Presented by Carroll E' Pickett

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Overview of Ford Motor Company and its Electronic
Data Interface with its suppliers
Presented by Carroll E. Pickett China Sourcing
Office, MPL Director September 12, 2007
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This presentation is subject to stipulations
under Global Terms and Conditions (GTC) and other
written agreements already or to be concluded
with Ford Motor Company".
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Agenda

Introduction
Ford Motor Company
Ford Requirements to EM Suppliers
Ford LLP Strategy
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An Introduction To Ford Motor Company
Premier Automotive Group
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Manufacturing Around the World
Dearborn, MI, USA
Russia
Europe
Japan
China
Mexico
Taiwan
India
Venezuela
South Africa
Brazil
Argentina
Australia
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Ford Vision

• Ford plans to continue improving business
• relationships in the emerging market supply
• base, such as India, China etc

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Agenda
Introduction
Ford Motor Company

Ford Requirements to EM Suppliers
Ford LLP Strategy
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What You Can Expect from Ford

• Follow our principles.
• Honesty and transparency are key components.
• Work with you in a constructive, collaborative
  manner to avoid problems, and make improvements
  where needed.
• We expect continuous improvement from both
  ourselves and you, the supplier
• Periodic reviews to ensure standards are followed
  and identify areas for improvements, especially
  the delivery and Quality processes

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Supplier Relationship Values

• Act like a partner to be a partner.
• Trust and be trustworthy.
• Communicate with consistency.
• Be fact-based.
• Think value

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Overview of RFQ Conditions

• The purchase agreement incorporates Ford Global
  Terms and Conditions
• Inventory transfer terms - Free Carrier (FCA)
  sellers plant
• Suppliers to comply with QS9000 Quality System
  requirements
• Suppliers are responsible for export packaging
  that meets the Ford Guidelines
• Suppliers are also responsible for the containers
  to ship the parts to the user facility
• Material releases to suppliers authorize 3 weeks
  of fabricated parts and 9 weeks of raw materials
• Standard Payment Terms apply
• Suppliers to comply with Ford Materials
  Management Operations Guidelines (MMOG)

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MMOG Supplier Requirements

• A recognized emphasis and importance of the
  materials function within the organization
• A SMRT supplier assessment, Phase I and Phase
  II, deficiencies corrected
• An integrated MRP or ERP manufacturing system
• QAD is one of Ford approved suppliers for
  integrated ERP system
• EDI (Electronic Data Interchange) capability and
  usage with customers and suppliers, receiving and
  sending customer requirements
• DDL (Direct Data Link) capability and usage,
  monitoring part status to the customer and
  answering shortages
• Use of ASNs Advance Shipping Notification to
  alert customer system of part shipments
• Use of customer approved bar code labels for
  identification and scanning to create the ASN
• Supplier training on Ford / Exel policies and
  procedures, contacts,how to read the release,
  MMOG, delivery rating, packaging
• MMOG compliance
• Delivery rating performance compliance
• Attain Q1

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Supplier Requirements

• Receive electronic production release requirement
• Read and understand release requirement
• Schedule production based on release requirements
  and safety stock
• Package material in accordance with guidelines
• Prepare export documentation in accordance with
  requirements
• Ship material based on release requirement timing
  
• Pack parts in a secured environment
• Ship parts in appropriate packaging and quantity
• Send electronic ASN (Advanced Shipping Notice) at
  time of shipment
• Monitor and reconcile all cumulative totals
• Contact CSO MPL whenever you have a question,
  concern and/or constraint issue

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Electronic Data Interchange
-Gateway Solution Process
Ford CMMS3
Ford Supplier ERP-QAD, or any other service
provider
ECSS send/receive the document
ECSS
Integrate with Internal system
GEC Hub
Easy connect to GXS Global network via PPP or VPN
Gateway application software can transfer
documents between Ford and its suppliers without
manual input.
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Ford Delivery Rating Criteria

• Supplier Communication System (25 points)
• ASN timeliness and accuracy
• Unanswered DDL shortages
• Up to date personnel list
• Problem reports
• Shipping Performance (75 points)
• Up to release schedule
• Zero shipping discrepancies, units off line
• All packaging confirmed, cums agree
• Problem reports

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Quality Assurance Processes

• The Supplier is responsible for part quality.
• The Supplier is responsible for any quarantine,
  rework, sorting, etc. related to parts.
• The Supplier is responsible for cost of
  sorting/returning parts.
• The LLP is an available resource on a contractual
  basis via a 3PL to assist the supplier with
  quarantining and rework suspected parts,
  provision of available space for sorting, and
  inspection.

