DETROIT -- Despite a blitz of model launches in the U.S. this year -- topped by the aluminum F-150 pickup -- Ford Motor has fewer vendors on its "watch" list of suppliers that are struggling to meet production targets.
Ford purchasing chief Hau Thai-Tang says the company learned its lesson about unreliable parts supply from the troubled Lincoln MKZ launch last year. The successful launch of the Lincoln MKC is proof of that, he said.
Thai-Tang spelled out his views on purchasing during an Oct. 3 interview with Reporters Bradford Wernle and David Sedgwick at Ford's world headquarters in Dearborn, Michigan.
Q: Ford has scheduled 16 launches of new or revised products this year, including the F-150. That's huge. How well are the launches going?
A: All launches are difficult, but so far we've been really happy with our launch performance this year. I think we've learned a lot. Perhaps the best proof is our recent Lincoln MKC launch. Compared with some of the struggles we had last year [with the MKZ launch], it's significantly better by all metrics. The quality of the product is better. The number of defects is lower. Our ability to respond to market demand is tremendously better.
How does Ford monitor suppliers to make sure they can meet its production targets?
We establish thresholds for average production per week as well as maximum production per week. We ensure that they can run at a robust operating pattern. We don't want to see them running three shifts, seven days a week just to hit their average production target.
If a supplier is routinely running its factories around the clock, would that be a danger sign?
That would be one. We'll allow them to do that to hit a maximum production target, but that's a short-term thing. We would only allow that for a couple of months. We don't want to see that on an ongoing basis. That's a sign that they are really stressed -- that they are being run ragged.
Toyota says it has about 50 North American suppliers on its watch list because they're running around the clock. How many suppliers are on Ford's watch list?
Our list is less than that. We used to have more. Our report used to be several pages long. Now, it fits on one page. And it's less than it was a year ago, even though we're launching more products. That's because suppliers are starting to invest [in additional production capacity]. They're relaxing the purse strings a little bit. They think the recovery is real.
Now that North American production is close to 17 million vehicles, are there any spot shortages that are concerning Ford? Let's start with tires.
The tire situation is much better. More and more global tire suppliers have invested in North America. And you have some nontraditional tire suppliers -- the Koreans, the Chinese, the Indians. That's helped the global market.
Is there enough aluminum in North America for the auto industry?
I can't comment on the industry, but I'm confident that we have enough supply for our products.
This year's Henke supplier survey said you ranked last among six North American purchasing VPs for "building trusting relations" with your suppliers. Was that fair?
My initial reaction was: "That wasn't very nice -- I'm the new guy!" I really took it to heart.
What have you done about it?
I made a really concerted effort to do a lot of outreach with our suppliers. In most cases, I've gone to their sites and met with their CEOs. I'd say I've met 70 percent of our [top 100] suppliers in the last year. I [told] them what I'm trying to do, and I also listened to them to get a better sense of their priorities. I call it "pounding the pavement."
What's your annual purchasing budget?
It's $100 billion. It's about 65 percent direct purchasing and 35 percent indirect purchasing.