Our Supply Chain Strategy
We rely on thousands of suppliers to provide the materials, parts and services we need to make our products. We also require their commitment to help control costs, improve quality and meet sustainability targets.
Supply Chain Overview
The automotive supply chain is one of the most complex of any industry. There can be up to 10 tiers of suppliers and sub-suppliers between an automaker such as Ford and the original source of raw materials used in the manufacturing process.
Our Supply Chain
$110+ bn total global spend
67 Ford manufacturing sites
Suppliers of vehicle parts and components
1,200+ Tier 1 suppliers
60+ countries in which suppliers are located
4,400+ supplier sites
100,000+ parts manufactured
500+ commodities sourced
Suppliers of facilities, equipment, materials and services
~10,000 supplier companies
600+ commodities being managed
ABF Suppliers: Production and Indirect (pdf, 69kb)
Managing Our Supply Chain
The breadth and depth of our supply chain make it challenging to effectively manage many business and sustainability requirements. These are ultimately our suppliers’ responsibility but, as their customer, we proactively support their development.
To achieve our goals, we foster long-term relationships with our suppliers through active engagement. This helps us communicate our expectations on key issues such as human rights, working conditions and environmental sustainability, and ensure that our suppliers have management systems in place to mitigate potential risks and ensure continuity of supply.
Our approach involves:
Communicating our standards
Assessing their environmental and social performance
Helping to build their environmental and social capability
Collaborating with industry partners and cross-sector organizations to develop solutions in a non-competitive environment.
By leveraging the scale and reach of our supply chain – and the sector as a whole – we aim to make a positive impact in the markets in which we do business around the world.
Communicating Our Standards
The basis of our work with suppliers is Policy Letter 24, our Code of Human Rights, Basic Working Conditions and Corporate Responsibility. This policy addresses workplace issues such as working hours, child labor, forced labor, nondiscrimination, freedom of association, health and safety, and the environment. It applies to our own operations but we also encourage businesses throughout our supply chain to adopt similar policies in their own operations.
To ensure our suppliers understand the standards we expect of them, our production purchase orders incorporate our Global Terms and Conditions (GT&Cs). These are further supplemented by 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 zero tolerance of child labor, forced labor and human trafficking, physical disciplinary abuse and any infraction of the law, while our Environmental Web-Guide sets out requirements including the elimination of materials of concern and increasing the use of sustainable materials.
Selecting and Screening Suppliers
We select and approve suppliers based upon their ability to provide Ford with quality parts, technology and innovation on a competitive basis. We gain input for sourcing decisions from many departments, including Purchasing, Product Development, Supplier Technical Assistance, Finance, and Material Planning and Logistics.
We also seek to identify and work with companies that have standards that are aligned or consistent with Policy Letter 24, and that cascade these expectations throughout their own supply chains.
Engaging With Suppliers
Open, honest and transparent communication with fair, honorable and consistent behaviors is a key component in establishing strong, lasting relationships with our suppliers. We’ve established several forums for engagement at all levels of the organization, including regional supplier meetings, business unit reviews, quarterly business update calls, and participation in supplier and industry association events.
Recognizing Supplier Excellence
We honor suppliers for their outstanding performance and achievements with our World Excellence Awards. At our 17th annual ceremony, held at our global headquarters in Dearborn, Michigan, in May 2015, Ford recognized 52 suppliers from across the globe with awards in 10 categories.
“Ford’s World Excellence Awards allow us to recognize and thank our partners who support us in all we do. In a year with a record number of global product introductions, these companies demonstrated a strong commitment to both quality and performance, and we’re honored that they are a part of our One Ford team.”
Aligned Business Framework
With our most strategic suppliers, we also maintain dialogue through our Aligned Business Framework (ABF). This engagement helps to further improve quality, drive innovation, find operational synergies and encourage shared commitments to meet sustainability goals.
The ABF formally spells out collaborative and transparent work in areas such as ethical business practices, working conditions, global manufacturing and development footprints, and sourcing from minority-, veteran- and women-owned businesses. Our ABF network, which accounts for 60 percent of our annual spend, currently comprises 81 production suppliers and 26 non-production suppliers. Of these, 13 percent are minority-, veteran- and women-owned suppliers.
For these strategic suppliers, our global Supply Chain Sustainability team has developed a rigorous, three-stage process for managing sustainability issues:
- Ford verifies that ABF suppliers have a code of conduct aligned with Policy Letter 24
- ABF suppliers conduct internal training to ensure their employees understand and comply with their codes of conduct. Ford validates each supplier’s internal mechanisms to ensure ongoing alignment
- ABF suppliers are also required to extend our shared expectations to their own suppliers. Ford ensures that ABF suppliers can verify that their own supply chains are compliant with expectations