Reusing proven systems and components is one way Ford Europe aims to meet customer demand for new products without sacrificing quality. Birgit Behrendt, Ford Europe vice president of purchasing, says it just makes sense to keep using the parts that customers like. Behrendt shared her views on reuse, the rising cost of commodities and Ford Europe’s relationship with suppliers when she met with Automotive News Europe’s Olive Keogh at the company’s European headquarters in Cologne, Germany.
To what extent are consumer expectations adding to the difficulties faced by the auto industry?
Our industry is now incredibly complex. Life cycles are shorter and there is fragmentation in the market because consumers want change. The challenge for us is to still appeal with new designs without changing the entire vehicle. We have to reuse and commonize what has worked and what has been well received by the customers. We have to give the customer the newness they expect but not to change for the sake of it.
Do you see reuse of systems and components becoming more prevalent in the future?
It will be a key element. Reuse is not only the right thing to do economically. It is also the right thing from a speed standpoint and a quality standpoint. Why would you change something that already has a proven track record? That is one less variable to have to worry about. You have to find the right balance between what can stay and what needs to be new.
What do you see as the most important aspect of the supplier-automaker relationship?
Trust and being predictable. Also to get across to people that we are not interested in short-term relationships. All of our business relationships are targeted to be of long duration. With most of our suppliers this is so.
Ford’s new global terms and conditions for purchasing did not meet with universal approval. Have the issues now been resolved?
Yes. We had a lot of good conversations with suppliers and were able to clarify things. A lot of it was due to misunderstanding and misinterpretation. It is behind us now and no longer an issue.
How are you handling challenges such as rising commodity costs?
What we’ve been attempting to do is make sure there is an understanding with our suppliers that we have no way of passing on rising costs. It is absolutely clear that the consumer is not willing to pay for it. That’s the fundamental problem we have. When you get to the end of the chain there is nowhere to go. We have to try to find ways to make this bearable for both of us. It puts a strain on the industry as a whole.
Good purchasing strategies have been credited with helping to stem losses at Ford Europe. How did you achieve this?
We have been able to find ways to take waste out of the system. At Ford Europe we have a cross-functional system known as Team Value Management, which includes our suppliers. This process helps us to understand the value equation better and to really identify waste.
What do you see as central to competitiveness?
Both sides being really efficient in what we do. For example, it may be the cost of poor quality, which is inhibiting a supplier from being really competitive. I have seen a situation where a supplier was spending enormous amounts of money on containment action. In other words, repairing or reworking [a component] in order to supply us with a product that met our quality standards. We worked with this supplier to help it better control the variables so that quality was built into the product. Less time was then spent on inspection and rework at the end of the process. This saved hundreds of thousands of dollars. Internal quality metrics are often more telling than what we see when we just look at an end product.