Ford to cut costs by reducing the number of suppliers

Ford to cut costs by reducing the number of suppliers

Ford is going through tough times and has revealed several plans to get back to profitability. Some of these plans have included job cuts and closing down of their loss making plants. The latest news in is that the company is now planning to cut costs by reducing the number of suppliers for their parts requirement. They also aim to give the selected suppliers larger, longer-term contracts in an effort to cut costs.

The company plans to use this new system of dealing with their suppliers from 2008 and plans to reduce this supplier list from 2500 to around 1000 companies. Ford makes annual purchases of around USD 90 Billion, which includes around USD 70 Billion worth of parts that goes directly into vehicles.

Ford would be revealing more details in the coming days as it continues to find new ways to cut costs and reduce the losses it has been making the last few quarters. They are not alone in their efforts considering both DaimlerChrysler AG’s Chrysler Group and General Motors Corp. have announced similar plans to improve relationships with suppliers and cut costs.