Ford Motor Co. cited reduced logistics costs and improved product quality as the main drivers for establishing its new Chicago-area supplier park. Almost four years ago, twelve of Ford's top suppliers were selected to participate in a supplier park program at its Chicago manufacturing campus, Ford's oldest manufacturing site. Since then, the Ford plant has transitioned from making the Taurus to producing three new models in 2005: the Ford Five Hundred, Freestyle and Mercury Montego with the help of its top suppliers down the road.

The new 155-acre supplier park was officially opened in August, just one-half mile from Ford's assembly plant. In a recent interview with Purchasing, Andy Shashlo, manufacturing lead at Ford's Chicago manufacturing campus, said the reasons for the supplier park were clear: Ford's freight costs could be reduced with the suppliers closer and quality issues could be resolved in a more timely fashion.

Suppliers in the park provide 60% of the plant's inventory with just-in-time deliveries. By having its major suppliers much closer, Ford cut its average distance per shipment dramatically, which results in a $50 freight savings for every car coming off the line.

Shashlo says in addition to reducing freight costs, Ford was looking to decrease its use of rail for inbound shipments. Under the supplier park concept, all parts from the 12 suppliers are picked up on trucks performing regular milk runs around the park to conform with Ford's flexible manufacturing strategy.

The supplier park concept is not new to Ford—the company has used similar programs at European and South American manufacturing plants. Ford and its suppliers invested $250 million combined to build the Chicago park. Suppliers were selected based on product and proximity of closest plant.

Shashlo says suppliers showed minimal hesitancy to work side-by-side in the campus. Suppliers are not only working more closely with Ford on design and quality issues in the new campus, but also working more closely with each other. Ford has paid special attention to supplier quality issues in recent years, especially in launching new models.