Supply strategy key to future growth at Ford

By Staff -- Purchasing, 5/7/1998

Purchasing asked Carlos E. Mazzorin, vice president of purchasing for automotive operations, to describe the key components of Ford's supply strategy. Here's what he had to say:

Cost control

"Our objective is to provide the highest value to our customers through development of products that are affordable in the marketplace and provide ample returns to Ford and our suppliers.

"Our attack on waste is being accomplished through a collaborative management of the value chain by Ford and its suppliers. This effort involves Ford engineering, manufacturing, sales and marketing, and purchasing in cooperation with production, service, and non-production suppliers. Ford purchasing is the process champion for these efforts, which are organized under Ford's Total Cost Management program. Key elements of this program include:

* Total-cost management workshops which bring together Ford and suppliers to reduce costs through such tools as value analysis, value engineering, and value-chain analysis.

* Assistance to suppliers implementing lean manufacturing processes.

* Joint efforts aimed at reducing complexity, in-creasing responsibility, and reducing warranty costs.

* Efforts to improve Ford-supplier processes. One example: Last year, a Ford-supplier team reshaped the process for development of new-model cost targets.

* Continued communication with suppliers to share information and ensure alignment of objectives.

Quality improvement

"Ford is working with its suppliers to help them improve their quality as we attack costs together. In the end, improved quality will reduce manufacturing waste and warranty expense, helping to cut overall costs.

"We are working in other ways with suppliers to help them improve their capabilities to support vehicle and powertrain programs with leading-edge technology and world-class quality.

"Quality metrics have been developed and are shared with suppliers via a Web site to support continuous improvement in incoming material quality and launch performance. These metrics measure launch quality rejects, parts submission warranty, parts-per-million defects, delivery, warranty actions, and customer-experience reports.

"To impress the importance of our drive for quality improvements throughout the supply base, we are encouraging our tier-one suppliers to drive these same metrics down through the value chain. Collaboration and teamwork are critical in this process. We want to eliminate waste from top to bottom.

"Finally, we are working to reduce the complexity of components across our vehicle lines, standardizing many of our parts and systems and jointly attacking warranty costs. This effort not only has the obvious cost benefits of volume buying and reduced manufacturing differentiation, but it also improves quality.

[One example: The new Mercury Cougar is based on the Mondeo/Contour/Mystique platform and shares about 70% of its components with those vehicles.]

Supplier development

"In a teaming effort among our suppliers, plant-vehicle teams, and program-management teams, we track system and subsystem performance across vehicles and subsystems on a continual basis. To help us coordinate this effort, we make a senior Ford person, known as a 'quarterback,' responsible for the quality of a system across vehicle lines. The steady flow of information from that tracking, along with the insights of suppliers and other team members, allows us to share best practices and apply lessons learned from one program to others.

"We also have instituted various programs to help improve supplier performance, such as quality roundtables. We have made some suppliers members of our launch teams and others are integral to our lean deployment efforts. In our kaizen workshops, suppliers help foster a collaborative approach to continuous improvement.

"We have developed an assistance program to aid minority suppliers with special financial needs. In addition, our Technical Assistance Program offers experienced former Ford employees to help minority suppliers solve technical or operational issues.

Vehicle design and development

"Ford's manufacturing, product development, engineering, marketing and sales, and purchasing functions are working in conjunction with suppliers early in the design and development phases of a project to ensure a seamless and effective process as well as higher quality and lower-cost designs.

"We are increasing the involvement of our suppliers in these early stages, including their responsibilities for project management, systems engineering, and development. For example, we have asked select tier-one suppliers to play a greater role in coordinating the fit, finish, and color approval of components in a system that has been sourced to several other suppliers. On several programs, we have given suppliers the responsibility for complete system design and prove out for module assemblies they ship to us.

"The objective: Use our suppliers' capabilities and expertise to design and develop products in which the product expertise is not exclusive to Ford. In addition, we'll use the program for those projects where Ford and its suppliers believe the suppliers can do the work more efficiently and effectively.