Supplier Relationships

The automotive supply chain is one of the most complicated of any industry. Automakers like us rely on thousands of suppliers to provide the materials, parts and services to make our final products. Our own direct (Tier 1) supply chain, for example, involves a million people and more than 100,000 parts made at more than 4,000 manufacturing sites (See Supply Chain Profile.). Many suppliers serve numerous automakers. And each of those suppliers, in turn, have multiple suppliers. There are often six to 10 levels of suppliers between an automaker and the source of raw materials that eventually enter the manufacturing process. The breadth, depth and interconnectedness of the automotive supply chain make it challenging to effectively manage business and sustainability issues.

Ford and its suppliers must work jointly to deliver great products, have a strong business and make a better future. In today’s economic environment, achieving lower costs, improving quality and meeting sustainability goals require an unprecedented level of cooperation with suppliers and the maintenance of strong supplier relationships.

Beginning in 2005, we introduced an Aligned Business Framework (ABF) with our strategic suppliers to accomplish these goals. In 2010, we expanded the ABF, designating additional companies to join this select group of key component and service suppliers chosen for closer collaboration on a global basis where possible. With the new suppliers named in 2010 and early 2011, the ABF network now includes 102 companies, including 75 production and 27 nonproduction suppliers from around the world. Minority- and women-owned suppliers make up more than 10 percent of the ABF network.

We are committed to maintaining strong relationships with our ABF and other suppliers by:

• Adhering to Ford Supplier Relationship Values
• Deploying a single global product-creation process that combines aggressive execution of product plans with minimal variances
• Enhancing process stability, commonality and reusability
• Improving communication by providing real-time performance data to the supply base
• Providing suppliers with greater access to senior Ford managers in small-group settings
• Establishing organizational stability models in Manufacturing, Product Development and Purchasing
• Improving order fulfillment
• Engaging the supply base in discussions about process stability, incoming quality and corporate responsibility, and involving suppliers in coalitions to create awareness of industry issues

It is important that our suppliers share our commitment to environmental and social responsibility. This improves the flow and quality of information critical to continuity of supply and compliance to regulation. It also helps to ensure efficiency and quality throughout the supply chain. Shared commitment helps us avoid risks to our operations and reputation that can arise due to substandard practices in our supply chain (see, for example, the Brazilian charcoal case study). We have developed a set of programs and partnerships to help align our suppliers’ practices with our own.