Ford Motor Company Supply Chain.doc


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Ford Motor Company Supply Chain.doc

  1. 1. Shannon Smith Management 120 11/15/04 Ford Motor Company and Supply Chain Management The Ford Motor Company is responsible for many innovations concerning supply chain management. The company was constantly working to improve their processes. They would consider any idea that could cut the costs required to make their automobiles or make their processes more efficient. Ford was committed to making their products accessible to the masses and used many different supply chain management techniques to accomplish this goal. The Model T automobile was Ford’s first attempt at accomplishing this goal. It was a sturdy and simple car (it only came in one color). While it was not as expensive as most cars it was still not affordable for the average family. Henry Ford realized that he would have to find a way to lower the costs of producing the car if he wanted to make it available to everyone. According to a PBS article, “He [Henry Ford] and his team looked at other industries and found four principles that would further their goal: interchangeable parts, continuous flow, division of labor, and reducing wasted effort” ( Ford was able to accomplish these goals. The main reason why they were able to do this is because the company encouraged input from workers to improve efficiency. The company would have their most intelligent workers go around and observe the operations of the plant and make lists of improvements they felt could be made.
  2. 2. Shannon Smith Management 120 11/15/04 The best ones were implemented on the factory floor right away (Brinkley 151). The parts, needed for the production of the car, were made to be identical to each other so “that any valve would fit any engine, any steering wheel would fit any chassis” (PBS). He also split the assembly of the Model T into 84 distinct workcells. Workers would then only have to be trained on how to do one process that was needed to complete the car. This allowed for unskilled workers to take the place of skilled workers. He also rearranged the factory so that the parts needed to make the car were produced just before they were needed. For example, when a part required for assembly was produced it would immediately be transferred to the next process it needed to go through and by putting the processes in the correct order and in close proximity to each other; there was minimal transportation time to the next process. This sped up the production process and cut costs. In order to meet the continuous flow principle, in 1913 Ford introduced a moving assembly line into his Highland Park plant. It soon moved to all phases of the manufacturing process. When adding this to the other principles, “Ford cars were produced at record-breaking rate” (PBS). This allowed them to reduce production costs and lower the cost of the car while still making a nice profit. Another revolutionary concept of Henry Ford’s was the $5 dollar day. On January 5, 1914, Ford announced that it would raise
  3. 3. Shannon Smith Management 120 11/15/04 the pay of their workers from $2.34 to $5.00. Ford did this in order to calm labor unrest and because he felt “that well-paid workers would put up with dull work, be loyal, and buy his cars.” (PBS). In the 1920’s Ford began to whittle the company down the essentials. The financial accounting department was at a bare minimum. Ford relied primarily on yearly bank statements to tell him if the company was making money (Brinkley 275). The River Rouge plant was created to put all of the cost-saving methods to use. Ford wanted a plant with “raw materials coming in on one end of the Rouge plant and the finished cars going out on the other end” (Brinkley 282). The plant had coal processing facilities, a steel foundry, an electric power plant, and by 1926 it had 93 buildings, so that they would not have to rely on other facilities. The River Rouge Plant was able to produce 4000 finished cars per day. This facility allowed him to do three things: eliminate reliance on outside suppliers, decreased the distance parts were moved, and they were able to make by-products that could be used or sold. (Brinkley 283). The Ford Motor Company revolutionized the industrial world. The company chief concern was improving the processes. They were not concerned with how much a new process would cost, but how fast it could be implemented. He changed the way the world looked at manufacturing. He changed the way people looked at supplying raw materials and of what individuals and machines were able to accomplish in the name of efficiency.
  4. 4. Shannon Smith Management 120 11/15/04 Works Cited Brinkley, Douglas. Wheels for the World: Henry Ford, His company, and a Century of Progress. New York City, NY: Viking, 2003. Najarian, Gerald. “Just in Time: Organizing in Product Work Cells.” 10 November 2004. National Science Foundation. “Supply Chain Management.” 10 November 2004. manufacturing/supply.htm PBS Online. “Ford installs first moving assembly line 1913.” 14 November 2004. http:/ ml
  5. 5. Shannon Smith Management 120 11/15/04