Introduction
Business leaders in the 21st century must adapt quickly and responsibly to the speed of change. In today’s world of fast change and harsh consequences for not keeping up, many businesses have no choice but to change to stay in the trade. Hence, it is crucial that firms gain the skills required to adapt to and profit from change. No business, no matter how big or small, national or international, can avoid change today (Asikhia et al., 2021).
As a result of rapid technological innovation, advancements in information systems, internal and external stressors, e-business and internationalization, deregulation, a growing knowledge workforce, shifting social and demographic trends, and an overall increase in competition, the business environment is becoming more difficult. For Ford, debt burden, ongoing losses, and the lowest share prices in the sector due to quality control issues with its suppliers’ chain strategies necessitate drastic action (Ford Motor Company, 2021). Using Kotter’s model, this paper analyzes Ford Motor Company’s approach to change by examining the company’s overview, diagnosis, and recommendations provided in the conclusion.
Company Overview
Ford Motor Co. (Ford) is an automobile manufacturer that develops, produces, markets, and sells a comprehensive range of automobiles, trucks, sport utility vehicles, and electric vehicles. The firm offers asset finance services for vehicles. Ford offers its goods under the brand names Ford and Lincoln. It serves clients in South America, the Middle East, Europe, North America, Africa, and Asia-Pacific.
Henry Ford and eleven more investors established the Ford Motor Company in 1903. (Ford Motor Company, 2021). Bill Ford is the current Executive Chairman of the Board. Ford, his wife Clara, and his son Edsel acquired complete control of the firm when it was reinstituted in 1919 (Ford Motor Company, 2021). Ford’s successors and the Ford Foundation (established in 1936) were the only stakeholders until January 1956, when the first public offering of common stock occurred (Ford Motor Company, 2021). The corporation runs transmission factories, assembly facilities, casting plants, metal casting plants, engine plants, and other component plants.
The company also has assembly sites, factories, parts service centers, and development centers worldwide. Ford’s headquarters are in Dearborn, Michigan, United States. Ford also possesses Brazilian SUV producer Troller, 8% of British automaker Aston Martin, and 32% of China’s Jiangling Motors (Ford Motor Company, 2021). In addition, the company has partnerships in China (Changan Ford), Taiwan (Ford Lio Ho), Thailand (AutoAlliance Thailand), and Turkey (Ford Otosan) (Ford Motor Company, 2021). The Ford family controls the corporation listed on the New York Stock Exchange; they have a minority shareholding but the majority of the voting power.
Diagnosis
Good financial statement numbers indicate a company’s solid financial and market positioning. Ford Motor Company is the second-biggest industrial firm in the world, with over 370,000 employees and more than $144 billion in sales (Naor et al., 2021). Ford posted close to $7 billion in net profits and a five-year average sales growth rate of 6% in its 1997 financial information (Ford Motor Company, 2021).
Before the 1970s, its primary competitors were General Motors and Chrysler. However, with the advent of such Japanese businesses as Honda, Toyota, and Nissan, the company faced increased competition in an over-saturated car industry. Due to the economies of scale, these massive corporations could produce higher-quality goods with a shorter cycle time and cheaper cost due to swift corrective action.
However, Ford has a significant issue controlling its enormous catalog of suppliers. After the company’s merger with Daimler-Benz, Ford’s local and international suppliers increased considerably. Their supply chain is more complicated, costly to operate, and difficult to manage due to the high number of suppliers they must work with (Sanci et al., 2022).
Therefore, Ford should reduce the number of suppliers to a significantly more manageable level. This will ensure that the supply chain problems are solved, thus production costs reduced (Boudette, 2023). Ford’s business relationships will be more intricate due to the company’s large number of suppliers, which will reduce supply chain issues.
Ford also has a broad chain of car dealers in diverse regional regions worldwide. Ford had also struggled to find an effective way to handle its supply chain from the perspective of suppliers and customers, and as such, it is always looking for new methods to accomplish this.
