Ford’s Supplier-Relations Efforts Pay Off With Focus

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CAR Management Briefing Seminars

TRAVERSE CITY, MI – Ford’s efforts to work more collaboratively with its supply base are paying off, as evidenced by the new compact Focus, a top company official says at the Center for Automotive Research’s Management Briefing Seminars here.

In 2006, Ford initiated Executive Business and Technology Reviews (EBTR), which are in-person visits by Ford managers to long-term supplier companies, seeking the best new technologies.

The program allowed the auto maker to be first in the compact segment with driver-assistance and active-safety technologies, says Birgit Behrendt, Ford executive purchasing director-Global Programs and the Americas.

“Several technologies seen on the new Focus have come out of EBTR, such as line-spot detection, traffic-sign recognition, lane-keep assist (and) what we call city safety systems,” Behrendt says.

Some of the technologies are available on the European Focus, but Ford’s U.S. arm has said they likely will appear in the future on the American version, as well.

Working through the EBTR process with 102 Ford-identified long-term suppliers, including Magna, Bosch, Continental and Faurecia, allows Ford to be first-to-segment, if not first-to-market, with new technologies, she says.

“This is what we call democratization of technologies, because we source them for the entire vehicle platform – 2 million units in the case of the Focus,” Behrendt says. “We can introduce and provide to our consumers technologies that you typically only find on luxury vehicles,” thanks to each side’s economies of scale.

The EBTR process, meant to improve Ford’s historically poor supplier relations and unite its product-development and purchasing units, typically involves 10-12 annual visits by sets of top executives and engineering directors and/or global commodity directors in purchasing.

Behrendt: Suppliers should have faith and increase capacity.

The visits are part of Ford’s Aligned Business Framework, which identifies suppliers for long-term contracts.

Top Ford executives who visit suppliers include Tony Brown, vice president-purchasing; Derrick Kuzak, group vice president-global product development; Paul Mascarenas, chief technical officer; Joe Bakaj, vice president-global powertrain engineering; Barb Samardzich, vice president-global product programs; and Burt Jordan, executive director-global powertrain purchasing; as well as Behrendt.

“This matched pair concept that goes from the top of house down to the individual component or system engineer, system buyer, has really helped us to provide access to our suppliers with a one-stop shop,” Behrendt says.

“There is a single point of responsibility and accountability at Ford with those matched pairs for each individual commodity, and that makes our accessibility much simpler than in the past.”

The EBTR process also emphasizes transparency, she says, meaning if a supplier pitches Ford on a new product or technology and the auto maker is unmoved, “we will tell them we’re not really interested,” realizing suppliers may otherwise waste time and money.

Yet, EBTR also allows for on-the-spot decision-making on what technologies Ford will adopt and for which vehicle line.

Behrendt says 2004 is probably when Ford “reached rock-bottom” in its supplier relations, as reflected by closely watched industry surveys. “We were very complex, not very decisive (and) we were very short-term focused,” she admits.

But recent surveys show the auto maker improving, which Behrendt attributes to EBTR.

Planning Perspectives’ 2011 survey of Tier 1 suppliers ranks Ford behind No.1 Honda and No.2 Toyota as the most-desirable OEM customer. And Supplier Business/IHS’ European supplier survey finds Ford in the U.S. making “the single largest improvement in the past several years,” Behrendt says.

The global financial crisis in 2008 and a series of natural disasters, including this year’s Japan earthquake and tsunami, “brought this industry closer together.”

As an example, Behrendt says after a fire at Magna’s Howell, MI, headliner plant earlier this year, one of Magna’s competitors, without Ford’s knowledge, took the initiative to make sure the auto maker would not run short of parts.

“I found this remarkable between two competitors in a competitive industry,” she says.

As to the health of the supply base, Ford still is closely monitoring its Tier 2 and Tier 3 suppliers, although fewer are rated as risky on their financials by the auto maker, compared with the recent past.

Ford also expects to see more consolidation in the European auto-supply sector as the market improves.

Behrendt advises all Ford parts makers to have faith and increase their capacity. “Suppliers are probably rightfully so cautious to install capacity, but none of us wants to be constrained when demand is there.”

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