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Ford Motor’s Capacity Expansion Accomplishment Comes with a Historic Perspective

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Often in the day-to-day flurry of supply chain management, we can sometimes lose historic perspective as to how prior critical decisions led to current day accomplishments.

In the Corporate Watch section of today’s Wall Street Journal there is a brief entry regarding Ford Motor Company titled New Work Shifts Increase Vehicle Capacity.  The entry states that Ford has boosted its North American vehicle production capacity by 600,000 vehicles in the past 15 months. The company has done this to respond to increasing consumer demand for Ford vehicles. Ford Vice President of North America manufacturing James Tetreault is quoted as indicating that capacity was able to be increased without building new facilities because of the ability to break down constraints at plants and with Ford’s suppliers. Ford has initiated revised labor practices with the United Auto Workers, has added an additional 8000 people to its manufacturing workforce and has added additional work shifts among new facilities.

However, Supply Chain Matters believes this brief mention has far more important takeaways for Ford’s North American manufacturing and the industry’s extended supply chain teams due to efforts initiated back in 2008 at the height of the global financial crisis that especially impacted North America automotive markets.

In a Supply Chain Matters March 2012 commentary, The Automotive Industry- A Look Back with More Inside Proof that Supply Chain Do Matter, we noted the Wall Street Journal’s citing from a book authored by Bryce G. Hoffman titled Alan Mulally and the Fight to Save Ford Motor Co... The book highlighted that by the fall of 2008, most of Ford’s suppliers were on the brink of bankruptcy.  At the time, Ford Vice President of Global Purchasing Tony Brown then launched Project Quark, a secret global cross-functional team tasked to monitor supplier health, prevent supply chain disruption for the business and shrink the supplier base into a viable network of strategic suppliers. The book also noted that Brown recognized that Ford could not stand alone in its efforts to revive and sustain the North America automotive supplier base.  In the end, it was an inter-industry collaboration among Ford, Toyota, Honda and Nissan with coordinated efforts that saved the supplier network.

In our March 2012 commentary we noted the important insight and learning that in the crisis of 2008, an acute understanding that the supply chain does matter and coordinated efforts among industry players and the U.S. government helped to preserve the capability we witness today.

Ford can now proclaim that it has expanded capacity by 600,000 vehicles through the collaboration of internal, labor union, and supplier initiatives, without the need to add expensive new factory capacity.  Ford and other automotive industry supply chain teams should at the same remember that critical awareness, strategy and automotive supply chain industry initiatives initiated at the precipice of the 2008 financial crisis in all likelihood provided the foundation for Ford’s current accomplishments.

Bob Ferrari

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