An unprecedented number of new vehicle launches this year has forced Ford and its supply base to cooperate more closely to get quality right from the start, said Hau Thai-Tang, Ford global head of purchasing.
Ford has 23 products coming to market globally this year – 16 in North America – including the 2015 Mustang and F-150.
Other automakers face the same challenge.
The industry is launching a new vehicle every week, said Dave Andrea, senior vice president of the Original Equipment Suppliers Association, a trade group that advocates for component manufacturers. More than ever, automakers and suppliers need each other.
The supply base has been cautiously rebuilding since the crisis of 2008-09. Dozens of suppliers restructured through bankruptcy or went out of business.
Now with U.S. new vehicle sales returning to pre-crisis levels, suppliers can now break even if automakers build 12.7 million vehicles a year in North America, Andrea said. The industry is forecast to produce 16.75 million cars and trucks this year, 17.26 million next year and 17.65 million in 2016 so suppliers should remain healthy even if sales fall off.
But the wave of new vehicles is daunting for Ford, which oversees 1,200 suppliers who deliver 130,000 parts to 4,600 manufacturing sites around the world. Those parts and subassemblies account for 70 percent of the value of a vehicle.
Launching new vehicles is more difficult than continuing production of a current model with a few new features because most of the tooling, processes and parts are new. That new equipment must be tested. Workers must adapt to a new way of performing their tasks. Suppliers must meet new just-in-time delivery schedules.
On the automaker’s side, its purchasing and product development teams must work together very closely, said Ford’s Thai-Tang.
Thai-Tang said he and product development chief Raj Nair are in the same meetings 65 percent of the time and are in constant contact. If one cannot make a meeting, the other can easily speak for both. Similar pairings occur at levels below them so decisions are made in tandem from the beginning.
“In a complex company, it helps to be pulling in the same direction,” he said.
The payoff is less second-guessing and time saved because there are fewer late changes to the way the vehicle is put together.
Nair tracks the number of changes through each milestone of the development process.
In addition, CEO Mark Fields holds weekly meetings to monitor the progress of the launches, Thai-Tang said.
Suppliers provide updates on how they are to meet targets for the production volumes required, Thai-Tang said. Ford also has a core team of 30 risk managers who monitor the health of the supply chain around the world.
“We have shifted beyond trying to forecast an event and beyond monitoring and reacting,” Thai-Tang said. The automaker is finding ways to minimize lost production in the event something breaks down.
Toyota also has a team working to help prepare its supplier chain for any contingency, said Robert Young, vice president of purchasing.
Toyota now has data on 75 percent of its tier 1 and 2 suppliers, which enables the automaker to react more quickly to a problem.
Young’s team has contingency plans to identify high-risk parts and materials for the Camry, the nation’s best-selling car. By the end of the year, Young will have similar plans for all vehicles Toyota produces in North America.
To address concerns about supplier capacity, Young said Toyota gives suppliers three-year snapshots of its plans twice a year so they have plenty of time to react and invest.
Such planning is imperative, Andrea said. “You can never prevent things from happening but you can focus on the time to recovery and financial impact.”