A year ago, David Nelson, 65, joined Delphi from Honda of America Manufacturing Inc. His mission is to bring the Honda philosophy to Delphi's suppliers.
Nelson, Delphi's vice president of global purchasing, is six months into executing the strategy. It's going to take about five years to complete, he says, by which time Delphi expects to have cut its purchasing costs by 30 percent.
"Our manufacturing costs, like most other companies', run a little over 30 percent," Nelson says. "Our purchase costs run roughly 50 percent. In the early time frame, the return on investment will be three to five times. As we get good at it, I expect over time we'll average 10 times what it costs."
Delphi's approach of finding the lowest cost in the world per part differs from that of other companies, Nelson says.
Conventional strategy is that "by market, go and get several quotations, look over all the information received and make the best selections based on the quotations," he says.
Then the engineers move in. "They work with the supply base to create the optimum manufacturing process, to work toward achieving this best-in-cost model," Nelson says.