Assessing Suppliers

Since 2003, we have conducted more than 750 assessments of existing and prospective Tier 1 suppliers in 20 countries. The assessments provide feedback to Ford and suppliers about how well they are meeting legal requirements and Ford’s expectations. They also provide insight into the effectiveness of our training programs. Assessments consist of a detailed questionnaire, a document review, factory visits, and management and employee interviews, and are conducted with the assistance of external auditors.

In 2010, we conducted assessments across the target countries. The findings from the 2010 assessments were generally consistent with those we had previously conducted. Namely, they identified a wide range of general health and safety issues, several wages and benefits issues and a limited number of other types of noncompliance.

The findings from Ford’s 2010 supplier assessments included:

• No evidence of forced labor or physical disciplinary abuse
• A range of general health and safety issues, including inadequate emergency systems
• In some cases, a lack of appropriate timekeeping systems, and thus a failure to pay correct overtime wages
• In some cases, a failure to pay the correct local minimum wage or overtime or to provide the correct social insurance
• A general need to clearly define policy on harassment and discrimination
• Limited cases of restricted workers doing hazardous work
• In some cases, limited or restricted access to appropriate documentation regarding subcontracted labor and privacy policies
• In some cases, nonpayment of company contributions to government-mandated social programs
• Working hours violations related to overtime (in some cases, this overtime is a chronic issue resulting from poor capacity planning, but more often, it occurs only during peak production periods)
• Freedom of association has been difficult to verify. While all assessed suppliers have either union representatives or a grievance process, there may be issues we have not been able to identify through our assessment process

Another common finding is that suppliers often lack fully developed management systems – including continual improvement processes – to support compliance over time. This finding has validated our training approach, which continues to emphasize management systems at both the corporate and factory levels. We continue to engage with our suppliers to develop and implement appropriate corrective action plans.

The assessment that Ford uses with Tier 1 suppliers has been an important tool for furthering our understanding of both the issues and the root causes for noncompliances. If issues are identified or allegations made of a sub-tier supplier, Ford does make available our assessment tool and guidance to our responsible Tier 1 supplier. In this way, we hope to affect positive change more broadly and enable our suppliers to effectively manage their supply base.

In 2011, we will continue to conduct supplier assessments across the target countries as necessary. We are also exploring the potential for conducting assessments jointly with other automakers in the future.