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Migrating from MS9000 to MMOG Level A

• Background
• Assessment Process
• Evaluation Process
• Q1 Award Eligibility
• MMOG High Impact Requirements

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Background

• MMOG
• Changed to Material Management Operation
  Guideline
• Incorporated MPL audit aligned with ISO/TS and
  included in AIAG and Odette standards
• Included a specific organization trained to
  develop and implement world class MPL management
  system published by AIAG and Odette
• Introduced in August, 2001

• MS9000
• Material Management System Requirement
• QS9000
• Designed to be compatible with Ford/GM/Chrysler
  Quality System Requirement (QS9000)
• Ford Automotive Operations (FAO)
• defined its expectations for its suppliers
• Introduced between 1989 - 1995

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Difference of Evaluation Method

• MMOG
• 206 questions in 6 chapters
• Each question has weighted score of 1, 2 or 3
  points
• Overall score
• ? Question score/ Max. Score
• All the questions in Sections F2 and F3 must be
  answered

• MS-9000
• 73 questions in 16 elements
• Each element has weighted score of 1 point, 2
  points or 3 points
• Overall score
• Average Score per Question X 50

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Contents of 6 Chapters in MMOG

• Chapter 1 Strategy and Improvement
• Chapter 2 Work Organization
• Chapter 3 Capacity Prod. Planning
• Chapter 4 Customer Interface
• Chapter 5 Production Product Control
• Chapter 6 Supplier Interface

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Eligibility for Q1 Award

• MMOG
• Overall score 90
• All F3-questions are fulfilled
• Non-compliance to fewer than 6 F2-questions
• -

• MS-9000
• Overall score 100 points
• No question scored below 2 points

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MS 9000 Base requirements
4.1 Managements Responsibility 4.2 Material
Management System 4.3 Contract Review / Customer
Interface 4.4 Scheduling System 4.5 Document
Control 4.6 Purchasing / Subcontractor
Management 4.8 Product Identification and
Traceability 4.9 Shipping Requirements 4.10
Manufacturing Flexibility / Inventory
Management 4.11 Inspection, Measurement and
Test 4.14 Corrective and Preventative
Action 4.15 Handling, Storage, Packaging and
Delivery 4.16 Control of Material
Records 4.17 Internal Material Audit 4.18 Training
4.20 Statistical Techniques
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Tier 1 suppliers addtl. Responsibilities -- MMOG

• ? Improved electronic Inventory Control System to
  ensure transaction accuracy. This includes
• Ability to receive Customer requirements
  electronically, and integrate into Material
  Requirement Planning System (MRP) via Electronic
  Data Interchange (EDI)
• Send Shipping notifications electronically to the
  customer (ASN) via DDL
• Document Manufacturing Plan for 4 to 6 months
• Document list of suppliers contact information
• Analyze available resource (people, facilities,
  training, etc.)
• MPL Participation and Sign Off in APQP
• Track Monthly Delivery performance to schedule
• Improve Engineering Change Controls and
  Communication
• Measure suppliers Production Counts Scrap

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MMOG Reference of "High Impact" tier 2 suppliers

• Confirm Capacity availability
• Send requirements electronically to sub-suppliers
• Send ASN's electronically from tier 2s to tier 1
• Improve New Model Launch Plan for all parts
• Implement sub-supplier Readiness (P.O.s issued,
  tooling available, releases received via EDI,
  packaging, etc.)
• Implement appropriate container labeling and
  safety controls procedures
• Bar Code Scanning - to verify load, create ASN
• Implement prevention controls to avoid Shipping
  Discrepancies
• Drive metrics to measure Sub-Suppliers
  Performance

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Agenda
Introduction
Ford Motor Company
Ford Requirements to EM Suppliers

Ford LLP Strategy
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China LLP Material Flow Strategy
Suppliers
Ford Plants
LLP Deconsolidation Center consolidates all
supplier components for JIT/JIS shipping to
multiple Ford manufacturing facilities.
Transport
China LLP Consolidation
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Logistics Cost Time Management In Global
Supply Chain
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Suppliers in India

• 157 suppliers in India supporting FOE, FNA, FAPA
  and Ford domestic market
• 48 of these suppliers are Q1 certified
• 44 of the 48 are qualified under MS 9000. These
  suppliers must be MMOG Level A compliant by the
  end of 2008 in order to maintain their Q1 status.
• Suppliers shipping to FOE and FNA must be MMOG
  level A compliant by the end of this year.

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Data Flow
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Data Flow - continued
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Packaging Data Sheet- Form150E
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Ford Supplier Expendable Packaging requirements
via the LLP process
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LLP Benefits for a Supplier

• More integrated business relationships
• Instant link to internationally experienced
  resource
• Simplified work process
• Focus on core business of making quality parts
• Local training
• Packaging assistance
• Better inventory control management
• Assistance in completing Customs paperwork

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Services of an LLP

• Supply chain transportation network design
• Transportation management
• Carrier management
• Warehousing and distribution
• Consolidation and deconsolidation services
• Supplier Training Assistance
• Skills transfer communication
• Single logistics point of contact for suppliers
  and Ford
• Visibility and transparency of shipments from
  suppliers to Ford facilities

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Questions ?
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Thanks