Suppliers gain as Ford improves parts commonality and reduces complexity

Ford Motor Company is simplifying how it works with suppliers by reducing complexity and expanding part commonality, leading to lower development costs and greater economies of scale for the company’s global supply base.

“The ONE Ford transformation is improving competitiveness not just for Ford – but for our suppliers around the world,” said Birgit Behrendt, executive director of global programs and Americas purchasing. She spoke at the Center for Automotive Research’s Management Briefing Seminars here.

By 2012, 72 percent of the vehicles sold under the Ford brand will be built off 15 core platforms, a key component of the ONE Ford plan to leverage the company’s global assets. Ford’s Purchasing organization is working closely with suppliers to take advantage of efficiencies throughout the vehicle development process.

Results are already showing up within Ford’s supply base. By using the same parts across all geographic regions, for instance, supplier TRW Inc. was able to keep the part count for steering systems unchanged for derivatives off of Ford’s global B-car platform. Without that type of complexity reduction, TRW’s total part count for the steering systems would have doubled. By holding part counts steady, TRW was able to more than triple the volume per part, allowing the company to spread the cost of the parts across more vehicles.

Johnson Controls Inc., the seat supplier for the next-generation Focus, has also been able to see gains. When the new Focus goes on sale early next year, it will be one of the first vehicles sold off Ford’s global C-car platform, which will account for more than two million cars annually by 2012.

Ford provided Johnson Controls and other global suppliers to the new Focus early access to vehicle development and manufacturing plans. This allowed the suppliers to design and engineer parts once that could be uniformly produced across the globe on a large scale. The result is Ford and Johnson Controls were able to reduce the cost of developing seats on the new Focus by 40 percent.

“These types of improvements would not be possible without a globally integrated Ford working closely with a supply base that is also coordinated around the world,” said Behrendt.

Both Johnson Controls and TRW are members of Ford’s Aligned Business Framework (ABF), a network of key component and service suppliers chosen for long-term relationships and closer collaboration. As Ford shifts more of its vehicles and engine architectures to global platforms, ABF companies are playing an increasingly important role in the company’s global supply base. Last year, approximately half of Ford’s global production purchases were sourced to ABF suppliers, up from 34 percent in 2006.

Ford’s commitments to ABF companies include long-term sourcing, improved parts commonality and more information sharing of product and manufacturing plans, as well as forecasts. Supplier commitments include increased financial data transparency, commitment to minority- and women-owned suppliers and bringing leading-edge technology innovations to Ford.

Launched in September 2005, there are now 67 production and 22 non-production ABF suppliers from around the world.