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Ford Motor Company Operations Management, logistics Essay  

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Operations Management, logistics

Operations management and logistics refer to the strategies adopted by companies to help them improve performance. Organizations incorporate logistics and supply chain management to gain a competitive advantage over other companies in the market (Christopher, 2016). Operations management logistics focus on improvement of all operations in an organization and especially the production and distribution process. Efficiency and effectiveness in an organization can be achieved through the application of proper operations management and logistics strategies. Effectiveness in this area is associated with the ability of logistics to meet market needs in a fast and efficient manner due to its flexibility (Christopher, 2016). Logistics also helps organizations in reducing operating costs as it reduces the cost of inventory storage thus giving a business a competitive advantage. To maintain the competitive advantage companies, have to closely manage their operations internally and externally with more focus on the supply chain models adopted (Christopher, 2016). There are various techniques applied in this area that organizations can integrate such as total quality management, just in time technique, choice of location and office layout among others. This essay presents an investigative discussion on performance and effect of operations and logistics management on performance based on a case study of Ford Motor Company.

 Ford Motor Company is an automobile company based in the united states. The company was founded by Henry Ford in 1903 when it started selling motor vehicles under the brand name Ford with its headquarters in Dearborn Michigan (Macdonald, 2017). The brand has grown over the years incorporating other cars where it now sells luxury cars under the brand name Lincoln alongside the Ford brand. The company has also entered into joint ventures in other countries such as Brazil and China where it holds an ownership percentage on several motor companies across the globe making it an international company (Macdonald, 2017). Ford is presented as the second largest automobile company in the united states, and fifth in Europe thus serves an extensive market base.

Quality management is a significant factor in business as it influences various aspects such as brand perception, the reliability of products and company profitability (Sallis, 2014). When products produced are of low quality, they cause losses on the business due to the need for reworks and in extreme cases loss of customers. This is because customers deem such products as unreliable thus moving to a different brand. Quality is essential in the motor vehicle industry as it affects not only consumer perception but their safety as well. Quality of products is also used as a critical performance indicator making it a significant factor that organizations should consider as part of operations management logistics (Sallis, 2014). Quality management can be enhanced through the incorporation of total quality management to ensure the products that reach the market are of very high quality. Total quality management follows up every stage of the production process ensuring mistakes are recognized at an early stage thus avoiding huge losses.

Business location and layout is another factor that has far-reaching effects on the operations of an organization. Location and layout affect business operation and has an impact on organizational success. In the choice of location and layout, the business has to ensure they choose one that maximizes on production through reduction of lead-time (Wee and Wu, 2009 p. 335). Location and layout can be used to determine organizational success by ensuring that distance traveled where material and human resources are involved in reduced. Such a layout is also bound to facilitate monitoring of operations as factors work together as a close-knit unit. Accessibility is also a significant area of consideration where the location is concerned as a business has to be accessible to customers. When companies select a wrong location for the business, it limits their access to customers thus curtailing market penetration and organizational success (Wee and Wu, 2009 p. 335).

Quality management is a strategy used in logistics to help improve productivity and overall performance in the company. Total quality management is used to improve quality as streamlines business processes ensuring they are in line with the set goals and objectives thus ensuring efficiency and effectiveness are maintained (Hartley, 2017). The problem of quality identified at ford is lack of consistency. Being a leading motor vehicle manufacturing company Ford has managed to bring out some of the best products in the market with high quality and unique features that make them very competitive. However, some of the products produced by the company has had issues with quality as shown by the numerous customer complaints received by the customer care department (Hartley, 2017). It is therefore essential to incorporate TQM in the company in order to ensure consistency in quality of cars produced and recognize areas that need reworking before they get to the market which will help reduce liability for the company and also improve customer loyalty.

Maintenance of quality starts at the goal setting point where companies have to set clear goals on the level of quality they aspire to achieve. Among the areas that the company needs to address in order to achieve high quality is setting realistic economic goals (Hartley, 2017). The company has a wide variety of motor vehicles that it is operating which makes it difficult to manage operations and ensure efficiency. The company has been highly focused on profits due to use of the SIGMA method of management thus compromising on quality in order to make higher profits (Hartley, 2017). The company, therefore, needs to reintegrate total quality management as well as formulate realistic economic goals that enable them to serve customers effectively and also remain profitable. Downsizing regarding variety reduction is a move that will help the company gain a competitive advantage over other motor vehicle companies. This move helps improve quality as it allows them to concentrate on innovation and improvement of existing cars giving them unique features rather than producing numerous varieties.

