CHALLENGE: need for business process reengineering in Ford Motor Company

Ford Motor Company is the world’s second largest manufacturer of cars and trucks with products sold in more than 200 markets. The company employs nearly 400,000 people worldwide, and has grown to offer consumers eight of the world’s most recognizable automotive brands.

CHALLENGE

With inherent large-scale growth issues, more demanding customers, and mounting cost pressures, Ford needed to transform from a linear, top-down bureaucratic business model to an Internet ready, nimble organization that engages and integrates customers, suppliers, and employees.

SOLUTION

Working with Cisco, Ford integrated and leveraged their supplier base by designing Covisint, …show more content…
It doesn’t send a copy of the purchase order to anyone. When the goods arrive at the receiving dock, the receiving clerk checks the database to see if they correspond to an outstanding purchase order. If so, he or she accepts them and enters the transaction into the computer system. (If receiving can’t find a database entry for the received goods, it simply returns the order.) Under the old procedures, the accounting department had to match 14 data items between the receipt record, the purchase order, and the invoice before it could issue payment to the vendor. The new approach requires matching only three items- part number, unit of measure, and supplier code- between the purchase order and the receipt record. The matching is done automatically, and the computer prepares the check, which accounts payable sends to the vendor. There are no invoices to worry about since Ford has asked its vendors not to send them. Ford dint settle for the modest increases it first envisioned. It opted for radical change- and achieved improvement.

FORD REENGINEERED THE PROCESS. NOW ITS FAST AND EFFICIENT

The new process cuts head count in accounts payable by 75%, eliminates invoices and improves accuracy. Matching is computerized.

CONCLUSION:

Ford discovered that reengineering only the accounts payable department was futile. The appropriate focus of the effort was what