ABB and Ford: Creating Value through Cooperation

To the extent that buyer-supplier relationships can be cooperative, value can be created for both customers and vendors. Regrettably, the traditional behavior of some industries, particularly the US automotive industry, often precludes cooperation. However, the experiences of ABB and the Ford Motor Co. during the design and construction of a $300-million facility represent one successful case. With the Ford-ABB Oakville Paint-Finishing Project, both companies have created a genuine, mutually beneficial, win-win relationship, and have innovated beyond the current practices of the Japanese automotive industry. Instead of forming a relationship around an initial and often dramatic price negotiation, Ford and ABB structured a series of repeat relationships over an extended period of time. Other critical dimensions of the Oakville Project process included the creative use of time, the development of a contractual structure for sharing future savings, and the enrichment of the purchasing process.