Supply Chain Overview
The automotive supply chain is one of the most complicated of any industry. There are often six to 10 levels of suppliers between an automaker and the source of raw materials that enter the manufacturing process.
The breadth, depth and interconnectedness of the automotive supply chain make it challenging to effectively manage business and sustainability issues. Respecting human rights and environmental issues in the supply chain is ultimately our suppliers’ responsibility. As customers, however, we play an active role in supplier development and have adopted various means to clearly communicate our expectations to our suppliers.
Supply Chain Standards
In our standard production procurement process, we issue purchase orders that incorporate our Global Terms and Conditions (GT&Cs). The GT&Cs are further supplemented by our web-guides, which expand on our expectations and suppliers’ obligations on specific topics. For example, our Social Responsibility and Anti-Corruption Web-Guide outlines our prohibition of child labor, forced labor (including human trafficking), physical disciplinary abuse and any infraction of the law. Our Environmental Web-Guide sets out environmental requirements, including the elimination of materials of concern and increasing the use of sustainable materials whenever technically and economically feasible.
Internally, we have adopted Policy Letter 24, our Code of Human Rights, Basic Working Conditions and Corporate Responsibility, to address workplace issues such as working hours, child labor, forced labor, nondiscrimination, freedom of association, health and safety and the environment. This policy applies to our own operations, and we encourage businesses throughout our supply chain to adopt and enforce similar policies in their own operations. Furthermore, we seek to identify and do business with companies that have aligned standards consistent with Policy Letter 24, including working to cascade these expectations throughout their own supply chain.
Supplier Selection and Screening
Suppliers are selected based upon their ability to provide Ford with quality parts, technology and innovation on a competitive basis. We gain cross-functional input for sourcing decisions from our Purchasing, Product Development, Supplier Technical Assistance, Finance, and Material Planning and Logistics departments. Due diligence of supplier capability is required when a new supplier is added to the supply base. In 2015, we plan to pilot a sustainability self-assessment questionnaire to assess the alignment of any new parent supplier with our established sustainability expectations. This questionnaire will address topics such as human rights, the environment, ethics, and health and safety.
Supplier communication is a key component of our ability to establish strong relationships with our suppliers. We have established several forums for supplier communication at all levels of the organization and include multiple cross-functional stakeholders. Examples include:
- Global Top Supplier Meeting and World Excellence Awards
- Regional Top Supplier Meetings
- Aligned Business Framework (ABF) dialogues
- Executive Business Technical Review
- Business Unit Reviews
- Quarterly business update calls
- Participation in supplier and industry association events
ABF Supplier Framework
We have developed an Aligned Business Framework (ABF) with our most strategic suppliers, which helps to improve quality, drive innovation, achieve operational synergies and encourage shared commitments to meet sustainability goals. ABF agreements – which were launched in 2005 and most recently updated in 2014 – comprehensively and formally spell out business practices designed to increase future collaboration, extend sourcing and increase data transparency.
Ford’s ABF Suppliers
As of the end of 2014, the ABF network included 106 companies, including 80 production and 26 indirect suppliers from around the world. Minority- and women-owned suppliers make up more than 10 percent of the supplier profile.
World Excellence Awards
As part of the annual World Excellence Award process, Ford recognizes suppliers for outstanding supplier performance in various categories, including sustainability, quality, cost, performance and delivery. In May 2014, Ford recognized 51 global suppliers with World Excellence Awards, including two suppliers for their sustainability performance: Laird Technologies and Maersk Lines. In May 2015, we will again recognize the performance of our suppliers at our annual World Excellence Award Ceremony.