GHSP transforms procurement from PO processors to sourcing engineers
By John Day -- Purchasing, 7/17/2008 2:00:00 AM
• GHSP
• Location: Grand Haven, Mich. • Size: 800 employees at five sites in the U.S. and China • Business: Supplier of driver controls for automotive and truck OEMs
Automotive manufactureers are happier than ever with supplier GHSP since the privately held firm replaced its purchase order processors with experienced engineers, according to Mike Herbert, GHSP's director of supply chain management.
GHSP, headquartered in Grand Haven, Mich., designs and manufactures mechatronic driver controls, including shift systems, electronic throttle controls, and smart actuators for cars and trucks. Five years ago the firm was experiencing supplier-related problems severe enough to threaten its relationships with automotive OEM customers. Top management decided to change the way the company worked with suppliers, and Herbert, then working in GHSP's engineering department, was selected to evaluate and improve the company's sourcing operations.
“Essentially we reorganized our entire supply chain operation,” Herbert says. “Before, design engineers sourced our parts and suppliers. They would write requirements, get quotes and then hand the requirements to a buyer who would write a purchase order and send it to the supplier.”
But problems often arose when suppliers were unable to meet manufacturing tolerances and GHSP engineers had to adjust their designs. “There is always going to be variation, but if a product is designed well, variations in design and processes can be digested,” Herbert tells Purchasing.
“We have to determine what's causing variations, such as a supplier using an older lathe or CNC machine. If we don't understand the variation we will miss incorporating it into our validation. We have to match what we need to what our supply chain can produce; any difference between the two—the gap—has to be closed.”
Under the old sourcing setup, GHSP's design engineers lacked the time and skills to develop and manage suppliers effectively and buyers lacked the necessary product and technical knowledge.
“Now the supply chain operation sources product with input from the organization, and there's a lot more dialog about who is going to make what and why,” Herbert says. “We have engineers with tier-one quality experience in the sourcing roles. They understand the products and the processes and they know how to ask the right questions.”
The supply chain management team at GHSP's headquarters consists of four buyers, each of whom sits next to a supplier development engineer. The buyers deal with supplier contracts while the engineers deal with product technology and manufacturing processes.
One of the two-person teams is responsible for decorative items such as shift knobs and chrome parts; another for electronic assemblies. A third team sources tubing and other metal stampings while the fourth primarily handles gaskets, molded plastics and other non-metal parts.
GHSP's supply chain group tracks supplier performance over time and issues supplier report cards based on the frequency of product trouble reports as well as the supplier's current and six-month rolling performance data.
“We bring suppliers in to meet with our engineers, and our supply chain people sit in on those meetings. They bring an historical viewpoint because they know the history we've had with each supplier,” Herbert notes. “If the product we're designing is an offshoot of a product we're already building, we know who is capable of handling the processes. For new items we'll bring in more than one supplier.”
GHSP's mechatronic systems contain somewhere between 40 and 80 components. Herbert estimates that the supply chain group moves approximately one million parts per day through the firm's manufacturing facilities. Components and materials in GHSP's supply chain have a total value of more than $100 million per-year. The group is reinforced by regional sourcing personnel at manufacturing facilities elsewhere in Michigan and in Shanghai, China.
GHSP experiences substantially fewer supplier-related problems now that the current organization is in place. “There is more up-front work and collaboration, and product launches are more successful as a result,” says Herbert. “Quality has improved while sourcing costs have been reduced.”
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