Ford approaches Tier 1 purchasing goal
 | Birgit Behrendt: Ford spent 65 percent of its 2012 global purchasing budget with its preferred Tier 1 suppliers. Photo credit: JOE WILSSENS |
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DETROIT -- After more than five years of changing the way it does business with suppliers, Ford Motor Co. has hit one of its key objectives: It now spends a solid majority of its purchasing budget with its preferred Tier 1 suppliers.
But it has not yet completed the planned consolidation of its global supply base.
In 2012, 65 percent of Ford's $90 billion global purchasing budget went to the 102 production and nonproduction suppliers who have been named to Ford's Aligned Business Framework of preferred Tier 1 suppliers.
Ford purchasing boss Tony Brown had said Ford wants to devote two-thirds of its production purchasing budget to those suppliers, though he didn't set a deadline for doing so.
But Ford still has to cull nearly 500 of its suppliers to hit its goal of having 750 "strategically significant long-term suppliers," including but not limited to the Aligned Business Framework suppliers. It has not given a deadline for reaching that goal.
'Healthy level of growth'
"In 2012, we reached a healthy level of growth with our Aligned Business Framework suppliers by sourcing 65 percent of our business with them," Birgit Behrendt, head of global programs and purchasing for the Americas, told Automotive News.
"Moving forward, we will continue to work closely with our ABF suppliers on collective opportunities for profitable growth," she said.
In 2005, Ford launched the group as part of an effort to establish more collaborative relationships with suppliers and move away from the cost-driven, confrontational business model that has frequently characterized carmaker-supplier relationships, particularly at the Detroit 3.
Ford conceived of the Aligned Business Framework group to promote communication, transparency, collaboration and trust and to bring suppliers into the design process earlier. To be included in the elite framework, suppliers have to conform to specific Ford standards, including sourcing with minority- and women-owned subsuppliers.
Suppliers selected under Ford's program are rewarded with long-term global contracts that allow early access to product development programs, and Ford commits to providing them with more detailed, earlier forecasts of the automaker's production schedules.
'Stronger' supplier base
Of the larger list of preferred suppliers, Behrendt said: "We have been reducing the global number of production suppliers from 3,300 in 2004 to about 1,260 at year-end 2012. We have identified plans that will take us to about 750 suppliers globally, and we are confident that our consolidation efforts will result in a stronger and healthier supply base."
Ford has actually identified the 750 suppliers that will be part of the next generation of vehicle programs. Ford will drop the other roughly 500 suppliers as current vehicle programs end.
Ford is trimming its supplier base at the same time it is reducing the number of global platforms. By the end of this year, Ford plans to consolidate 85 percent of its global production on nine core platforms under CEO Alan Mulally's One Ford plan to commonize global platforms and gain scale by purchasing common parts. Five of the nine platforms are global. Others, such as the F-series pickup in North America, are regional.
The push to common platforms has reduced the differences among classes of vehicles in different regions. Previously, the Mondeo, Ford's mid-sized sedan in Europe, was built on a separate platform than the company's North American mid-sized sedan, the Fusion.
Now, the 2013 Fusion and Mondeo are both built on Ford's global C-D platform and are virtually identical in their mechanicals, although there are still cosmetic differences. The platform will serve as the base for all Ford's mid-sized sedans.
You can reach Bradford Wernle at bwernle@crain.com.
