Ford Motor Company offers a good example of the manufacturing industries. As the latest trends take shape in the vehicle manufacturing industry, the sector is increasingly faced with the need to change its management operations concerning logistics and supply. Ford Motor Company has realized the need for change and is increasingly outsourcing ideas from other sectoral players. With raw materials getting scarce by the need coupled with the need to proactively manage its purchasing, demand/supply operations, the company hopes to preserve its profit margins despite the prevailing commodity volatility. Further, the company has put in place measures to engage in demand-supply balance which s well as risk management of raw materials and financial derivatives.
The Company has also incorporated software assistance in its management of logistics and accounting. The software acts as a decision support tool. Such software can identify the appropriate time to order new raw materials in time for continuous production. Further, the software has been able to successfully act as a management platform in a bid to preserve profit margins within the unpredictable market scenario.
It must be acknowledged that without these decision support tools, the company would find its ability to manage unforeseen shocks to the system including raw material volatility. The company’s renewed focus on the supply chain has been premised on enhanced efficiency and speed. It has adopted techniques to eliminate waste, minimize inventory, and hence it’s quality standards. Despite these efforts providing significant inventory reduction and giving rise to many global supply chains, the quest by organizations for low-cost suppliers and new product markets has produced uncertainty in organizations’ ability to handle unforeseen market volatilities.
The company has accepted that it is experiencing unexpected volatility levels in commodity markets. The vehicles produced currently use plenty of materials and so do the machine components installed in them. Manufacturers are therefore forced to put in place diverse and complex portfolios for procurement. These portfolios equally result in complex supply chains and a broad commodity market series. Generally, this explains the importance of decision support tools to Ford Company Limited. By adopting some of the sophisticated systems already applicable in the energy sector, Ford Company has been able to enhance its market participation through the purchase and sale of commodities and managing all logistics involved most advantageously.