NEW YORK (CNN/Money) - Ford Motor Co. is looking to significantly trim the number of suppliers it uses in an effort to cut costs from its $90 billion in annual purchases, according to a published report.

The Wall Street Journal reported that Ford expects to cut by more than half the number of suppliers from whom it buys 20 key parts such as seats, tires and bumpers as a first step in this process. Ford is now spending $35 billion a year on those parts, according to the Journal. The new supply chain is expected to take effect for vehicles that will be built in 2008-2009 and beyond.

Ford is looking to shrink from about 2,500 suppliers worldwide to fewer than 1,000, according to the article. The paper reports that Ford expects to win lower-cost contracts by offering larger, long-term contracts to the suppliers who are retained.

While Ford executives didn't tell the Journal how much money the company hopes to save with its new purchasing strategy, Tony Brown, its senior vice president of global purchasing, said the company expects savings to be "significant" both in warranty costs and parts, materials and services. He acknowledged that the auto maker's long-running approach to buying parts -- pushing suppliers for annual price cuts -- is not working.

"It is clear we have a business model that doesn't effectively work for them or for us," he told the paper. "If they are marginalized, they can't do for us what we need, so we are taking affirmative actions to improve the state of the Ford family of suppliers."

The paper reports Ford already has chosen seven companies as initial suppliers, including some of the world's largest auto suppliers: Swedish-based Autoliv (Research), Delphi (Research), Johnson Controls (Research) Inc., Canada's Magna International (Research), Visteon (Research) Corp., Lear Corp. (Research) and Japan's Yazaki Corp.

The move by Ford could shake up the already embattled auto parts segments, which has seen several suppliers file for bankruptcy protections. Collins & Aikman Corp., filed for bankruptcy earlier this year and the Journal reports it has required tens of millions of dollars from Ford to keep afloat.

No. 1 supplier Delphi has said it could file for bankruptcy protection by Oct. 17 unless it wins concessions from unions and assistance from its former parent, General Motors (Research).

Delphi President and Chief Operating Officer Rodney O'Neal told the Journal the new Ford purchasing plan "makes a lot of sense" because it gets suppliers involved in the product-development process earlier and gives them larger contracts

"Anytime you get these bigger contracts you can take your resources and utilize them across more volume and that helps," he told the paper. "It's tough to make a buck without the higher volumes."

Ford spends $70 billion a year on production car parts, so trimming only three percent from the cost of purchases would save $2 billion. Ford lost $1.1 billion on its core automotive operations in the second quarter, although earnings from Ford Credit and Hertz allowed it to post a profit in the quarter.

For a look at the Ford push to offer more hybrid vehicles, click here.

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