Helping diverse suppliers develop, grow and achieve sustainability is ingrained in the Ford culture. Suppliers are considered partners and gain access to a wealth of information and assets needed for success.
Economic power is generated by the strength and sustainability of the businesses participating, explaining Ford Motor Company's emphasis on building successful, strategic alliances with qualified, diverse suppliers.
Carla Preston, director of supplier diversity development shared some valuable insights into how supplier diversity supports the company's brand promise to source at least ten percent of its business with minority and women-owned business. Ford is a leader in supplier diversity, starting groundbreaking initiatives as far back as 25 years ago. That leadership position continues today.
"The program's uniqueness is not found in the number of suppliers we have in our supplier base because we already have over 400 quality minority, women and veteran businesses. It is in the legacy it creates in building the capacity and scale of diverse suppliers who are then able to achieve sustainability," Preston said.
More Than 'Doing Business'
Too often companies focus almost exclusively on the number of suppliers in their database at any given time but are unable to give examples of how supplier participation helped them achieve sustainability.
Not so with Ford which has been doing business with a minority supplier for over 40 years. Ford does not simply "do business" with a supplier. It commits to the supplier as a member of the Ford family, helping the business build capacity. Building capacity takes time.
Rush Trucking Co. is a minority-owned freight transport and trucking company founded in 1984 by Andra M. Rush, a Mohawk Native American woman. This is a story of a corporate-supplier alliance leading to remarkable results. The company began with three trucks funded with a small loan from Rush's parents and maxed out credit cards. Ford was the first corporation to offer Rush Trucking a contract to truck automotive parts between suppliers and manufacturing plants. Through acquisitions, Rush Trucking became The Rush Group over the years and now includes Blazer Truck Lines, Raycan Transport (Canadian firm), Expedited Delivery Service and Rush Distribution Services.
Ford played an important role in Rush Trucking's growth, but its commitment to supplier sustainability did not end there.
Rush has entered two joint ventures with the assistance of Ford. In 2001 Rush Trucking and Intier Automotive Interiors formed a joint venture that was launched as Dakkota Integrated Systems. Once again with Ford's help, Detroit Manufacturing Systems was founded in 2012 as a joint venture between Rush Group and Faurecia Interior Systems, a French company.
Approaching Rush Group with opportunities for joint ventures reflected Ford's commitment to supplier sustainability and to job creation in Detroit. Rush Trucking Corp. is now the largest Native-American owned business in the United States and has grown to over 1,100 trailers, 700 tractors, 400 owner operators, and 450 employees and company drivers. This remarkable success story also includes the employment of hundreds of Native Americans to work in assembly plants located near reservations and as truck drivers.
Ford was willing to help Rush Trucking form joint ventures because the company had proven their ability to meet the auto manufacturer's strict service and quality requirements. When Ford decided to establish a global footprint, first thoughts turned to suppliers. The company needed suppliers with operations outside the U.S. to support Ford's ability to supply its clients, and manufacturing and power train facilities around the world. The company first works with suppliers regionally and moves ahead globally as opportunities arise and the supplier capability is proven. One of its global suppliers is HUSCO Automotive, a Hispanic-owned company based in Wisconsin. The Ford Q1 designated supplier announced a $45 million expansion at a 2012 event where it won the Ford Motor Co. World Excellence Awards as a top-performing global supplier. A significant portion of the increased revenue will come from doing business with Ford.
Other mentored suppliers entering the global landscape include Flex-N-Gate Corp., an Asian Indian owned company in Urbana, Illinois and Piston Automotive, an African-American company in Redford, Michigan, to name only two.
Sharing Information
It is often pointed out that technology has led to an information-sharing age, even if it means sharing once tightly protected intellectual assets. Many corporations are still having problems with sharing proprietary information, whereas Ford decided to leverage its assets to the benefit of minority-women and veteran owned suppliers.
