At Ford Motor Co., every part on a car is called, unsentimentally, a "commodity." And it is axiomatic in business that every commodity should be bought from the lowest bidder.
Also at Ford, too many cars are commodities. And consumers buy them, unsentimentally, based on low price.
While Ford can't get good pricing on its cars, it has tried constantly to push down the pricing of its suppliers of commodities.
The result has been the drying up of profits.
This is why Ford's new approach to its suppliers is so critical. If Ford hadn't realized that its catfights with suppliers weren't working, the company was doomed to continue its downward spiral.
Global purchasing chief Tony Brown, an intense and hard-charging businessman who also can laugh, showed remarkable judgment when he said the old business model wasn't working for Ford's suppliers or, more importantly, for Ford.
This really could bring on a new era for Ford and for the half of its 200 major suppliers that will move forward with long-term, multicycle contracts with Ford.
But, as a supplier friend told me, it will require an unwavering commitment from Ford's engineers to work collaboratively with suppliers, or the company will drift back to whipsawing.
Ford's new policy will put a bullet through the head of the distrustful, adversarial relationships with suppliers. Unfortunately, the bullet will be fatal to some suppliers, mercifully speeding up the shakeout that needs to happen in a supplier sector that is long on capacity and short on profits.