Home Markets Ford restructures supply chain after $1 billion in unexpected costs

Ford restructures supply chain after $1 billion in unexpected costs

by SuperiorInvest

Ford CEO Jim Farley at the company’s factory in Dearborn, Michigan, where it builds the electric F-150 Lightning on April 26, 2022.

CNBC | Michael Wayland

DETROIT – Ford Motor announced plans to restructure its global supply chain on Thursday, days after the company said it expected reserve an additional $1 billion in unexpected supplier costs during the third quarter.

The supply chain restructuring aims to “encourage efficient and reliable component sourcing, in-house development of key technologies and capabilities, and world-class cost and execution quality,” the automaker said. he said in the message.

Ford CFO John Lawler will lead the effort on an interim basis until the company selects someone to fill the newly created chief supply chain role. position.

Lawler enters at a time when parts a raw material costs for automakers and suppliers rose sharply the coronavirus pandemic. The increase came amid serious supply chain challenges, including ongoing global shortages of key semiconductor chips.

On Monday, Ford said recent negotiations resulted in inflation-related supplier costs being $1 billion higher than originally expected during the third quarter. The announcement, including a preliminary release of some earnings expectations, sent Ford shares into a tailspin worst day in over 11 years.

According to Ford spokesman TR Reid, the restructuring is not directly related to the automaker’s announcement earlier this week. He said changes to Ford’s supply chain have been underway for some time amid the industry’s supply chain problems and its shift to electric vehicles.

“As we have previously acknowledged, this is an area where we have improved and there is still room for improvement,” he said.

Jonathan Jennings, Ford’s vice president of supply chain, will also take on additional responsibility for technical assistance and supplier quality, the company said. He will report to Lawler.

The supply chain plans were announced alongside other executive changes and appointments related to electric vehicles, product development and other areas of the company.

Ford said the changes are a quickening of the CEO “Jim Farley’s Ford+ Plan for growth and value creation.”

Ford shares fall after the company warns of $1 billion in additional costs

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