The Competitive Advantage Of Information Systems Information Technology Essay

Since Information System is a construct for competitory advantage which defined in the early 80s, there are tonss of companies invested at information engineering. Until now, there is a study shows that information engineering investing is being more and more in every company. It is demoing that, Information system is a foundation for carry oning concern today. In many concerns, endurance and the ability to accomplish strategic concern ends is hard without extended usage of information engineering. It is because information engineering can assist a company more easy to derive competitory by accomplishing operational excellence, developing new merchandises and services, enhanced client and provider familiarity and working digital markets. So today, information system is really of import for every company.

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This essay will discourse how utile of information system in concern, by utilizing Ford Motor Company as an illustration which utilizing information system to heighten client and provider familiarity in client relationship direction system ( CRM ) .

Ford Motor Company ‘s organisation and environment

The Ford motor company was formed in 1903 by Henry Ford whose purpose was to supply the people with a inexpensive and low-cost auto that any in-between category employed individual could have. Ford Motor Company is a celebrated company which selling automotive. It is besides a planetary automotive industry leader based in Dearborn, Michigan. It manufactures or distributes cars across six continents.

In 1995, Ford had embarked on an ambitious restructuring program called Ford 2000, which included unifying its North American, European, and international automotive operations into a individual planetary. Ford 2000 helps company cut down the cost by reengineering and globalising corporate organisations and procedures. The major reengineering undertakings were initiated around major company processes such as Order to Delivery ( OTD ) and Ford Production System ( FPS ) , with ends such as cut downing OTD clip from more than 60 yearss to less than 15 yearss.

Ford besides launched a public Internet site in mid- 1995 ; by mid- 1997 the figure of visits to the site had reached more than 1 million per twenty-four hours. A companywide Intranet was launched in mid- 1996. And by January 1997 Ford had in topographic point a business-to-business capableness through which the Intranet could be extended in a secure mode beyond company boundaries into an Extranet potentially linking Ford with its providers. Ford teamed with Chrysler and General Motors to work on the Automotive Network Exchange, which can assist providers to pull off different agencies of interaction with each car manufacturer to be consistency in engineering criterions and procedures in the provider web.

In the supply concatenation country, there was general understanding that information engineering besides could be deployed to dramatically heighten stuff flows and cut down stock lists, replacing information for stock list, as the look went. So in the program of Ford 2000, for run intoing the purpose on reengineering undertakings, holding a nice supply concatenation direction systems and client relationship direction systems can assist the company more close to providers and clients which can easy to cut down the cost on order to bringing system and Ford production system. As that clip Internet revolution unfolded in analogue, Ford Motor Company created new possibilities for reengineering procedures within and between endeavors by utilizing Internet.

– Ford ‘s Existing Supply Base

The bing supply base was in many respects a merchandise of history. Start in early 1990s, Ford had begun to seek actively to diminish the figure of providers the company dealt with straight. Rather than utilizing a big sum to purchase single constituents, it shifts to hold long-run relationships with a subset of really capable providers who would supply full vehicle subsystems. By making that, Ford can easier to hold a well nexus with major providers which can assist Ford easier to bettering a scope of techniques such as just-in-time and entire quality direction.

– Ford Motor Company ‘s SCM and CRM engineering of Information system

– Ford Production System

In restructuring program, Ford 2000, the most of import is reengineering undertakings ; one of these undertakings is Ford Production System, it is an information system to accomplish a close relationship to providers. Its purpose is that better the procedure on doing motor to be more pull-based system, with synchronised production, uninterrupted flow, and stableness throughout the procedure. To accomplish that, Ford could state providers precisely when and where certain constituents would be needed yearss in progress, and buffer stocks therefore could be reduced dramatically. If this system can work successfully, the benefits would be felt throughout the supply concatenation.

– Order to Delivery

For another cardinal procedure Ford reengineering undertakings is looking for better the client relationship direction system. The information system to make that is Order to Delivery, the intent of this system was to cut down to 15days the clip from a client ‘s order to bringing of the finished merchandise. The Order to Delivery vision was to make a thin, flexible, and predictable procedure that harmonized the attempts of all of Ford ‘s constituents to enable it to supply consumers with right merchandise in right topographic point at right clip, which means that it can assist Ford Motor Company run into the just-in-time technique. By accomplishing Order to Delivery, Ford believed that it would supply better quality, higher client satisfaction, improved client choice, better works productiveness, stableness for its supply base, and lower trader and company costs.