Preston describes the Joint Technology Framework Program as one in which intellectual assets and properties such as patents are shared with specially selected suppliers. "Right now we have 13 suppliers participating in the program, and we are the only automotive company doing it. We provide patents developed by Ford's engineering and scientists that are not used and make them available to suppliers. The suppliers are free to use them however they choose, like in the aerospace or non-automotive industries," she said.
Ford's goal is not just building its own Tier 1 supplier diversity program. It is economic growth. The supplier diversity program is larger than counting the number of suppliers. Preston's title tells it all – Director of Supplier Diversity Development. Ford helps Tier 1 suppliers build their own diverse supply chain network.
"We ask our Tier 1 suppliers to put a program in place and commit to spending 6 percent with minorities, 5 percent with women, and 3 percent with veterans," she explained. Suppliers are rewarded for exceeding goals.
In 2013, Ford's Tier 1 suppliers sourced over $2 billion dollars with diverse suppliers. The Tier 1 suppliers in South Africa have similar programs and report to Ford's CEO on a quarterly basis. Some suppliers are both Tier 1 and Tier 2. There are also companies that began as Tier 2 and move up to Tier 1. "Once a supplier enters our base, we never close our doors and are constantly working to help them build capacity and sustainability," Preston said.
Bring the Idea
The most successful suppliers are those that bring new ideas to the table because Ford is always working on innovation.
The product development group has a product planning and strategy group that operates on a technology cycle plan. The group is always working on future iterations of innovation and technology that should go into vehicles. That include features like fuel economy, weight reduction, quality improvements, improving the ride, noise reduction, fuel efficiency, engine improvements and so on.
Each year 12 suppliers are chosen to undergo an Executive Business Technical Review (EBTR). Senior executives like vice president of engineering, the vice president of research, the vice president of purchasing and others spend a couple of days at the supplier locations to hold robust discussions on new and innovative ideas they can bring to Ford. Preston is proud to point out that two of the suppliers selected in the last round are minority owned.
Evolving Together
As a leader in supplier diversity, Ford has made enormous progress, but there are challenges to overcome.
As a leader in supplier diversity, Ford has made enormous progress, but there are challenges to overcome.
The first challenges are developing diverse suppliers that have the scale and capacity to work directly with Ford Motor Co. "There are a lot of great companies out there, but they are not necessarily ready to work with Ford at the Tier 1 level. They may be ready for Tier 2, 3, or 4," Preston said, encouraging companies to recognize where they fit and to take advantage of existing opportunities to get into the supply chain.
Another major challenge is the shortage of minority, women, and veteran owned suppliers in the automotive industry on the production side. Many diverse suppliers are non-production and indirect suppliers, but Ford requires suppliers able to build the components and systems for vehicles.
According to Preston, "Ford needs electrical suppliers, raw materials suppliers, casting suppliers, and suppliers who can contribute to Ford's growing hybrid and alternative energy vehicle development and production. As we evolve, we are looking for suppliers who can evolve with us."
Preston oversees a large group of people who join sourcing teams and participate in supplier technical assistance groups that assist suppliers having an issue. She monitors reports looking for inclusion of diverse suppliers on sourcing lists and watches for indications a supplier is at risk of losing the Ford Q1 status which is mandatory. She meets regularly with suppliers to discuss quality standards and performance. The program support is top-down beginning with Executive Chairman William Clay Ford, Jr. Scorecards are maintained and reviewed quarterly with Ford's President and CEO, Mark Fields.
The 50th year anniversary of the Ford Mustang and 60th year anniversary of the F-150 truck are approaching. The iconic Mustang and beloved truck represent Ford's own sustainability as an automotive company. Diverse suppliers are needed for the F-150, Mustang, Explorer, Taurus, and Fusion. Preston is also working on getting minority and women-owned suppliers over to the Lincoln brand. The company is careful to maintain differentiation between the Lincoln and Ford brands.
The company does not have a supplier mentorship program and for a good reason. "When a supplier joins Ford, it becomes a partner. We work closely with the supplier on a routine basis. Mentoring is ingrained in how we do business because helping suppliers develop and grow helps us develop and grow also." she said. It is just the Ford way of doing business.
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