Ford Motor Company

1. Ford Motor Company is more than 100 years old? Why take the step to change supplier relationships now?

Ford was coming off of one of its worst years with a $1.1 Billion operating loss, it was time to re-evaluate what they were doing and how they were doing it. Having over 2500 suppliers offers no real stability in quality or cost. Manufacturers are constantly undercutting each other for the business but in order to cut costs generally they have to cut quality as well. By reducing the number of suppliers and creating a framework for all of them to comply with would allow for better quality and consistency from Ford as well as more financial stability for their suppliers.

1. If you were a Ford supplier, how would you react to ABF? What would be your major concerns?

That would depend on the type of supplier I was. If I was someone who pushed for consistent quality, prices, and service then I really wouldn’t be that worried. I would either be getting the business based on my merit, or I wouldn’t. And if I didn’t, then I would have to re-evaluate the way I was doing business. My biggest concerns would be what would I have to do in order to maintain the contract once I got it, and what would keep them from changing their minds and demanding higher quality for lower prices to keep the business.

One other thing that I would really like would be to have the opportunity to work with Fords engineers to help with the development process and understand from the beginning what was expected and how we could make it happen within their standards and our processes.

1. Is it possible for suppliers to take advantage of Ford under the ABF?

Sure, once they get the contract they could find ways to cut corners. But honestly if they wanted to maintain the contract and keep the guaranteed business with minimal competition it wouldn’t be a very smart move to try to find the loopholes.

1. What are the costs to Ford if ABF fails?

If this were to fail, then Ford would have to re-establish relationships with organizations they had cut ties with. This could very easily lead to increased pricing due to the fact that the suppliers will need to make up for lost income. It would also put a strain on the current suppliers because now they are back in competition with more organizations.

It would also lead you back to a time where there was no collaboration between suppliers and they customer. This would again lead to inconsistencies in product and quality.