Ford is forming closer alliances with suppliers who offer integrated systems, says Hans-Peter Kunze, vice president of purchasing at Ford of Europe. Kunze has held that post since December 1997. Prior to joing Ford, Kunze spent seven years as a purchasing executive at Volkswagen. He was interviewed by Automotive News Europe's Edmund Chew.
How much does Ford of Europe spend on production parts, and how many people work in the purchasing department?
Ford's spend in Europe totalled around $13 billion in 1998. It will be approximately the same this year. About 35 percent is spent in Germany, 29 percent in the UK and 11 percent in Spain. We have 580 buyers including all support functions. Ninety percent are employed in the UK and Germany, split roughly equally between the two locations.
Is the number of suppliers Ford uses rising or falling?
Ford has a global base of some 1,600 suppliers. But this number is declining, driven by the move to a more systems-based approach and by consolidation within the supplier base. In Europe, for example, we had 800 suppliers for the Escort. We have about 200 for the Focus.
Ford has led the introduction of supplier parks to Europe. Will this trend continue?
We have a lot of experience with supplier park operations in Valencia (Spain, where Ka and Focus are built) and Saarlouis (Germany, which also makes Focus.) As well as cost benefits, we have also seen quality improvements and environmental benefits. So, yes, I think we will continue to develop supplier parks.
Will you bring suppliers into your plants?
We have no plans to do that.
What percentage of parts bought-in are modules?
It varies from model to model. Ten suppliers in Saarlouis supply some 40 percent of the value of the Focus in the form of modules and subassemblies. If the recent trend in Europe continues, the modular share is likely to increase with our new products.
How far will modularization go? Will a total interior be sourced from a single supplier in Europe?
This situation might happen, especially with niche vehicles. But you need to be sure that there are overall benefits - not only in terms of cost. For example, you have to consider whether suppliers have the necessary resources, including engineers and program managers, to do everything themselves.
How and when do you select suppliers? Do you have design competitions?
We select our suppliers roughly at the time of design freeze, using cost, quality and technical targets. We also place significant emphasis on the supplier's ability to support a global product platform. The supplier must be able to develop and deliver high-quality components at volume, and use leading-edge technology and solutions. We do not usually use concept competitions. Our decisions are based more on our policy of strategic long-term partnerships.
Are you happy with your experience of single sourcing?
Generally, we have had positive experiences. Although single sourcing can bring economies of scale, it does have a higher risk factor. I believe we will maintain the current balance of our sourcing. That means using single suppliers for specific product lines but more than one supplier on a given commodity across our product ranges.
What have been the major changes in your purchasing strategy?
The key change in Europe has been the move to stronger partnerships based around the supply of integrated systems. We have developed our Full Service Supplier program to assess and develop the necessary skills in our supply base.
Ford is a global enterprise, so global capability is a vital element in our sourcing strategies. Suppliers with global capabilities are involved in our development programs at a very early stage.
With the Focus, many key suppliers placed their engineers inside the Ford launch team at Saarlouis for up to 12 months prior to the launch.
One of Ford's key objectives is to be the supplier's customer of choice.
What does this kind of approach involve?
How we communicate, how we define expectations together - these are very important factors. We want to have open communications, and to give suppliers full access to information on how well they are doing. Suppliers have open access to their latest performance data via Ford's Internet system.
Are you looking for more innovation among suppliers?
Yes. My experience is that innovative companies have, in most cases, cost-effective processes and high levels of quality.
What would kind of changes would you like to see?
It is important that suppliers do not simply see us as the customer. Suppliers should look at the needs and wants of the end-customer. Quality and cost objectives remain vitally important.
But we are also moving to objectives based on customer satisfaction, so that we can concentrate on areas that really matter to the consumer such as long-term reliability and durability.
This is part of Ford's drive to be the leading consumer company which provides automotive products and services.