Ford wants to repair supplier relations

DETROIT — In a bid to repair fractured relationships, key Ford Motor Co. leaders will go on a listening tour of suppliers beginning early this year.

Ford global product chief Derrick Kuzak and purchasing chief Tony Brown have scheduled meetings with CEOs at many of the automaker's major parts makers. Ford CEO Alan Mulally says he may attend some meetings.

The sessions are a direct response to Ford's dismal results in several industry surveys of supplier-automaker relationships, including one conducted for Automotive News by J.D. Power and Associates. Ford finished last among automakers and scored low in every category of that survey, released in the spring of 2007.

"It's absolutely not OK," Kuzak told Automotive News. "Your survey is very troubling. We need to correct that perception."

Last week at the Automotive News World Congress, former Boeing executive Mulally sarcastically called those last-place finishes "one of the highlights of my career." Mulally is known for the improvements he made in Boeing's purchasing network.

"It's something I can't even imagine with my background," Mulally said, adding that he intends to do everything he can to move Ford up the list.

Ford trails pack
Ford finished last among automakers in a 2007 Automotive News survey of suppliers conducted by J.D. Power and Associates. Ford's scores were well below the average of all automakers in the survey's 5 categories.
-- Openness to new ideas
-- Ease of working with automaker on innovative ideas
-- Level of trust
-- Willingness to offer financial incentives or rewards for innovation
-- Ability to carry out innovations

All ears

Ford executives are still counting on the company's Aligned Business Framework program to help win over parts makers. Brown launched the program in September 2005 to improve collaboration by trimming the number of Ford's suppliers and working more closely with those that remained.

But more than two years into the Aligned Business Framework's operation, much skepticism remains.

That's where the one-on-one meetings between suppliers and the Ford executives come in.

"Tony and I are going to be there to listen," Kuzak said of the planned sessions. He wants suppliers to tell them "whether or not we're doing well, how do you think we can do better, where are we doing OK and where do you see the improvement at Ford so we'll know where to focus our attention.

Mulally told Automotive News last week that improving collaboration is crucial because suppliers manage 60 percent of the dollar value of Ford's vehicles. Only through a seamless partnership can Ford and its suppliers achieve quality, productivity and cost-reduction goals, he said.

That cooperation must get better this year: Ford is looking for as much as $1.2 billion in supplier-related material cost reductions in 2008, executives say.

Better business case

Besides listening, Ford leaders want to explain better to suppliers what the automaker is doing to help the bottom line for vendors.

One example is rapid deployment of new technology across all Ford vehicle lines, Kuzak said. He cited Ford's capless fuel filling system and Microsoft-developed Sync, a voice-activated vehicle communications system. Both features will be rolled out in nearly all Ford models within two years.

Ford's strategy to build global vehicles with regional variations is another powerful tool. That will require large-volume contracts, and Ford intends to use the same supply base from region to region, Kuzak said.

Said Mulally: "Just think of all the things we're doing right now — reducing the number of platforms, getting the volume of the platforms up, reducing the order guide and complexity — all of that is absolutely the key for the suppliers to improve their performance." c

You can reach Amy Wilson at awilson@crain.com

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