Ford Rethinks Supply, Demand

Meet a kinder, gentler Ford Motor Co.

As the auto maker approaches suppliers for help with its latest cost-cutting strategies, it wants consultation, not concessions, says Nick Scheele, president and chief operating officer.

“We've taken a look at supplier relationships and it was clear that we got ourselves in a situation with some suppliers where we were asking them to do an awful lot,” Scheele tells WAW in an exclusive interview.

So Ford North America is retreating from the supplier-owned tooling model while implementing “Team Value Management,” a comprehensive waste-elimination program first launched in Europe.

“We will steal,” adds a straight-faced Jim Padilla, group vice president-Ford North America. “A best practice is a best practice.”

TVM requires that OEM and suppliers dissect vehicle programs component by component to define waste and set the appropriate course correction, bearing in mind which party can best bear engineering responsibility.

“It gets us all in a room and allows the suppliers to say to us, ‘Hey, the problem is 80% yours,’” Chairman and CEO Bill Ford Jr. tells L.A. analysts.

The auto maker launches TVM this quarter, having scheduled a meeting with its top 100 suppliers. Full implementation is expected by the end of 2003.

Ford expects the program to contribute to a 15% reduction in costs. Its overseer will be David Thursfield — group vice president-international operations and global purchasing, as well as chairman and CEO of Ford of Europe — who helped shepherd TVM's rollout overseas, where the process was proven.

Whenever a component was examined for potential savings — through commonality or redesign — Thursfield tells reporters: “We never walked away with less than 10%.”

And if Ford North America doesn't realize its 15% target, he adds: “I would be disappointed.”

Meanwhile, Scheele makes clear Ford's position on the troublesome issue of supplier-owned tooling. As a result, he says, Tony Brown, Ford's vice president-global purchasing, is telling suppliers “we will no longer move forward on supplier-owned tooling.”

So, what does this portend for modules? It may not make sense to have a supplier oversee a module if 80% of the value-added comes from Tier 2 suppliers, Scheele says.

“Should the Tier 1 do it or should we do it? Those are all on the table.”

The December issue of WAW will have more on the Scheele interview.