all supply chain inefficiency.As communication is not in real time, increase in costs is inevitable due to situations like mis-communication and delayed communication. Ford is not directly in touch with sub-tiered supplier, leaving the job to its main suppliers. A direct relationship will usually produce better results for both parties.2.Development of Information Technology in the supplier baseFord has a network of 30000 suppliers operating with different levels of technology. Its tier one suppliers have fairly modernised information systems but do not have the ability to rapidly invest in new emerging ones. The lower tier suppliers do not even have the same level of IT understanding and modernity as the tier one suppliers do leading to bottlenecks in the supply chain.Furthermore, Ford faces constraints imposed by geography in information flow, as it operates in 200 countries3.Competitors headed to a virtual organisationOther automakers like Chrysler and General Motors (GM) have been posting their procurement requirements on the web with tremendous success. GM has taken to seeking tier one suppliers by posting its needs over the Internet, successfully. For example a belt fastener manufacturer in Lima could have access to GM’s requirement over the web and be in a position to supply at a lower cost than an American supplier. Other Issues: Ordering supplies the traditional way is time consuming and costly ie paper, stationery costs.Annual procurement spend is approximately $80 billion dollars (http://global.umi.com/pqdweb?ReqType=301&UserId=IPAuto&Passwd=IPAuto&JSEnabled=1&TS=953862725), hence a small change in procurement cost will result in substantial savings. Although Ford is using EDI to link with big suppliers, EDI transmits basic information about transactions, but it cannot adapt to rapidly changing markets and is too expensive for smaller suppliers to use. GENERATION OF ALTERNATIVESThere are 2 alternatives that Ford can cho...
