Ford to reduce suppliers by 40% image

Ford Motor Co’s new global purchasing boss announced that the rising U.S. auto production is having an impact on the overall car quality. That’s because automotive parts suppliers are pressured to resolve issues in less time than before, so the automaker wants to cut down its supplier base by 40% for increased savings.

Ford’s long-term target is to purchase parts from 750 suppliers, a smaller base than last year’s 1,260 figure, said Hau Thai-Tang, who is group vice president of global purchasing since August. The second-largest U.S. automaker is also cutting down on the amount of vehicle platforms, decreasing development costs and allowing the company to buy from fewer suppliers.

“We still think that there’s plenty of opportunities for us to get down to the 750 number and still have plenty of competition and allow us to get the best ideas from the most innovative suppliers,” Thai-Tang told reporters at a briefing in Ford’s HQ.”Everyone is running flat out and it’s contributing to some of the quality challenges that we’ve seen,” he added.

Chief Executive Officer Alan Mulally, 68, has asked for increased profitability at Ford, targeting a reduction in the number of its vehicle platforms to 14, down from 27 in 2007, his first full year at the helm. Ford’s lineup will appropriately dip even further to just nine platforms by 2017, Thai-Tang said.

Via Bloomberg, Reuters