– Ford Retail Network

On 1 July, 1998, Ford Motor Company launched the first of its Ford Retail Network ventures in Tulsa, Oklahoma, under the freshly formed Ford Investment Enterprises Company. The rule of Ford Retail Network was that giving consumers the highest degree of intervention and make an experience they would desire to come back to once more and once more. The salesrooms would be consolidated to concentrate resources on making a superior merchandising experience, while the figure of service mercantile establishments would increase to be closer to client population centres. Then Ford can cut down the cost on advertisement every bit good as more and more on utilizing Internet to supply the service to the clients as the information system can analysis the demands for clients efficaciously.

– Exploitation SAPA® package

Until now, Ford non merely merely follows the web-site to supply the service to clients, for accomplishing entire supply concatenation visibleness in existent clip, increasing trader and client service satisfaction and minimizing costs, particularly ongoing IT costs, Ford besides utilizing SAPA® package, to better the public presentation on supply concatenation direction and client relationship direction.

Business theoretical accounts for Ford Motor Company

– Three generic schemes – Cost Leadership

Under Porter ( 1985 ) , he regarded the choice of a defensible place within an industry as the terminal consequence of a competitory strategic analysis. He argued that successful, profitable companies by and large choose to vie on either low costs or by distinguishing their merchandises to run into specific client demands. Although these two strategic options are reciprocally sole, he added a 3rd class of houses as niche participants that serve a specific market or merchandise section. Porter ‘s three generic schemes are: cost leading, distinction and focal point.

“ Henry Ford was a husbandman ‘s boy whose fabrication mastermind transformed life around the Earth ” ( Ford Motor Company, 2010 ) . So that Ford Motor Company is following the concern theoretical accounts which Henry Ford want to be. It is the cost leading.

In the car industry, Ford Motor Company can run into its concern theoretical account, cost leading. As Porter ( 1985 ) stated that cost leading is about being the lowest cost manufacturer in the industry. For an organisation to derive competitory advantage, it must accomplish overall cost leading in an industry it is viing in. To lowest the cost, there are many techniques and methodological analysis for organisations to utilize. Among the popular and successful techniques used by successful organisations worldwide in heightening quality, productiveness, take downing cost are six methodological analysis, Total Quality Management ( TQM ) , Benchmarking Competitors, Just-in-Time ( JIT ) , Supply Chain Management ( SCM ) , Entire Productive Maintenance ( TPM ) and MRP solutions.

When Ford Motor Company developed the information system, it is easier to accomplish this concern theoretical account. It is because Ford utilizing information system to better the relationship to clients and providers. Ford develop the Ford Production System can assist it to better Supply Chain Management system to be a competitory advantage. And besides, the Order to Delivery system can cut down the clip, which means Ford can easier to accomplish the just-in-time techniques.

Not merely these two grounds, but besides the major ground of Ford can accomplish this concern theoretical account, cost leading, is that Ford through developing information system to acquire a power on utilizing a cheaper monetary value to purchase the stuff from providers. By that, Ford can cut down the cost efficaciously, that ‘s why Ford Motor Company can accomplish cost leading.

Ford developed the information system is focus on enhanced client and provider familiarity, it is looking for what clients want to, non for what company what to develop. So that means, Ford is non merely concentrate on narrow mark. It is because different clients need different type of autos.

– Value Chain

Porter ( 1985 ) stated that value concatenation theoretical account is a systematic manner of analysing all the house ‘s activities and measuring how they interact with each other. Such an scrutiny is necessary in order to place possible beginnings of competitory advantage. For Porter, the value concatenation can be consisted for five primary activities ( including inbound logistics, operations, outbound logistics, selling and gross revenues, and service ) and four support activities ( including house substructure, human resource direction, engineering development and procurance ) .

