Ford Motor Company, one of the oldest and largest automobile manufacturers, was
established in 1903 by Henry Ford. In 2024, it sold over 4.4 million automobiles, generating
$185 billion in revenue, with its pickup trucks leading sales in the U.S. Ford pioneered the
standardization of automobile parts, reducing costs and enhancing efficiency, and was one of the
first to vertically integrate production vertically, controlling the entire process from raw material
extraction to assembly. This integration has improved production control and accelerated
innovation.
Building on its legacy, Ford emphasizes supply chain management, operating in North
America and over 125 countries. Its multi-tiered supplier system includes Tier 1 suppliers, which
provide major components, and Tier 2 and Tier 3 suppliers, which supply raw materials.
Components are managed by logistics control towers for dispatch to over 60 global assembly
plants, based on vehicle types such as trucks and electric vehicles (EVs). Once assembled,
vehicles are transported to distribution centers for customer purchase.
Despite its extensive supply chain model, Ford faces potential disruptions from
pandemics, semiconductor shortages, and geopolitical tensions. To combat these challenges, it
must strike a balance between lean operations and resilience in supply chain management,
aiming for 100% renewable energy in manufacturing by 2035 and achieving carbon neutrality by
2050.
Introduced in 2021, Ford+ is the company’s growth strategy, aiming to redefine customer
value, reduce cyclicality, and generate profitable growth. Ford focuses on three segments: Ford
Blue for gasoline and hybrid vehicles, Ford Model e for electric cars, and Ford Pro for
commercial customers, targeting reduced ownership costs.
To meet its electric vehicle goals, Ford is prioritizing the development of new long-range
commercial vans, mid-size trucks, and SUVs to boost customer adoption. It has realigned its
U.S. battery sourcing plan to reduce costs and maximize production capacity. Currently, a
significant concern is the global supply chain challenges, including semiconductor shortages and
geopolitical tensions from U.S. tariff implementations, which coincide with Ford’s electric
vehicle initiatives.
While supply chain issues are common, Ford is experiencing unique struggles. Multitiered networks complicate real-time management, illustrated by fluctuating tariffs with China.
This raises the question of how corporations can adjust their product lines to mitigate costs
without passing on increases to consumers, which burdens households and affects companies
with fewer options.
Ford is responding to the rising demand for electric vehicles, despite facing sourcing
challenges for the necessary components. Many automakers struggle to secure raw materials for
EV production, yet Ford’s 2021 Ford+ initiative aims to develop affordable options, such as the
Mustang Mach-E and the F-150 Lightning, while retaining gasoline-powered vehicles.
The Ford Blue division features traditional vehicles with updated enhancements for longstanding customers. Ford Model e was created to capitalize on the electric vehicle trend,
leveraging advanced technology for a competitive edge. Lastly, Ford Pro offers a comprehensive
range of commercial vehicles and services, ensuring a one-stop shop for fleet needs, including
software solutions and maintenance.
Although Ford has demonstrated success over the years, the company has faced several
significant challenges. These include global supply chain disruptions caused by external factors
such as the pandemic, material shortages impacting EV production, and geopolitical tensions
resulting in increased tariffs. Potential strategies to address these challenges include diversifying
supply chain sources, expanding Ford’s vertical integration efforts, increasing inventory buffers
for essential components, and advancing domestic manufacturing initiatives.
Increasing the variation in supply chain sources would reduce dependence on a single
supplier, especially in cases where tariffs have been imposed, leading to the following strategy:
advancing domestic manufacturing. Developing U.S.-based component plants where vehicle
production would occur would significantly reduce the risk of transportation issues and lower the
costs of incurred tariffs. The following strategy would be to expand Ford’s vertical integration
efforts. Increasing the ownership in chip manufacturing would resolve the previous issue that has
impacted electric vehicle production. The last strategy proposed would be to shift from a just-intime inventory model to a just-in-case model, specifically on those critical components where
shortage issues have arisen, to ensure materials are available when needed.
Now that we have identified potential strategies to resolve issues involving global supply
chain disruptions, material shortages, and geopolitical tensions, we must establish criteria to
determine whether these strategies are successful or not. The requirements that would be most
beneficial to consider when deciding whether to develop the strategy are cost efficiency, risk
reduction, customer satisfaction impact, and scalability. This set of criteria would measure
whether company profits would increase, exposure to risks and production delays would be
reduced, and, lastly, whether the strategies can evolve as needed.