Steven Armstrong joined Jaguar in 1987 from Automotive Products, a brake and clutch supplier based in Leamington Spa, UK. He was appointed Jaguar's senior purchasing manager at the end of 1997, and was promoted to purchasing director earlier this year. He was interviewed by Edmund Chew.
What is Jaguar's spend on production parts?
It will be around a billion dollars this year. It has grown substantially in the past couple of years due to the launches of the XK8 and XJ8.
Are you outsourcing more?
We have progressively outsourced non-core business such as plating and presswork over the past seven or eight years. Certain elements of assembly that used to be done line-side or on the track have migrated out to suppliers as models have changed.
But craftsmanship, such as the wood you see in our cars, is important to us. It's something we're very good at. Some of the interior trim and leather cutting is also kept in-house, and we have invested in these areas.
How far can you reduce the number of suppliers?
We try to talk in terms of what is the right size for the supplier base, rather than how small it should be. As we grow, it gives us the opportunity to bring in other suppliers. With the introduction of the S-type and X400, our suppliers could increase to as many as 500. We use 340-350 at the moment.
Where are your suppliers located?
About 70 percent of the product is supplied by UK sources. The balance comes from mainland Europe, with a small amount from North America and Japan. Our choices are often driven by technology. We have a number of suppliers in Germany because components are produced there that you just can't buy from UK sources.
What is your biggest challenge?
It is always achieving better quality. We have made massive strides over the past few years, and improvements in supplier quality have played a major part. Quality is perhaps our biggest single issue, and a number of suppliers still aren't where we need them to be. I don't think a lot of them recognize they have got to close that gap.
What are you doing about it?
We're kicking off with a number of initiatives, targeting both good and bad suppliers. One of the key issues is what we have called 'run-at-rate' with suppliers on new products. Historically, we would get through the development and initial production phases. But once we accelerated, the whole thing would just fall apart. It was because a number of suppliers had failed to run the processes at the full production rate.
On the S-type program we have picked about 50 suppliers and encouraged them to run the process at rate, even on the last prototype part.
We concentrate our efforts on suppliers with the core skills we require. That gives us massive quality benefits.
What proportion of your supply base is common with Ford?
Ten years ago, when we had 900-plus suppliers, maybe only 50 were common. Now I would guess that figure is nearly 200. A number of traditional Jaguar suppliers have been bought by bigger players who happen to be Ford suppliers.
When we want to find a new supplier, we will look at the Ford supplier base. It helps to take on a supplier we have got history on. Often certain suppliers will be great for engineering, but when it comes to delivering robustly, on-time to the rest of the track, they could be the worst in the world.
Are you using a more modular approach?
Yes, but we haven't gone as far as, say, the complete front-end. On future models we are looking to see what best suits us from a manufacturing point of view. We need to identify where the industry is going and how suppliers can support us with modules.
There will certainly be higher levels of modularity on future cars. To some degree that is driven by the fact that we're not in greenfield sites - you can't suddenly develop a complete new manufacturing strategy.
Will there be much carry-over of Ford parts?
Being part of a huge corporation gives us access to a whole raft of technologies in the Ford parts bin. So, yes, we do take common components. But we do it in a way that enhances Jaguar and its business. It is an obvious, natural synergy.