In 2008, Ford Motor Company’s operations management (OM) was reformed along with massive changes throughout the organization. Under the One Ford plan of then CEO Alan Mulally, Ford’s operations management became more effective in addressing the 10 strategic decision areas. As the fifth biggest firm in the global automotive industry, Ford maintains operations management strategies that deal with a variety of business conditions based on different market contexts. As such, in the 10 strategic decisions of operations management, Ford must ensure flexibility along with consistency throughout its global organization.
Ford applies the 10 strategic decisions of operations management with emphasis on consistency and high productivity. Ford also maintains a considerable degree of flexibility to address business variations in different areas around the world.
Ford Motor Company’s Operations Management, 10 Decision Areas
1. Design of Goods and Services. Ford’s goal in this strategic decision area of operations management is to achieve global consistency. The One Ford mission requires such consistency in goods and services. This condition contributes to Ford’s financial efficiency and its ability to optimize customer satisfaction.
2. Quality Management. The main concern in this strategic decision area of operations management is the satisfaction of quality expectations. Ford Motor Company does so through standard quality assurance practices. The firm also conducts random batch tests on its products to ensure quality. Quality evaluation also involves data Ford acquires through market research to identify customers’ quality expectations.
3. Process and Capacity Design. This strategic decision area of operations management supports production goals. Ford pioneered the assembly line method, which maximizes production capacity. Also, Ford continues to improve its capacity by developing new facilities for its production network and supply chain.
4. Location Strategy. Ford Motor Company’s aim in this strategic decision area of operations management is to ensure strategic benefits of its facility locations. The company’s strategy involves regional production facilities, such as the Ford factories in Germany. On the other hand, dealership locations are based on market size.
5. Layout Design and Strategy. In this strategic decision area of operations management, the objective is to maximize efficiency of workflows and resources. Ford addresses this objective through automation of production processes, such as through the use of robotics in production facilities.
6. Job Design and Human Resources. Ford has the goal of maximizing human resource effectiveness and efficiency in this strategic decision area of operations management. Ford has a number of programs to support HR capacity and employee satisfaction. The company ensures continuous improvement and personnel development in its strategies.
7. Supply Chain Management. This strategic decision area of operations management focuses on streamlining and cost-effectiveness in the supply chain. Ford’s supply chain is global and involves company-owned production facilities, as well as third parties. The company-owned facilities, such as those in the Ford River Rouge Complex in Michigan, are a result of Ford’s backward vertical integration strategy. This strategy empowers Ford to control the supply of some of the materials used for manufacturing its vehicles.
8. Inventory Management. Ford’s inventory management supports just-in-time manufacturing methods, which require continuous monitoring to adjust the inventory and minimize its costs. However, in this strategic decision area of operations management, Ford’s actual inventory management performance also points to market-based inventory decisions. Different markets present different challenges, such that Ford has varying inventory management practices in different markets.
9. Scheduling. In this strategic decision area of operations management, the short-term and intermediate schedules of processes and resources are considered. Ford addresses these concerns through automated scheduling in its production facilities, and semi-automated scheduling in its offices, such as corporate offices and regional offices.
10. Maintenance. The goal in this strategic decision area of operations management is to maintain adequate business processes to satisfy demand. Ford addresses this goal through a combination of strategies for HR, IT, manufacturing and other areas, as well as maintenance teams for facilities and other assets.
Productivity at Ford Motor Company
Ford Motor Company’s operations management addresses productivity goals for the 10 strategic decision areas. Since the firm has various operations and products, a wide array of productivity measures are used. Some of Ford’s productivity criteria are as follows:
- Number of service jobs completed per day (aftersales service productivity)
- Number of vehicles rolled out per day (manufacturing productivity)
- Number of applications processed per day (Ford Motor Credit Company productivity)
- Ford Motor Company (2015). Supporting One Ford.
- Ford Motor Company Form 10-K, 2014.
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