Bottom-‐up planning b. Level production plan c. Chase production plan d. Top-‐down planning e. Mixed production plan Problem #64: ______________ is an S&OP where production is changed in each time period to match the sales forecast a. Bottom-‐up planning b. Level production plan c. Chase production plan d. Top-‐down planning e. Mixed production plan 4 www.LionTutors.com SCM 301 – Lutz -‐ Exam 1 – Answer Key 61. E 62. E 63. B 64. C 5