Ford to Blacklist Suppliers That Fail to Meet Cost Targets

In an effort to cut costs, Ford has launched a crackdown on suppliers that fail to meet key quality targets, placing them on a “blacklist” that bars them from bidding on future contracts.

According to a report in the trade press in Detroit, the U.S. automaker will also require many parts manufacturers to implement three-year cost-saving plans, or face the same consequences.

The report by Crain’s Detroit Business cites executives from five different companies as sources, all of whom Ford has asked to implement multi-year “Total Value Management” (TVM) plans, which require a certain percentage of cost savings relative to their total business with the automaker each year.

While the program is not new, suppliers are struck by the way the Blue Oval has intensified the use of this requirement as a condition for retaining and securing new contracts, while replacing those with whom it fails to reach an agreement.

When asked about this, Ford stated that this practice is not a new policy and that its implementation is part of broader efforts to reduce costs and improve quality in order to “compete in a complex and constantly changing industry.”