[The following news item appears in the February 1995 edition of
_Quality_Progress_, pages 14 and 18.]

        FORD MAKES DRAMATIC MOVE TO STREAMLINE ITS SUPPLIER BASE

     Quality might be Ford's Job 1, but slashing its supplier
rolls appears to be running a close second. The Big Three
automaker, which is undergoing one of the largest reorganization
efforts in its history, has made a dramatic move concerning its
facilities suppliers and all nonproduction goods and services
suppliers. Over a three-year period, the company plans to cut its
supplier base in these areas from 50,000 to about 5,000 a 90%
reduction.
     According to Charles Ross, director of Strategic Planning
and Process Improvement in Facilities, Material, and Services
Purchasing for Ford Automotive Operations, the move to reduce the
number of suppliers Ford uses is aimed at improving supplier
quality and internal efficiency.
     Ross said Ford is developing metrics to rate supplier
quality, but that measuring 50,000 different suppliers would be a
near-impossible task. He said, "We're looking for a critical mass
of businesses that wish to satisfy Ford's requirements." He added
that the company aims to control as many product and supplier
variables as possible and that reducing the number of suppliers
should go a long way toward achieving that goal.
     Ross said the reduction also means that Ford will view the
supplier process in terms of whole systems rather than looking at
the process in small pieces.
     The suppliers include those that supply everything from
tools and computers to window washing and floral services. Ross
said that during the first year of this reengineering program,
Ford plans to reduce the number of its suppliers by two-thirds.
That number will in turn be cut by two-thirds in the following
year, and, in the third year, it is planned that the number of
suppliers will be near the target of 5,000. "Five thousand
suppliers might not be the end number," Ross said. "It might be
fewer."
     Ford is convinced the program will work. Ross pointed to the
success of two pilot programs:
     * Ford cut the number of its software suppliers from 1,500
     to just one. "This has allowed the company to remain current
     with the newest software, buy the software cheaper, and get
     faster delivery," said Ross.
     * In Great Britain, to simplify its safety equipment
     purchasing, Ford first reduced the number of categories of
     safety equipment from more than 20 to just one: personal
     safety equipment. Then, Ford reduced the number of suppliers
     from which it purchased this equipment from 40 to one. Ross
     said this new process has worked so well that "we plan to do
     the same thing in Germany and, eventually, in North
     America."
     Ross said Ford is also looking at internal process
improvement. "Our current order-fulfillment process costs $200
per transaction," he explained. "If it costs $200 to order a $30
drill bit, we have spent almost seven times the value of what we
are buying to acquire it. That is a lot of bureaucratic drag.
We're looking into different ways of improving this process, such
as using a barcode system or touch-screen ordering. As you get
more noise out of the system, such as the cost of order
fulfillment, you can improve your product."