By Comparing Ford and Dell

First, by comparing Ford and Dell, the case helps students develop a fuller appreciation of the potential for partner conflicts that arise as incumbent firms move to procuring and selling via the web. Ford’s independent dealers, for example, are worried about losing sales to new Web-based channels and so might oppose certain uses of the new technologies. Suppliers are worried about costs of developing web capabilities and about the implications for the kind of information sharing that more direct models seem to involve (historically, sharing information with automakers has seemed to suppliers like a recipe for lowering their own margins). Students will realize that the factors are either absent or less consequential in Dell’s business.

Second, the case provides an opportunity to learn about the direct model and to understand in benefits. By discussing how Dell makes and delivers its products, students explore direct mode concepts (e.g., inventory velocity). One challenge that Dell faces that is not salient for Ford is the rapid obsolescence of its products and of components in inventory. Students must decide whether this difference diminishes the relevance of Dell’s direct model to Ford’s business.

Third, the case prompts students to consider the problems of connecting to suppliers and other external parties who tend to be less technologically advanced than the subject company. For a variety of reasons, this is more of a problem for Ford. The importance of common industry technology standards can be discussed (the auto industry’s attempt at this is called “the Automotive Network Exchange” or “ANX”).

Fourth, the case illustrates the challenges of forecasting what customers will buy. Once again, Dell’s world is simpler than Ford’s. Most of Dell’s sales are direct to large customers who can be canvassed concerning the future needs. Ford, because of its independent dealer network, does not even own the data it needs to forecast