Ford gives its suppliers an ultimatum

Tier 1s must meet higher quality standards or lose business

Ford's new rules
What suppliers must do to avoid losing new business

  • Meet new overall Q1 score

  • Maintain score monthly

  • Achieve higher score each year

  • Perform as well as competitors

  • Obtain site approval

    What else could lead to loss
    of new business

  • Ford stops vehicle shipments twice

  • Ford recalls or notifies owners once

  • A supplier has more defects than competitors

  • Plagued with vehicle defects, Ford Motor Co. will impose higher quality standards on its Tier 1 suppliers Feb. 1. Suppliers worldwide must comply or give up the opportunity for new business with the automaker.

    Ford is wrestling with a string of marred product launches and vehicle quality problems. For example, Ford had to repair more than 55,000 redesigned 2002 Ford Explorers and Mercury Mountaineers during vehicle introduction in April. The Ford Escape notched five safety recalls after launch.

    Up to 20 percent of Ford’s Tier 1 suppliers would not meet the new quality criteria today, said David Velliky, Ford global director of supplier technical assistance.

    “Between now and Feb. 1, every supplier must go through re-certification of every one of their manufacturing facilities in accordance with Ford’s new specifications,’’ said Scott Whetter, a vice president at Siemens Automotive Corp. and the account executive responsible for global sales to Ford. “There are some criteria that could be difficult to meet over the next five months.”

    Siemens, a supplier of electronic components and systems, supports the new standards, Whetter said.

    Cracking down

    Ford’s Q1 quality rating is awarded to Tier 1 manufacturing locations, not to a supplier as a business entity. Plants unable to meet the criteria by Feb. 1 will be ineligible to seek new Ford business. “Only Q1 facilities are considered in new product development and source selection,” Ford said in a 57-page document outlining the changes.

    “We are giving suppliers lead time to get better because right now a good percentage would not meet the hurdle,” Velliky said.

    Failures that will trigger revocation of Q1 status are spelled out. For example, Q1 certification will require a manufacturing site assessment, in some cases performed jointly with Ford.

    More importantly, Q1 is no longer a one-time reading of a supplier’s performance. Suppliers must maintain their rating each month, as measured by a complex set of data. Ford will raise the certification standards each year.

    In addition, suppliers will be measured against other companies supplying the same component or system to Ford. The automaker will revoke a supplier’s Q1 status if a supplier produces more defective parts than competitors based on a formula in the new criteria.

    Greater penalties

    In addition, Ford is shifting more responsibility to suppliers and invoking greater penalties when a supplier mars a vehicle launch or build. For example, if Ford records two instances when it has to stop shipment of a completed vehicle, Ford can revoke Q1 status.

    Similarly, Ford is cracking down on suppliers when the automaker is forced to issue one vehicle recall or owner notification campaign requiring customers to return vehicles to a dealership for repairs.

    In the past, suppliers had to be 100 percent at fault to lose the Q1 rating. Now, Q1 can be revoked if the supplier is partially at fault.

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