Motor Co.'s Purchasing Operations are Being transformed under CEO Alan Mulally's “One Ford” strategy, which calls for all divisions of the auto maker to operate on a collaborative global basis.
To align North American purchasing with the rest of the world,last year called on Paul Stokes, former head of European purchasing.
Stokes succeeds Andrew Hinkly, who has left the company, and reports to Tony Brown, senior vice president of global purchasing.
Under Ford's new “matched-pairs” system, which teams product-development personnel with those from purchasing, Stokes works with Paul Mascarenas, vice president-product development-The Americas. Together they are responsible for all the parts that go into Ford's global lineup.
Other matched pairs include Derrick Kuzak, group vice president-global product development, and Brown; Burt Jordan, executive director-global powertrain purchasing, and Barb Samardzich, vice president-global powertrain engineering.
Stokes faces numerous challenges, including escalating commodity prices, poor supplier relations in North America and falling sales, all while the auto maker is in the midst of a massive restructuring as consumer preferences shift from large trucks and SUVs to small, more fuel-efficient cars.
Stokes leverages much of the knowledge gleaned from his stint in Europe in his new post in North America, although he admits there are big differences between the regions.
“In Europe, the market is buoyant. Ford is doing particularly well in Europe. Most of the conversations start with, ‘Can you produce some more components?’ Which is not a bad way to start a conversation,” Stokes says. “Here in North America, unfortunately, most of the conversations start with, ‘We're cutting the volume.’”
Fortunately, most of Ford's key suppliers operate on a global basis, which allows for production lost in North America to be offset by the auto maker's gains overseas.
Ford does not rely solely on global suppliers for its parts due to regional differences that cannot be avoided. Still, the concept of a global supply base is the crux of Ford's “Aligned Business Framework,” which rolled out in September 2005 to “develop a sustainable business model to drive mutual profitability and technology advancement.”
The program also was intended to cut Ford's key supplier base 50% while strengthening relationships with select preferred suppliers and improving quality.
The methodologies behind ABF, the One Ford strategy and the matched-pairs system are closely aligned, and Stokes and his team are taking advantage of the global focus they emphasize.
Unlike in the past, when global suppliers would have to deal with different Ford personnel around the globe, today they speak to one of the matched pairs, which simplifies their business plans, improves communication and allows for personal relationships to be cultivated.
“It's been complicated for them (suppliers) because they've been talking to different people,” Stokes says. “At least now when they come to have a conversation, we can give them a global impression of what's going on.”
Stokes cites Ford's upcoming C-car — reportedly a global version of the Focus — as an example of how the worldwide approach streamlines interaction between the OEM and its suppliers.
Earlier this month, Stokes, Brown, Kuzak, Samardzich and Jordan invited a small group of suppliers to Europe to review the C-car, Stokes says.
“We explained exactly where we want to make the C-car, what the global volume will be and the suppliers we want to work with,” he says. “We invited them to see the new models in the studio, which is something we've never done before at this stage, so they can actually start to get some excitement as well.”
Stokes admits there are some cases in which operating globally makes no sense, especially for a unique component that only a handful of suppliers produce.
To illustrate his point, Stokes points to a man in England who makes chrome flagstaffs with little chains.
“When the queen calls up and wants a new flag for the front of her car, the man makes the flagstaff,” he says. “He's the only guy in the world that I know of (building those flagstaffs), so I guess he's global.
“This idea that we're going to end up only with global (suppliers) will never be the case,” Stokes says. “In some areas we will be able to use global suppliers, but we're not asking every supplier to go build factories all over the place. I think we tried to do that once or twice before in the past, and it wasn't necessarily a good idea, was it?”
Ford Purchasing — By The Numbers
$90 billion annual global budget for production and non-production materials
Parts come from 5,500 manufacturing sites operated by 2,000 supplier companies in more than 60 countries
‘One Ford’ Strategy Streamlines Purchasing Operations