A gearhead takes on Ford global purchasing

DETROIT -- A consummate gearhead who was once a race engineer for Mario Andretti and Nigel Mansell, Hau Thai-Tang made a name for himself as chief engineer of the 2005 Ford Mustang.

Now, as Ford's new purchasing chief, Thai-Tang has a much bigger job: translating the elegant simplicity of CEO Alan Mulally's global One Ford to fit the complexities of local markets.

That means a Ford Focus in a low-volume market such as Argentina, for instance, might not get the same high-strength steel B-pillar that a Focus has in the United States and Europe. There's no local steel supplier near Ford's Pacheco, Argentina, plant, and it's too costly to ship the part thousands of miles.

But Thai-Tang, 47, has a lot more on his plate -- pulling him outside his engineer's comfort zone. He is now responsible for Ford's $100 billion annual procurement spending, only 65 percent of which is associated directly with building vehicles.

"I certainly had a lot of insight on production commodities. I'm learning a lot about tools, raw materials, the media buy, the ad agencies, consulting services, toilet paper, all those things I had little exposure to because I was working on cars," he said in a wide-ranging interview with journalists last week.

Thai-Tang believes Ford put him in his new job because he knows the nuts and bolts of product development and the variations between vehicles from one market to the next.

Under the One Ford plan, the company is simplifying its product lineup around the globe from 27 platforms in 2007 to nine by 2017. Ford hopes to save money by using more common parts. Thai-Tang's goal is to wring the maximum cost efficiencies out of the One Ford plan without compromising brand characteristics.

"That global scale doesn't always lead to the most efficient solution," he said. "The trade-off is it will cause more unique engineering."

But Ford won't compromise on features such as electronically assisted power steering that are essential to Ford's new global brand DNA, Thai-Tang said.

"In some cases, we still say we don't want to dumb down the design," he said.

Thai-Tang has another immediate concern. With its plants running at full capacity and sales booming, Ford is keeping a close eye on suppliers to make sure they can keep up with the torrid pace.

"Everyone is running flat out. It's contributing to some of the quality challenges we've seen," he said.

In the past when Ford wasn't running at full capacity, "when an issue came up, you [could] actually recover and build vehicles on the off shift on the off days," Thai-Tang said.

"We've removed that cushion. We're a lot more exposed in terms of any production issues because you just can't recover.

"The supply base is not finding time to do preventive maintenance because they're running flat out."

Ford is trimming its supplier base under its Aligned Business Framework. The top 65 preferred suppliers in the Aligned Business Framework get about 60 percent of Ford's annual spending.

Ford is working to trim its supplier count from about 1,250 at the end of 2012 to 750 at the end of 2017.

Thai-Tang says he got some good advice from longtime Ford purchasing boss Tony Brown, whom he replaced in July. Brown told Thai-Tang that he needs to be the voice of suppliers in Ford's leadership councils.

"I've taken that to heart. In all my discussions, it's been very candid," he said. "We're business partners. They're trying to maximize their business results.

"You can rant and rave and threaten to take business away, but those things yield very short-term results and are not conducive to a long-term prosperous relationship."