DETROIT (Sept. 30) — Ford Motor Co. will reduce its suppliers for certain "high-impact" parts and commodities in half and award the selected suppliers with long-term contracts to reduce costs.
Ford said it is undertaking its "Aligned Business Framework" initiative to "strengthen collaboration and develop a sustainable business model to drive mutual profitability and technology development."
"The Aligned Business Framework is an innovative bilateral agreement between Ford and its family of selected suppliers," said Thomas K. Brown, senior vice president, global purchasing. "This is not business as usual. We´re not only asking our suppliers to step up. We´re also asking ourselves to step up."
The new agreements establish working business models for both Ford and the selected suppliers. The agreements spell out business practices designed to increase future collaboration, including phased-in up-front payment of engineering and development costs, extended sourcing and data transparency.
Ford said it intends to significantly expand the volume of business with these select suppliers. It did not quantify its expected cost savings.
The initial strategic suppliers are Autoliv Inc., Delphi Corp., Johnson Controls Inc., Lear Corp., Magna International Inc., Visteon Corp. and Yazaki Corp. The targeted components are seats, wiring, restraint systems and instrument and trim panels; these parts represent about half of Ford´s annual production purchases globally.
Additional suppliers that have the capability to provide technological innovations and show a commitment to quality, costs and delivery performance will be identified in the coming months.
"Innovation will be part of this new supplier partnership — as it will be part of every aspect of our business strategy going forward," said Ford Chairman and CEO Bill Ford. "Not only does innovation apply to safety, technology and design, it also will differentiate how Ford and our suppliers will define our relationship going forward."