It was clear to the senior management team that Delphi had too many
suppliers to have a focused, lean supply chain. Delphi was challenged
to develop close relationships with like-minded suppliers dedicated to
cost reduction. So they set out to identify “strategic supplier partners.”
This turned out to be a more onerous task than it appeared at first
glance. It was a matter of meeting with the CEOs of candidate suppliers
one by one and explaining the challenges associated with being a
strategic supplier. In fact, about 10 percent of the suppliers interviewed
chose not to join Delphi in the lean journey. It took about two years
to develop an initial set of “core” and “near core” suppliers, and more
work remained to be done.
In the meantime, a lean supplier development engineering group was
formed, and knowing Delphi could not wait years to get started teaching
lean to suppliers, developed a list of suppliers likely to make the strategic
supplier list. Delphi began working with a subset of core suppliers, and
in two years had done projects with 70 suppliers. The approach was
modeled after Honda’s best practices model and Toyota’s approach,
through its supplier support center.
Target model areas are selected through this approach. Lean experts
from Delphi, supplemented by outside consultants who formerly
worked for Toyota, act as sensei.They do not do the work for the
supplier’s plant, but guide them through teaching and coaching. The
approach is:
- Get a solid commitment from the supplier’s CEO.
- The CEO must appoint an internal lean champion (either full- or
part-time, depending on the company size). - Select a product family.
- Develop current and future state maps along with detailed action
plans. - Post the maps, plans, and key metrics in a war room.
- Implement.
- The Delphi sensei visits regularly and reviews progress by walking
the floor and comparing progress to plans in the war room. - Delphi expects to share in the supplier's cost savings resulting from
the product (typically 50-50 for a specific product family only).
As Delphi anticipated, project results were similar to those of Honda,
Toyota, and its own plants—double or even triple digit performance
improvements on all key metrics. For traditional thinkers, lean supplier
development engineering is simply about cost savings. However, for
Chapter 12. Develop Suppliers and Partners 299