BIRMINGHAM, Ala. - Teaching Tier 2 and 3 auto suppliers the principles of lean manufacturing and helping them practice it present an opportunity for Delphi Corp. and other top tier suppliers, said Dave Nelson, head of global purchasing for Delphi.
"I think extending the lean enterprise is critical to staying in business today," Nelson said at the Automotive News Manufacturing Conference. "What Toyota and Honda have as a global strength is success in working with their supply base."
Nelson studied the Japanese auto supplier and manufacturing system from the inside, working for Honda of America Manufacturing Inc. for 10 years as a senior purchasing executive.
At age 65, Nelson knows that many of his peers prefer retirement. But he said he liked the challenge of bringing lean manufacturing to the world's largest auto supplier, which he termed a five-year project. Nelson would not say when he intends to retire but said he expects to be at Delphi until he is close to 70: "I want to see this thing through."
Bringing lean manufacturing to smaller suppliers is not a way to squeeze them for price cuts, Nelson said. By working with suppliers to find ways to reduce costs, Delphi can become a supplier's most profitable customer, he added.
For Delphi, lean manufacturing is the means for cutting into the $14 billion it spends annually on buying goods from its suppliers. Delphi is trying to trim the number of suppliers of direct materials from about 7,000 today to about 1,000 by 2008.
A key first step is getting Delphi's suppliers to accept that Delphi wants to help them. "We haven't always treated suppliers with the respect they like in the past," Nelson said.
But once a supplier gets past the initial resistance, the training delivers results. Nelson cited a project with a supplier plant in Ohio in which a lean workshop eliminated a safety hazard and reduced the operation by half a shift.
"You can know everything you need to know about cutting waste," Nelson said, "but it won't do any good if you can't convince others to go along."
While he declined to tell the Big 3 how to run their purchasing operations, Nelson said: "Toyota, Honda and Nissan do purchasing the best. I think that's an important strategy that Delphi must use to be a strong company."