Another area in the organization where total quality management is required is a measurement of goals and operational performance. Incorporation of the just in time strategy can help significantly in the improvement of quality where customer service and overall performance measurement is concerned (Ross, 2017). Customer satisfaction is the overall threshold for measurement of performance and quality. Ford Kenya, therefore, has to integrate it among the key performance indicators and incorporate customer feedback in the manufacturing process in order to enhance quality and thus increase customer satisfaction. Total quality management integrates employees in the process ensuring that all individuals are working towards a similar goal and ensuring they understand the quality goals and objectives made (Ross, 2017). The company, therefore, need to include a workshop on quality to ensure all employees understand what is expected and to focus their practices towards customer satisfaction.  

Another tool that can be used to improve quality in the company is benchmarking. Benchmarking refers to a practice where companies observe the functionality of another business in the industry that is performing better and evaluate the processes that they can adapt to improve their performance (Ross, 2017). While Ford is among the best motor vehicle manufacturing companies in the world, it still needs to work on quality management to ensure their products are consistent. This can be achieved by benchmarking with another company such as Toyota company that is well known for the provision of quality products under all circumstances. External benchmarking is seen as the best strategy in this case as it allows the company employees to learn different ways of handling operations to maintain quality. Wastage of materials is sighted as one of the issues that lead to reduced quality in the company (Chang, 2016). External benchmarking would therefore, help in learning the practices that work best in the industry which they can implement and reduce the issue of wastage thus maintaining quality.

Total quality management can also be applied to segment the relationship between ford and its main suppliers. Total quality management involves fostering good relations with all stakeholders in the industry especially the suppliers (Chang, 2016). The company needs to stop relying on inspection as the method to ensure quality in materials provided. Ford should adopt a hands-on approach by getting involved in the process from the start and inspecting products from the first stage at suppliers’ plant as raw material throughout the whole process to the point they are supplied to the company (Chang, 2016). This ensures that high quality is maintained and also fosters good relations between the company and suppliers as they are both invested in the process of quality maintenance thus reducing loses on both ends.

Business location and layout is another area that determines successful business operations. Business location dictates operational success as it influences other factors such as acquiring of materials also and transportation of finished products to consumers. When a company chooses the right location, they can operate smoothly and get raw materials into the company easily without incurring extra costs for transportation (Mangan, Lalwani, and Lalwani, 2016). The ideal location in the case scenario presented would be close to the source of raw material in order to reduce transportation costs incurred. Locating the industry close to the raw materials also enhances efficiency in that it reduces movement of both people and materials thus cutting on cost (Mangan, Lalwani, and Lalwani, 2016). Location logistics, therefore, look into the formulation of a plan that combines business objectives with a compatible location that works towards those goals.

The location strategy put in place must be compatible with the set objectives as well as the overall strategies Incorporated in the company. Ford company presents well thought out strategies regarding location as the manufacturing plants are located in areas close to the source of raw materials as well as the storage area (JH, et al., 2016). The showrooms used for the sale of vehicles produced are also optimally located in areas where customers can access them easily. These showrooms are also well distributed globally ensuring that the consumers have access to the vehicles irrespective of the area in which they are situated. The virtual location has also helped significantly in the management of logistics in this area. The company has a virtual shop where the sale of vehicles can be made through online platforms on the company’s website (De Toni, A.F., 2016, 2016). This is a management strategy that has significantly helped in enhancing efficiency and organizational success.

An appropriate business location as De Toni (2016) elucidates is one that is close to all factors of production such as labor and transport. Although Ford company has adopted the right strategies in the determination of location the company need to improve on the strategies involved in the choice of the storage location. Since Ford is a global company, there is a need to bring warehouses closer to shipping docks as most of the vehicles sold abroad are shipped through waterways and ships. The right location is also dependent on the size of the firm and political factors. Ford has been a global company required a large floor area for expansion and thus has to locate its industries to areas where there is room for expansion.

After the right location is selected, an organization needs to analyze the available space and optimize on it by applying the right layout.  When it comes to the layout of the organization, it has a significant role in the improvement of performance and general operations. The layout is essential as it dictates factors such as movement of materials along the supply chain from raw material, through production to the final product (Prokhorova, Kolomyts, Nenasheva, Sholukha, and Vashchenko, 2016). Layout helps in the optimization of the production process where the right layout is Incorporated as wastage and non-value adding handling of materials is eliminated. The site layout has a significant effect on organizational performance as it controls the production process. When the site layout is structured in the right manner flow of materials is efficient and wastage of time, materials and labor is minimized.

