With Ford's plans to treble production capacity in Asia Pacific and Africa (APA) by 2012, it is bringing both its global manufacturing and logistics processes, as well as its best IT systems to the region. Most notably, Ford is in the process of rolling of its European order-to-delivery system, Vista, in the major markets of APA, including India, Australia, South Africa and eventually China, so that Ford can switch from a build-to-stock (BTS) to a build-to-order (BTO) production strategy.
Despite a sales increase of nearly 50% in APA last year, as well as an 83% sales increase in the first two months of 2010 for China, Ford has seen its market share remain the same in China at below 3% and around 2% across APA. In response, the company is expanding aggressively.
“We’ve got to step it up here,” says Rick DeMuro, Ford’s director of material, planning and logistics (MP&L) for APA in an interview with Automotive Logistics magazine to be published in April. “We need to raise our market share in China and India to 6-8% to meet our goal of profitable growth. It will mean bringing in and producing more vehicles based on global platforms and recruiting fresh talent as well as getting some help from our partners.”
Part of raising that market share means bringing across its European order-to-delivery system Vista, which the company is planning to use to switch to BTO. Ford will be among the first volume producers to adapt such a model in Asia.
According to DeMuro, the system is live in Australia, New Zealand and India, with rollout planned next for South Africa. He sees the transition as revolutionary for these markets as it will help lower vehicle inventory and better balance production and transport capacity. The shift demands greater discipline from dealers and plants, but also from logistics providers that will need to provide more time-critical deliveries. It also demands improved communication and IT throughout the supply chain.S urveying the electronic links in the supply chain across APA, DeMuro sees gaps, particularly below tier one suppliers. He is adamant that the communication between tier suppliers must be automated, because “smoke signals” – such as email or fax – won’t do anymore.
“I don’t have the luxury of looking into the tier two level, so I must rely on the tier one. But if that supplier says to me, ‘oh god, [the tier two] didn’t get our email with our requirements’, then I am not a forgiving person."
The BTO transition also means Ford will need to work with providers to develop more crossdocks and milk runs. While some of these processes are already in place in Thailand, they will be expanded for Ford in India and China, according to DeMuro.
