Purchasing - Ford Vision
Luis A. Mendoza
Purchasing Senior Manager
2 Source: The Economist
Global influence in our
daily business
3
GDP Forecast Debt forecast
Unemployment
2012 in Figures
4
2012 in Figures
5
Global Sales Growth Stabilizes
Source: J.D. Power
6
Global Sales Expected to Cross 100M
by 2015
64 67 70 66 6472 73 77
8595 101 106
0
20
40
60
80
100
120
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: J.D. Power
Global Launches 2012
and Tendency
8
Ford Sillicon Valley
¿Mobility?
I3 1lt, I4 1.6lt and 2lt, V6 Ford´s electrification strategy
Global Expansion, Asia
and Africa Regions
Global Launches and Tendency
FOM in Global Context
10
Ford Manufacturing Footprint
Salamanca
Ranking Country Volume
1 U.S.A 1,404,602
2 Germany 824,830
3 Mexico 393,200
4 Brazil 320,259
5 China 263,375
6 Canada 259,977
7 Spain 240,668
8 Belgium 200,734
9 Turkey 182,582
10 Argentina 75,559
Ford Worldwide Production 2010
11
Mexico in Global Context
Mexico came in second as a source of supply for global Ford
Source:: VCI January 2011
Top 5 countries supplying
parts for Ford
% of Ford Total Turnover
GERMANY, 10% BRASIL, 8%
SWEDEN, 5% MEXICO, 11.8%
U.S.A., 31.3% ROW
(62 countries) ,
35.1%
12
Worldwide Ford’s Supply Base
3.9
5 5.26
8.5
0
1
2
3
4
5
6
7
8
9
2005 2007 2009 2010 2012
246
298323
342370
0
50
100
150
200
250
300
350
400
2005 2007 2009 2010 2012
Buy in Mexico could reach $9.5 bils. for 2012 thanks to production volume recovery at North America
Mexico Purchasing Growth (USB Bill.)
Mexican Supplier Sites Growth in Mexico
Sites
Distribution by Region
North America 42%
Central and South America 1%
East Europe 1.4%
Europe 31%
Asia 22%
Oceania 1%
Rest of the World 0.2%
Quality Strategy
14
Quality Strategy
• Value for our clients
• Continuous improvement
• Q1 process
• PPAP Process – Early risk identification
15
KEYS: The three gears are
working together to
move the central
gear.
They have to work
together to achieve
the main goals.
Exceed the
customer
expectations
•Quality
•Cost
•Time Continuous
materials and
product flow
World class
reliability and
sustainability
Highly motivated
and efficient
people
Value for our Clients
16
Continuous Improvement
4. The OUTPUTS are
monitoring and
controlling
5. Constantly are
PERFECTED
CRITICAL
OUTPUT
0/100
0 Defects
100% Volume
100% Flexibility
2. The STANDARS are
followed with NO
excuses
3. The ABNORMALITY
is evident
PROCESS
Cultural Factors
Physical Factors
Operative Factors
A
N
D
O
N
A
N
D
O
N
1. The INPUTS are Clearly
identified
0 Missing
Parts
0 Equip/Tools
Fails
100% Assembly Feasibility
CRITICAL
INPUT
17
A standard used to qualify Suppliers for business with Ford
Q1 is a global reference to an elite Supplier
– Displaying the highest quality and greatest reliability
– Showing the discipline to ensure success & drive
improvement
Uses a point-based system to evaluate Supplier performance
– A few vital metrics determine which Suppliers are eligible
– Supplier Q1 information is maintained in the GSDB
database
– These metrics are reported in the Supplier Improvement
Metrics (SIM) database
Q1 Process
18 18
• Phased PPAP organizes the process into four phases
– Phase 0: Run-at-Rate
– Phase 1: Quality Verification
– Phase 2: Production Verification
– Phase 3: Capacity Verification
PPAP
X TT PP MP 1
Phased PPAP Phase 0 Phase 1 Phase 2 Phase 3
PPAP/Phased PPAP Comparison
19
Risks Identification
Capacity risks that are identified and addressed early reduce risk to launch and
save significant cost to the program
Capacity Planning Options for risk reduction are many without Jeopardizing launch and without excess cost
To program
Phase 0 (R@R) Risk increases as timing before launch is reduced.
Risk must be addressed with more urgency, and resolution may incur higher cost
Phase 3 (CapVer) Risk increases as timing before launch is
reduced. Risks must be addressed with more urgency, and resolution may incur higher cost
Buyers - Global Skills
21
Purchasing Leaders
1
2
3
4
Energy andutilities
Others Finantialinstitutions
Materials andconstruction
Chemicalsand
Healthcare
Packagedgoods
High tech andtelecoms
Automotiveand assembly
Overall average
Average purchasing score (scale 1= low to 5 = high)
Low High
While purchasing
leaders exist in
every industry
their number varies
widely across
industries
Source: McKinsey GPE Team
10 13 25 44 51 45 21
48 52 42 39 48
37 31
26 23
13 10 8
11
49
40
Average score of industry group
Purchasing leaders
Middle of the pack
Purchasing followers
64 50
22
Importance of Specific Skills in Strategic
Purchasing
• Communication skills
• Leadership/interpersonal
skills
• Negotiation skills
• Business management
skills
• Skills in developing
sourcing strategies
• Ability to build fact base
and analyze material
• Ability to identify
category-based
improvement levers
There are some skills all
companies consider important…
… but some skills are only
considered important by leading
purchasing organizations
Source: McKinsey GPE Team
!
23
Track Purchasing Performance Beyond
Pure Cost Savings
Source: McKinsey GPE Team
50
50
50
37
25
50
50
62
75
39
43
52
57
61
61
70
74
100
Supply base reduction
Cycle time reduction
Quality improvement
Innovation
Procure-to-pay processcompliance
Security of supply
Overall value generation
Internal customer satisfaction
Cost Savings
Followers Leaders
Purchasing leaders track more than just pure cost savings
Significant difference between leaders and followers
What is my own strategy
to develop my team?
Where supply base is?
25
3,571
3,200
2,700
1,576
?
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2005 2006 2008 2010 2012
Ford Motor Company
Supply Base Consolidation (# of Ford supplier sites)
26
I ask myself:
1. Segmenting the market based on my strategy
a) Do I know better to customer A than to customer B?
b) Geographically, where am I stronger?
c) What capacity ($) do I have?
d) Do I have global advantages
and synergies?
e) Can I supply to everybody?
27
I ask myself
2. Decide on What and How I
want to compete
a) Am I stronger as Tier II?
b) Do I get advantages making a
partnership?
c) Do I get disadvantages making a
partnership?
d) My manufacturing plants, how are
they regarding costs, quality, etc.?
e) Does my value chain give any
competitive advantage?
f) Do I have presence in key
markets?
28
Conclusions
• Does your company know where it goes?
• Have you identified your strengths and
opportunities?
• Do you have an strategy and a plan to take you
to success?
• Do you have clear metrics for them?
Thank you !!!