Company layout is also crucial as it determines the quality of materials produced as well as efficiency in the movement of human factors and materials. Proper layout in a company ensures quality products at a lower cost of operation (Prokhorova, Kolomyts, Nenasheva, Sholukha, and Vashchenko, 2016).  The layout Incorporated by Ford is divided according to the production work done at every point. This form of payout creates an unrestricted flow of materials and human resources thus enhancing quality and reducing the time taken to manufacture products. The layout is subdivided into sections based on the machines used thus creating space in areas where large machines are used.

Triple bottom line

Economically ford company has on several instances been shown to focus on bottom lines and profit margin. This is shown through the decision made by the company to incorporate the six sigma practices as part of their quality management (Macdonald, 2017). This is a strategy that has caused various issues in quality as shown through customer complaints raised compared to the use of other TQM methods. Sigma compromises on quality in some instances as it aims to make products at the least monetary cost to increase profits. Organizations have a responsibility to conserve the environment through practices that are environmental friends in the disposal of waste products and gas emotions produced (Macdonald, 2017). Ford company embraces fully the move to conserve the environment by focusing on the sustainable environment.

The company has expanded its operations to the production of motor vehicles that run on electricity in a move to help reduce fumes produced from burning of fuel (Macdonald, 2017). This is a move that conserves the environment through reduced gaseous emissions as well as reduced consumption of non-renewable fuels. The company has also helped in environmental conservation through the provision of expert advice to government agencies on the regulations that should be put in place for the upcoming electrical vehicles (Macdonald, 2017). Socially the company has contributed through several charitable funds and their capital grant program; where it gives back to the community. The company has also sponsored several groups in social areas such as women empowerment in Saudi Arabia and the improvement of health and sanitary conditions (Macdonald, 2017). The company aims to build a self-sustaining community through philanthropic endeavors that improve the lives of individuals.

Recommendations

Although Ford Inc. has been doing well regarding operations management and logistics, there are still areas where improvement need to be made. In the area of location and office layout, the company needs to track the movement of products to ensure the flow is consistent and also reduce material handling where there is no value addition to enhance performance. Another area that the company needs to improve on with the layout is spacious working areas, especially in the assembly area. A proper layout provides a spacious working area to minimize the risk of accidents. The company, therefore, needs to come up with a proper strategy that ensures individual have enough working area thus mitigation of such risks.

The company also needs to improve their quality management strategies in several areas. The company needs to stop relying on inspection as the method to ensure quality in materials provided. Ford should adopt a hands-on approach by getting involved in the process from the start and inspecting products from the fast stage at suppliers’ plant as raw material throughout the whole process to the point they are supplied to the company. This strategy ensures that high quality is maintained and fosters good relations between the company and suppliers as they are both invested in the process of quality maintenance thus reducing loses on both ends.

Conclusion

Generally, maintenance of high quality in products is essential as it plays a significant role in driving the organization towards success operations thus making higher profits. Ford company should, therefore, ensure they incorporate quality management strategies that will help achieve the desired quality. Location and layout have also been presented as important in an organization as they simplify matters and streamline the flow of operations when incorporated in the right manner. Organizations should, therefore, strive to choose the right location and layout for their operations that not only minimize risks but also improve access to the market.

Word count (without references): 2619

References

Chang, J.F., 2016. Business process management systems: strategy and implementation. Auerbach Publications.

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

De Toni, A.F., 2016. Ford Case Study: The Network Evolution from Extended Enterprise to Virtual Enterprise. In International Operations Management (pp. 74-95). Routledge.

Hartley, J.R., 2017. Concurrent engineering: shortening lead times, raising quality, and lowering costs. Routledge.

JH, F., Li, M., Su, X., Zindel, J., Luo, A.A., Verma, R., Wangº, Y.M., Bilkhu, S. and McCune, R.C., 2016. ” Ford Motor Company, 2101 Village Road, Dearborn, MI 48121. Magnesium Technology 2014, p.517.

Macdonald, D., 2017. Ford Foundation. Routledge.

Mangan, J., Lalwani, C. and Lalwani, C.L., 2016. Global logistics and supply chain management. John Wiley & Sons.

Prokhorova, V.V., Kolomyts, O.N., Nenasheva, A.I., Sholukha, N.A. and Vashchenko, P.G., 2016. Logistics management as a tool to achieve competitive advantages of the enterprise trade. International Review of Management and Marketing6(6S), pp.32-37.

Ross, J.E., 2017. Total quality management: Text, cases, and readings. Routledge.

Sallis, E., 2014. Total quality management in education. Routledge.

Wee, H.M. and Wu, S., 2009. Lean supply chain and its effect on product cost and quality: a case study on Ford Motor Company. Supply Chain Management: An International Journal14(5), pp.335-341.

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