Another issue that slows down the supply chain is antiquated information technology (Sanci et al., 2022). Despite a lack of modern IT infrastructure among the company’s first- and lower-tier suppliers, production must continue on schedule. Misunderstandings and poor coordination between the supply partners may result from inadequate information technology (Tomac et al., 2019). This could lead to more orders, longer delivery times, higher prices, and more administrative hassle. Ford also lacks influence over the ultimate buyer because their products are distributed through independent dealerships.
Kotter’s 8-Step Approach
Every business will have to deal with change management at some point because, without reinvention, they will fall behind in a very competitive market. According to Kotter, a business’s primary endeavors to raise efficiency, quality control, and corporate culture are change management efforts (Tanner, 2023). Leaders may undertake change management initiatives inside a company by adhering to Kotter’s eight-step change process.
Step 1: Establish a Sense of Urgency
This stage addresses concerns such as whether areas at Ford Motor Company need immediate change management activities. Based on the above study, some aspects that demand immediate modification are arranging the sales force to match competitive realities, constructing a new corporate structure to break into fresh markets or explore new prospects, and implementing a new sales compensation plan. All of the above modifications are essential components of the supplier chain strategy.
According to Weiss (2016), the leader should ensure that all the suppliers and internal managers adhere to the status quo. If not possible, they should embrace the change initiative. This may be accomplished by distributing data throughout the organization that validates the change assertion. Furthermore, the leadership should disseminate data to the whole company that supports the assertion that change is required.
Step 2: Form a Powerful Guiding Coalition
Most change initiatives are under the direction of new management, in whom employees have much less trust than those with whom they have worked for a long time. In the case of Ford, new leaders must use the skills of current managers and incorporate them into change management projects (Weiss, 2016). This will create a strong steering coalition that not only comprehends the gravity of the problem but also has the confidence of the organization’s personnel (Weiss, 2016).
The management should be capable of clarifying at the grassroots level what went wrong with the supply chain strategy. Moreover, the executive should be able to elucidate why the company needs to change and the consequences of implementing change. The consequence of such actions will result in a far more favorable attitude toward change initiatives among the ranks at Ford.
Step 3: Create a Vision
The most crucial duty of the leader driving the transformation activities is to define and express a vision that may gather broader organizational support. In one scenario, Ford would maintain technologically sophisticated supply chain databases in which they would need to monitor their Tier 1 suppliers and establish direct linkages with their Tier 2 suppliers. According to a second scenario, Ford would invest in constructing a system incorporating Tier 1 and Tier 2 suppliers without overusing its resources to develop more sophisticated technology. This will allow Tier 2 suppliers to report production status and participate in future design initiatives through the system (Weiss, 2016).
An online supply chain might be helpful for several reasons. Ford would first limit suppliers’ utilization of a central design database, to which they would have limited access. Variable input prices may be independently established for each supplier to disguise the real material cost.
Step 4: Communicate the Vision
Leaders should communicate the vision concerning the change initiative to their employees amicably. Sharing thoughts, feelings, and needs with other people is a key part of developing meaningful connections with them (The Importance of Communication, 2022). For example, based on Ford’s diagnosis, the leader should convey to the organization’s stakeholders the significance of suppliers having database accessibility (Weiss, 2016). Hence, IT personnel should guarantee that Ford has control over each supplier’s degree of access.
Owing to Ford’s aggressive buying approach, access to supplier pricing, contract conditions, and other sensitive information should be restricted or prohibited. As such, Ford would be able to choose the technology level at which it wishes to operate (Weiss, 2016). In this instance, each provider would only have access to their own area of responsibility. Ford would be able to maintain and alter the software with little or no modifications to the supplier’s infrastructure. Through fragmenting systems among specific vendors, the danger of information or software leakage will be minimized. Therefore, the workload of Ford’s employees will be decreased, saving them energy and time.
Step 5: Empower Others to Act on the Vision
The leaders should empower others, in this case, the employees, on the vision. Ford has always recognized the importance of its employees to the business culture, from its inception to the present day (Sanci et al., 2022). To grow future leaders, Ford should establish a secure, diversified, and happy work environment that fosters innovation, cooperation, and talent development (Weiss, 2016). In addition, Ford should give frequent evaluations as part of the Individual Development Planning (IDP) process to help employees identify their strengths and limitations. This assists workers in achieving personal goals while making significant contributions to the execution of the supplier chain strategy transformation.
