Ford is urging suppliers to take advantage of the auto industry’s restructuring to create a more financially viable business model that will help suppliers and automakers alike when the economy recovers.
Burt Jordan, executive director of global powertrain purchasing at Ford, said the dramatic changes in vehicle volume and segment mix provide suppliers with a unique opportunity to re-examine their product portfolios, financial structures and balance sheets, as well as manufacturing capacity and footprint to reshape their businesses for future success.
In remarks at the Center for Automotive Research’s Management Briefing Seminars, Jordan outlined how Ford is committed to supporting its long-term suppliers as they work through the difficult restructuring actions brought on by the challenging economic conditions.
“I encourage every supplier to examine your business and ask yourselves questions about where you see things going in the future,” he said. “For those that we have selected as long-term partners, we will work with you to help you achieve your goals.”
Facing an industry in crisis, Jordan explained how Ford’s purchasing group last year significantly expanded its supplier risk management team to better understand the health of the company’s base. Then, armed with an extensive data profile of its production suppliers, Ford accelerated its supplier consolidation efforts already in place under the Aligned Business Framework (ABF) program started four years ago. Under ABF, Ford and its key suppliers set long-term relationships designed to improve collaboration and mutual profitability.
Ford had 2,198 global production suppliers at the end of 2008. Of those, 1,683 were eligible for new sourcing. After an extensive review of suppliers over the last six months, Ford expects to be able to reduce the number of suppliers eligible for new sourcing to 850 by the end of this year. Ford has a long-term goal of 750 total global production suppliers.
Ford’s supplier consolidation efforts support the company’s “One Ford” global product plan, which calls for fewer but higher-volume platforms, global vehicles such as the Fiesta, Focus and Transit Connect, as well as increased parts sharing and commonality. By increasing the number of common parts across a smaller supply base, Ford will be able to make progress toward the One Ford goal: profitable growth for all – including suppliers.
“The Ford purchasing organization is laying the groundwork for a more financially viable supply base when stability returns to the industry,” Jordan said. “We understand the strengths and weaknesses of our supply base better now than we ever have before. That knowledge gives us the ability to also turn the crisis into an opportunity by accelerating our own consolidation with the right suppliers going forward.
“We want you, as suppliers, to play an equally proactive role in shaping the industry’s future,” he said.