Despite the revamping effort, Ford remains plagued with prolonged Order-To-Delivery (OTD) time periods, congested inventories and error-ridden procurement processes. Upon investigation, these troublesome issues appear to be well addressed by the radically new direct business model of the Dell Computer Corporation. Dell differentiates itself through the utilization of virtual integration, an efficient and effective direct business model facilitated by electronic business providing Build-To-Order (BTO) products directly to customers. The process begins with the customer specifying exactly which features are to be included in the desired computer. Dell, then, buys components from several different suppliers via Internet-based JIT ordering. By using Dell’s process of JIT ordering , misallocation of company resources is avoided and unnecessary inventory is limited resulting in a core competency of considerable cost reduction. By substituting information for inventory, Dell’s lean business structure offers mass-customized machines that are ordered, assembled and delivered with reduced lead times without sacrificing margins or maintaining inventory.
Although, Ford may never be able to achieve the efficiency of the Dell computer Company, it can achieve a low cost position in the industry by integrating a direct supply network. Ford’s goal of TQM could be easily met by implementing a variation of Dell’s already successful virtual integration business model. Fostering cooperation through incentives is key since compliance of supply chain partners is necessary to gain first-mover advantage.
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