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Tuesday, September 2, 2014

How Ford Keeps Its Global Suppliers Close

Collaborative suppliers are a sure route to a purchaser’s success, yielding revenue-building benefits such as technology acquisition, innovation, product differentiation, and market share. One OEM with an aggressive program in place to develop its supply chain this way is Ford Motor Co.

Ford calls its program the Aligned Business Framework (ABF). It promotes regular communication between the OEM and its global suppliers about technology developments that can enhance Ford vehicles and set them apart from competitors. It also encourages collaboration in product development, provides opportunities for supplier growth, develops trust, and encourages long-term relationships with its vendors.

Ford unveiled ABF in 2005. Fittingly, it was the brainchild of Tony Brown, Ford’s global head of purchasing who retired on Aug. 1. Brown wanted a program that would keep Ford and key suppliers close, so the OEM could always be abreast of game-changing technologies, capabilities, and applications.

Kristina Adamski, a Ford representative, says the automaker recently introduced ABF 2.0, an updated version of the program that is even more effective.

One important component of ABF is the Executive Business Technical Review (EBTR). Heads of purchasing and product development from Ford meet formally with select suppliers around the world, “wherever their R&D sites are,” Adamski says. There are typically 10 to 12 EBTRs per year. At these meetings, which are scheduled at the beginning of a year, suppliers present their latest technologies, and Ford officials decide which, if any, to pursue.

“We’ve been holding such meetings for years,” Adamski remarks, “but before ABF we didn’t have a formal procedure in place for following up, or a real consensual process.”

The OEM now has people on staff to track the supplier technologies it is interested in and integrate them into its product development. “We have reviews and extensive communications with suppliers to make sure the best technologies do not get lost,” Adamski notes.

The technologies have given Ford a boost in its 2012 and 2013 vehicles. Recent examples of products developed or soon to be commercial based on the technologies the carmaker adopted from its suppliers include the hands-free lift gate on the Escape SUV, collision-warning devices, the Lane-Keeping system, and active park assist. One important advance is a driver alert that senses if the person behind the wheel is losing control based on the vehicle’s movements.

Ford says the ABF program has improved the perception suppliers have of the company. There are 104 ABF-certified suppliers, 76 of which are in manufacturing (the rest are in non-production areas). The OEM sources 65 percent of global production from these suppliers, almost twice as much as in 2005. That number will soon be at least 70 percent, since Ford is consolidating its supply chain to 750 this year from 1,150.

The company used to promote its vehicles with the slogan, “Ford has a better idea.” This still holds true in supply chain management. In my next article, I’ll cover how Ford’s suppliers become ABF qualified and how they are expected to pass along the program’s principles — and Ford’s corporate values — to their own supply chains.


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