The value concatenation of the Ford Motor Company is non all that different from other makers in the car industry. However, when Ford Motor Company developed information system, it helped Ford to better its value concatenation. In one of support activities, Procurement, Ford through its information system, Ford Production System, to better the relationship of providers, it is non merely assisting Ford to cut down the cost for purchasing stuff, but besides working closely with its providers to extinguish waste and thereby lower costs for both organisations. This should be a “ win-win ” state of affairs for both companies and should assist raise Ford from its near-last ranking in provider dealingss.

The following activity for information system to better is engineering development. Ford through the information system, Ford Retail Network, to understand the value of consumer input and what consumer needed, which can assist Ford easier to plan a successful modern design engineerings. They have initiated orienting design theoretical accounts after public demand. This method has proven extremely successful in recent fiscal periods.

Selling is besides a really of import facet of the Ford. By utilizing Ford Retail Network system, Ford has been working together with traders or buys all traders to roll up more information to make selling schemes that help hike gross revenues. This is proven to be the primary footing for the consumers ‘ perceived values.

Ford has besides teamed-up with Caterpillar Logistics and SAP to better repositing and its Daily Parts Advantage web for acquiring trim parts to their traders. Their hope in partnering with Cat Logistics was “ to procure a spouse with expertness in the automotive supply concatenation, puting a foundation for development of a new information system. The end was to obtain end-to-end visibleness of service parts, increase the velocity of clip to market, optimise stock lists at each location, and do a better occupation functioning the client ” ( Supply Chain Brain ) .

Along with Cat Logistics and SAP, Ford is besides utilizing an SAS platform that supports client relationship direction ( CRM ) . This SAS platform enhances Ford ‘s bing client relationship database and provides a powerful base for information analysis, informations excavation and prognostic mold therefore enabling extremely effectual coverage, trending, cleavage, client marking, and client life-cycle analysis all of which support key activities for CRM.

As information system can better tonss of activities in value concatenation, it can assist the company to derive the competitory advantage.

Problems and challenges in the development of the Information System

When Ford Motor Company developed the information system, it needs to confront tonss of challenges. Here are some of them.

– Costly and seasonably

As Ford is a big company, it is really dearly-won on developing information system. There are complex pieces of package which Ford developed to accomplish its competitory advantage. To develop these big system, Ford need to pass its resorts. Not merely the cost on purchasing package and hardware of the system, but besides other cost such as confer withing fees, forces costs, developing. Besides, most of them need to pass clip to develop. For Ford Motor Company, it has big squad on Information Technology, which needs to engage tonss of employees to work. There are dearly-won on the wages and besides it needs spend over one oral cavity to develop the employees to understand the system and utilize the system.

As Ford adopts an enterprise application from SAP, it is really dearly-won to exchange SAP and it become dependent on SAP to upgrade its merchandise and keep its installing.

– Hard to roll up information

Some of the information systems which developed by Ford focal point on supply concatenation direction. These systems require multiple organisations to portion information and concern procedures. It is hard for each participant to alter of its procedure and the manner it uses information to make a system that best serves the supply concatenation as whole. Besides, there are different policies in different company ; Ford can non roll up the information to the full for its providers as some of the information may be the secretiveness.

– Hard to manage the engineering

As the engineering of information system such as cyberspace is growing rapidly, it is non easy for Ford Motor Company to understand clearly about the engineering, it will be a hazard on losing money when develop that engineering. So when developing the information system, Ford needs to do certain it understands what is its usage clearly.


In short, Ford uses information engineering on concern director, SCM and CRM, for enhanced client and provider successfully. It can see that information system can assist Ford accomplish its concern theoretical account.

Presents, every company will develop the information system to accomplish competitory, most of them have the e-business, excessively. It is surly that information system is a really utile and major tool to assist company to run into their purposes. However, it does non intend have information system can assist the company to make a successful concern, because the most of import is that company have a correct concern scheme. As the illustration on Ford, its concern theoretical account is cost leading ; it is a great competitory advantage at early 1900s when Ford provided Model T autos. However, following the alteration of environment, it is non work now. So, if a company privation to accomplish competitory, it is non merely concentrating on develop information system, but besides concentrating on the concern scheme.