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Ford Is Rethinking Its Supply Chain Strategy Following Chip Shortage, COVID-19

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Over the last year, automakers have dealt with a series of supply chain issues related to severe winter weather, the COVID-19 pandemic, and a global semiconductor chip shortage. These disasters have also forced companies to rethink the way they operate and make changes to the supply chain so it’s more simple, flexible, and quicker to react when problems arise. That includes Ford, which has altered its approach to securing much-needed components over the past year.

These changes flip the old “just-in-time” method of reducing inventory on its proverbial head as Ford works to build up its inventory of key parts needed to produce vehicles. “If you’re down for 30 days at the F-150 plant, what’s the cost to the Ford Motor Company versus paying this insurance to stockpile these chips?” Ford’s chief product platform and operations officer, Hau Thai-Tang, told Reuters. “That’s the way we would think through it.”

Thai-Tang said that Ford has already started buying specialized chips from chipmakers rather than going through middleman suppliers, though it’s admittedly still struggling to secure enough semiconductor chips as Ford F-150 production has been cut multiple times so far this year.

Regardless, moving forward, Ford is already looking at what other parts and materials might cause similar problems in the future and working to stockpile them. Additionally, the automaker has upped the two-week vehicle mix and volume forecast it provides for suppliers to six months and is considering extending it to a full year.

Meanwhile, automotive suppliers are working to secure key commodities needed to produce these parts and build up reserves to avoid future shortages. It’s a stark contrast to the just-in-time inventory and production method that Toyota made famous decades ago, but in these trying times, it’s also seemingly a necessary change.

We’ll have more on the changing supply chain soon, so be sure and subscribe to Ford Authority for ongoing Ford news coverage.

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Written by Brett Foote

Brett's lost track of all the Fords he's owned over the years and how much he's spent modifying them, but his current money pits include an S550 Mustang and 13th gen F-150.

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5 Comments

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  1. Cry me a freakin’ river, Farley. Ford used to build vehicles that didn’t need ‘chips’. Technologied y’all’s dang self right into a corner.

  2. It never hurts to periodically take a look at one’s supply chain logic, especially with a world-wide pandemic as an interrupter. There will be more of these coming along, so best to include this in one’s chain construction considerations.

  3. It amazes me that manufactures of anything don’t manufacturer most of the parts in house these days. GM had Delphi, Ford I’m an sure had there in house electrical manufacturer. Granted a computer chip is abit it of there league but we have texas instruments as well as others here in the us that would surely take up the slack. I always wondered why a jet manufacturer have to have a wing built in dubai and shipped in when we have skilled builders here. Granted that is good for the workers in dubai but if something like the suez canal happened your sol. Should be like the military always have a back up plan.

    • Who makes it for company is simple, availability, price, shipping fees, quality. What matters is that the part( wing, radio, ect) is sitting on the assembly area floor when its assigned vehicle, body, whatever passes the assembly stage for its installation, and the suez thing doesn’t have a permanent effect on timing.

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