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Ford Combines Purchasing with Product Development

May 12, 2008
Automaker merges key operations teams to eliminate wasted time and effort.

Waste reduction is a popular catch-phrase in the world of manufacturing. And while it's usually applied to improving such things as production efficiency and inventory management, many companies are finding that it can just as easily be tailored to upper-level functions throughout their corporate ranks.

Automaker Ford Motor Co. recently drew on a similar concept in an attempt to cut down the time and effort being wasted in two areas of its business that all too often ended up doing the same work. By reorganizing its purchasing and product development organizations into one integrated global team, the company believes it will be able to eliminate those duplicated efforts, helping to accelerate the creation of new vehicles, reduce costs, enhance quality and improve overall efficiency.

"We have successfully shared technologies across many of our product lines in the past," says Derrick Kuzak, Ford's group vice president of global product development. "These changes will allow us to fully leverage our global product development and purchasing organizations to create more customer-focused vehicles faster."

According to a statement from Ford, the consolidation of activities has resulted in a repositioning of senior leaders throughout both the purchasing and product development organizations to assign global responsibility for key vehicle segments and major purchasing functions. Having started in December 2006, the new arrangement is aimed at more closely integrating the two organizations and eliminating duplication in how vehicles are created, engineered and sourced.

Bringing together Ford's purchasing and product development operations will help simplify its sourcing process, says Tony Brown, group vice president of global purchasing."Better alignment of our resources not only helps Ford -- it will also improve the way we do business with our global supply base by simplifying our sourcing process," says Tony Brown, group vice president of global purchasing. "This is consistent with the principles of our Aligned Business Framework, which is strengthening collaboration with our key suppliers."

As part of the initiative Ford is assembling joint product development and purchasing teams around the world who will be responsible for the company's core engineering and purchasing functions. These teams will improve interaction with Ford's global supply base to leverage economies of scale through common sourcing, reduce complexity and increase sharing of common parts.

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