Step 6: Plan for and Create Short Term Wins
Due to the transformation of the status quo, the first effect of the change initiatives will be more negative than beneficial. For instance, new training to boost productivity will initially result in a drop in present production while personnel acquire new skills and methods of operation (Weiss, 2016). To overcome such circumstances, the leadership of organizational change should prioritize short-term successes. In essence, the leaders should develop a supply chain that is virtually interwoven based on Dell’s model (Sanci et al., 2022). The method outlined above provides short-term benefits, including speedier fulfillment of customers’ demands at greater profit margins owing to the removal of reseller markups and stronger connections with both customers and suppliers.
Step 7: Consolidate Improvements and Produce More Change
Short-term successes inspire increased zeal among personnel to pursue change initiatives. Management should proceed with establishing a framework in which the current improvements can be consolidated, and additional change initiatives can be layered on top (Weiss, 2016). For instance, Ford could effectively reorient the purchasing and process design departments in order to reduce costs and boost efficiency.
For the procurement personnel to curtail the cost per lot of components by ordering more without the risk of accumulating excess inventory, the purchasing team should establish endorsements for standard parts that engineers should use. In addition, the procurement team may explore the suppliers to regulate which suppliers can most cost-effectively supply specific components based on shipment size. After this, process design would collaborate to incorporate this component into a new or existing configuration.
Step 8: Institutionalize New Approaches
Leadership must take action to permanently embed the new procedures and reforms once the improvements have been stabilized. Ford must designate an IT professional to act as an intermediary to correspond to all IT activities between suppliers and Ford Company in order for the advanced system to function adequately and as expected. In order to improve communication and guarantee a steady flow of data between partners, IT specialists should fix any problems that reoccur. By keeping tabs on online orders, the company can make sure the lead time is respected for each and every one.
Ford Motor Company should also conduct regular online surveys to gauge customer reaction. Analyzing the outcomes of a company’s performance management efforts helps in making sure that the business and HR strategies are successful (Weiss, 2016). The same applies to making suggestions for enhancements in a company such as Ford. Every year, the company’s top brass should get together to assess the model’s evolution. Changes in shareholder value, both up and down, need to be tracked and analyzed. This will help cement the organization-wide change initiative.
Conclusion
Ford should continue to develop strategic partnerships and improve its corporate culture. Dell’s level of supply chain connectivity is only possible in a system where information easily travels to all points of the supply network. By combining the virtual interoperability business model with its current supply chain, Ford can anticipate a far more productive and lucrative future.
Applying Kotter’s eight-step change approach, it is evident that many executives and managers in Ford’s supply chain failed to grasp that change management is a systematic and detail-oriented process. Hence, change is not an event in which management proclaims the changes required for the company to grow. Managing change affects not just the operational procedures of a business but also its culture and fundamental values.
References
Asikhia, O., Nneji, N., Olafenwa, A., & Owoeye, O. (2021). Change management and organisational performance: A review of literature. International Journal of Advanced Engineering and Management Research (IJAEMR), 3(1), 67-69. Web.
Boudette, N.E. (2023). Ford halts production of electric pickup over battery issue. The New York Times. Web.
Ford Motor Company. (2021). 2021 annual report. Web.
Naor, M., Coman, A., & Wiznizer, A. (2021). Vertically integrated supply chain of batteries, electric vehicles, and charging infrastructure: A review of three milestone projects from theory of constraints perspective. Sustainability, 13(7), 1-21. Web.
Sanci, E., Daskin, M. S., Hong, Y. C., Roesch, S., & Zhang, D. (2022). Mitigation strategies against supply disruption risk: A case study at the Ford Motor Company. International Journal of Production Research, 60(19), 5956-5976. Web.
Tanner, R. (2023). Kotter’s Eight step leading change model. Management is a Journey. Web.
The importance of communication. (2022). CIPP. Web.
Tomac, N., Radonja, R., & Bonato, J. (2019). Analysis of Henry Ford’s contribution to production and management. Pomorstvo, 33(1), 33-45. Web.
Weiss, J. W. (2016). Organizational change (2nd ed.). Bridgepoint Education, Inc.
