Suppliers are an integral part of our business, and our success is interdependent with theirs. We rely on more than 2,000 production suppliers to provide many of the parts that are assembled into Ford vehicles. Another 9,000 suppliers provide a wide range of nonproduction goods and services, from production equipment to computers to advertising.
Working Together for a Sustainable Future
Ford and its suppliers must work jointly to deliver great products, to have a strong business and to make a better future. In today's economic environment, achieving lower costs and improving quality will require an unprecedented level of cooperation and strong supplier relationships. In 2006, we introduced an Aligned Business Framework (ABF) with our strategic suppliers to accomplish these goals. Through this process, we will be reducing the number of our suppliers for select commodities from more than five to as few as two. We are also increasing the use of common parts for multiple vehicles. This will allow us and our suppliers to reduce costs and improve quality. It will also increase our level of coordination with suppliers and facilitate greater sharing in development of new innovations. The ABF will give chosen suppliers a greater share of our business and better knowledge of future volumes. In addition to these ABF goals, we are committed to maintaining strong relationships with suppliers by:
- Adhering to Ford Supplier Relationship Values
- Deploying a single common global product creation process that encompasses aggressive execution of product plans with minimal variances
- Enhanced process stability, commonality and reusability
- Improving communication by providing real-time performance data to the supply base
- Providing suppliers with greater access to senior management in small-group settings
- Establishing organizational stability models in Manufacturing, Product Development and Purchasing
- Continuing to improve release stability and production predictability through implementation of order fulfillment
- Engaging the supply base in discussions on process stability, incoming quality and corporate citizenship, and involving suppliers in coalitions to create awareness of industry issues
In 2006, Ford was honored by the Automotive Industry Action Group's (AIAG) CEO of the Year Award for William Clay Ford Jr. AIAG, a group of 1,500 member companies including OEMs, suppliers, automotive media and industry analysts, gives the award to the CEO who has made the greatest contribution to the industry. In profiling Ford, AIAG highlighted the Company's work on sustainability issues, including industry working conditions, as one of the reasons for the honor. For more information, see Taking Action as an Industry.
Environmental Management and Human Rights
It is important that our suppliers share our commitment to environmental and social performance.
In September 2005, we added language to our core contract covering all nonproduction suppliers to reflect our specific Code of Basic Working Conditions requirements prohibiting the use of forced labor, child labor and physical disciplinary abuse. We did the same for production suppliers in January 2004. In 2007, we revised the Code to include commitments on "community engagement and indigenous populations," "bribery and corruption" and "environment and sustainability." These revisions reflect our increased understanding of the broad set of issues that fall under the umbrella of human rights and our interest in including broader community impacts beyond "the fence line" of our facilities. By building this language into the Ford Global Terms and Conditions, the Code now applies to all Ford suppliers. We have conducted training and assessments of suppliers in India, China, Turkey, Romania, Russia and Mexico, and developed an approach to ensuring alignment with our Code throughout our supply chain.
Mid-2003 was the deadline for Ford's Q1 (preferred) production suppliers to attain ISO 14001 environmental management certification of manufacturing facilities that ship products to Ford. ISO 14001 certification is expected of Q1 nonproduction suppliers if the supplier site is a manufacturing site or a nonmanufacturing site with significant environmental impact. We worked with General Motors and DaimlerChrysler, which adopted similar requirements, to communicate consistently with suppliers and monitor progress.
By 2006, 100 percent of Q1 production suppliers had ISO 14001 certification. Suppliers that did not meet the deadline are not eligible for Q1 status, which is a prerequisite for consideration for future Ford business. We also encourage our suppliers to extend the benefits of improved environmental performance by implementing similar requirements for environmental management systems in their own supply base.
Supplier Environmental Forum
To provide a venue for ongoing collaboration between Ford and suppliers that are demonstrating leadership in sustainability, we created the Ford Supplier Sustainability Forum (the successor to the Supplier Environmental Forum). The Forum's mission is to:
- Foster communication and information-sharing among participants
- Provide an opportunity for open dialogue between Ford and its suppliers
- Identify areas for collaboration, share best practices, explore common emerging issues and generate actions to address issues that deliver business value
- Advocate for the implementation of actions at our companies and our supply chains
During 2005 and 2006, Forum members focused on environmental health and safety, global working conditions training, materials reporting and climate change strategies.
Supplier Environmental Leadership
For several years, Ford has recognized supplier companies that demonstrate leadership in environmental and social performance with a Corporate Responsibility Award. This award was developed to foster excellence in both social and environmental performance. Suppliers must meet several criteria, including ISO 14001 certification at all manufacturing sites, full acceptance of Ford Motor Company's Global Terms and Conditions and demonstration of overall sustainability leadership by incorporating environmental and social considerations into their business.
In 2006, Johnson Controls, Inc. (JCI) won the Corporate Responsibility Recongnition of Achievement Award for its significant achievements in environmental and social performance. JCI has made excellent achievements in waste minimization and reduction, including using 70 to 80 percent recycled lead and plastic in its battery production, reducing waste by 4.8 percent in 2005 and converting 10 percent of production waste back into raw materials. JCI also reduced heavy metal emissions by 41 percent, eliminated ozone depleting substances from manufacturing processes and reduced greenhouse gas emissions by 24 percent over 2004 levels. In 2006, JCI completed implementation of a human rights code covering JCI facilities and its suppliers. The code was developed in cooperation with Ford and major nonprofit organizations including Oxfam International and ICCR.
