TRAVERSE CITY, MI –Motor Co. intends to slash its global supplier list to 750 from the 3,000 it employed just a few years ago, one of the auto maker’s top purchasing executives says.
The reduction is part of the company’s vaunted “One” strategy, Birgit Behrendt, Ford’s newly appointed purchasing director of global programs and the Americas, tells the CAR Management Briefing Seminars here.
“You cannot have a good relationship with over 3,000 suppliers. It is impossible,” Behrendt says, noting five years ago Ford routinely ranked low in third-party, supplier-relations scoring studies.
A source list of 750 global suppliers is more manageable. “And we are on track to meet that number,” she says.
Ford expects to source two-thirds of its global programs from preferred parts suppliers. That means as the auto maker increases it business, so will its preferred partners.
But the downsizing already has paid dividends, Behrendt says, pointing to Ford’s improving supplier relations. It ranks No.3 overall and best among the Detroit Three, according to Planning Perspectives Inc., a consultant.
Behrendt also says Ford has shown the greatest improvement in its supplier relations in Europe. And in another recent survey, 67% of suppliers said their best relations were with Ford.
“If you know me, I’m not satisfied being middle-of-the-pack,” she adds. “Ford wants to be much better than average. Ford wants to be your customer of choice.”
But One Ford also means the auto maker will move to consolidate platforms – from 27 today to an expected 15 in 2012. “We cannot afford to develop things twice,” Behrendt says.
That’s good news for preferred suppliers, which now stay on a platform for the program’s lifecycle instead of facing the annual contract reviews of years past.
For example, 80% of the parts used on the new Ford Focus C-car are common across all regions. And 75% of the program’s suppliers are common, no matter where the vehicle is assembled.
“The combination of common sourcing and common parts is something that helps those global programs deliver,” Behrendt says.
Good supplier relations and global scale also boosts efficiency, she adds.
For example, sourcing all seats for the Focus from Johnson Controls Inc. led to a 40% improvement in development costs for the supplier. “That is being very responsible with your resources as we are with our resources.”
For the Fiesta, a single-source supply agreement withAutomotive Holdings Corp. tripled the supplier’s seat business on the car.
“That is also a significant effort form a variable cost standpoint and provides a more competitive product,” Behrendt says.