Ford's key suppliers win more business on global vehicles

ERJ staff report (AN)

Detroit, Michigan -- Ford Motor Co.'s key suppliers are poised to reap big rewards from the automaker's campaign to design global vehicles such as the Ford Focus.

In a recent interview, Ford purchasing chief Tony Brown discussed his effort to use common parts and steer global contracts for those components to vendors in Ford's Aligned Business Framework.

Brown and two top lieutenants - Burt Jordan, Ford's executive director of global vehicle and powertrain purchasing, and Birgit Behrendt, Ford's executive director of global programs - met with Automotive News Editor Jason Stein, News Editor Charles Child and special correspondent David Sedgwick.

You now have 102 suppliers in Ford's Aligned Business Framework, which rewards key vendors with global contracts. How much of Ford's purchasing business will they get?

Brown: Eventually, two-thirds of our production will go to Aligned Business Framework suppliers. We haven't specifically said when that will happen. We have gone through supplier consolidation strategy. When we started, we had 2,400-plus suppliers. We were down to 1,500 suppliers last year, and our stated goal is 750 suppliers. We would like to see two-thirds of our production "buy" with those suppliers.

Behrendt: About 55 percent of our production purchase in 2010 was with those suppliers.

Are you getting lower prices for those global contracts?

Behrendt: We have enjoyed some benefits working with our suppliers on a number of fronts. We have saved a significant amount of engineering costs - because you pay the engineering costs for the tooling only once.

Brown: It doesn't just show up in the prices we pay for parts. [It's also] the quality and the technology of our products.

So it's important for you to have global parts on your global platforms. How successful have you been?

Brown: The Ford Focus has 80 percent common parts around the world. The parts are the same if you build that car in Dearborn, Germany or Chongqing. It will be the same part and it will be from the same supplier. That has worked very well for us.

Did you get 80 percent commonality of parts on the Fiesta?

Brown: No. We've acknowledged that the Fiesta did not start out [as a global platform]. The Focus would be the first example of the fundamental One Ford strategy coming together. In our view, if the Focus isn't the benchmark for the industry, it's awfully close.

So what would be the percentage of common parts for Fiesta?

Brown: About 60 percent.

Can you design global vehicles that have more than 80 percent common parts?

Behrendt: It's questionable. You have regulatory requirements that are different in different regions of the world. You will never be at 100 percent.

What are a couple of examples of components that are unique in different markets?

Behrendt: Lamps are a good example. You have different regulatory requirements in different regions. You also have unique emissions controls equipment.

Brown: Until you have some global standards, you are going to be limited.

From Automotive News (A Crain publication)