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Ford Motor Company Virtual Integration Strategy

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Introduction I would recommend that the Ford Motor Company adopt the virtual integration strategy, currently used by Dell. The virtual integration strategy combines both forecasting and information technology. Virtual integration combines both efficient and responsive supply chain. Virtual Integration Dell uses virtual integration to build direct relationships with their customers and carry less inventory. The emphasis is given to forecasting and information technology. In virtual integration, information is a substitute for inventory. Dell only produces their product when they have demand from customers. Forecasting allows Dell to have real-time information of demand. The information technology that exists between retail, Dell and the suppliers allow for this information to be exchanged quickly. In addition, Dell only uses a limited number of suppliers. Due to the proximity of the relationship, it is important to pick long-term suppliers. These suppliers should be leaders in their field and continue to innovate. Virtual integration also aids in customer responsiveness and shareholder value. These topics are important to the CEO. Close customer relationships help Dell track customers’ needs and respond quickly. By selling directly to …show more content…

Inventory velocity focuses on reducing speed and increasing speed. Improving inventory velocity reduces the risk of being stuck with obsolete inventory. This is a bigger issue in the computer industry, when compared to automobiles. Currently, with the pull method, Ford takes 60 plus days from ordering to delivery. By improving their inventory velocity, they can shorten this time. The inventory velocity will improve through close relationships with suppliers. By implementing a virtual integration model, Ford will see improved inventory velocity for the first few years. However, the challenge will be to continue this improvement over a sustained amount of

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