Delphi builds bridges to designers & suppliers

Buyers make sure Delphi gets the leading-edge technology it needs from suppliers.

By James Carbone -- Purchasing, 3/16/2006

"Bridge builder" are the words that Tom Miklik of Delphi Electronics and Safety (DES) uses to describe his job at DES' global supply management organization (GSM).

Miklik's duties as manager of advanced product development in the global supply management organization are to work with Delphi engineers and suppliers to make sure Delphi gets the latest technology for the automotive systems that it builds for its OEM customers. Delphi designs and builds a number of high-tech systems for automakers, including keyless entry, theft protection and safety warning among others. Miklik must make sure suppliers not only provide a needed technology, but can support Delphi's requirements for capacity, delivery, quality and cost.

"What we try to do is build a bridge between the corporation and suppliers to address the technology needs that our engineering community has identified," says Miklik. "There are times when we need to have a supplier bridge the technology gap that we have."

To bridge that gap, Miklik spends a high percentage of his time with engineers at Delphi as well as with suppliers' engineers. His involvement with design occurs very early in the new product introduction cycle.

Miklik sits on the staff of Robert Schumacher, the general director of advanced product development and strategy for Delphi, and works with his chiefs, including the heads of product lines such as integrated media systems, powertrain, integrated body systems, chassis and safety and occupant protection. However, Miklik reports to Jerry Griffin, general director of global supply management for DES based in Kokomo, Ind.

Griffin says GSM's role is to assist the advanced engineering and design group in the procurement of technology and act as a bridge between the supplier and the advanced product development group to assure the needs of both constituencies are met.

Miklik says that often his role is to find capable suppliers for new technologies. Often technology gaps are discovered between what Delphi needs and what its current supply base can provide.

"When we find a technology gap that needs bridging, I sit down with engineering and discuss it," says Miklik. "We ask: 'Who do we know that can give us the technology we need?' Then we define expectations and I go out to suppliers along with the engineering," he says.

According to Miklik, engineering tends to look at the technical advantages of a supplier. He sees his job as having a more comprehensive perspective. "Engineering often has the view: 'I want the technology. I want to go in that direction.' They don't have the whole organizational view of what that means to the company," says Miklik. "I bring in that commercial business piece."

A supplier may have a great technology, but may not be able to deliver in the volumes that Delphi needs or support it globally, or deliver on time with short leadtimes. Often new or innovative suppliers are small and their production capacity may be limited. The supplier may have to invest to boost its capacity to meet Delphi's requirements.

If a small supplier is chosen, Delphi may then represent 50% of the supplier's annual revenue, which would make the supplier very dependent on Delphi.

"If the supplier has to double its capacity, the risk (to the supplier) is substantially large," says Miklik. "We have to be sensitive to the total impact on the supplier's business line. So if something happens at Delphi and the program with the supplier doesn't fly for some reason, we don't want to negatively impact the supplier." As a general rule Delphi doesn't want to represent more than 35% of a supplier's annual revenue.

"Our biggest concern is suppliers who are not automotive, but are small suppliers that are technologically innovative," says Griffin. "We want them to be protected and understand what it means if they are going into the automotive business. We spend time with more novice suppliers."

Griffin says Miklik helps suppliers understand the requirements of the auto industry and has "established a sense of discipline with product development and a link between Delphi engineers and suppliers."

"Suppliers get a view into our needs and expectations and can then help to educate our engineering folks about what they can expect of the supplier," says Griffin.

While Miklik works closely with engineers and suppliers, he is not the only one in supply management doing so.

"All buyers are involved. I work at advanced product development, but all buyers perform advanced engineering functions. They get suppliers to address a potential design issue. With a new product, four or five different buyers may call in suppliers along with engineers," says Miklik.

Griffin says Delphi often calls in suppliers for a "discovery day" where invited suppliers spend time with Delphi engineers.

"They come in and talk about their product and where it is going. They'll show a five-year technology plan," he says.

For instance, a wireless chip supplier can explain how its product would work in automotive applications. "At that time we solicit from our engineering teams the needs they have and try to match those with the suppliers' technology."

However, sometimes supply management's role is more than just linking engineers and suppliers. For instance a couple years ago Delphi wanted to add a camera to its Forewarn Collision Mitigation System which it supplies to a European vehicle maker.

Purchasing and engineering interviewed about 10 camera companies that had different camera technologies, says Miklik. The list of suppliers was narrowed down and Delphi decided to focus on one.

"This supplier demonstrated an imaging chip and camera usable for our application and was willing to develop a next-generation chip/camera to add to our portfolio," says Miklik.

The supplier's core business was cell phones, but the supplier wanted to diversify and move into the automotive market "for stability and to take the bubble out of their overall scheduling."

"The issue with the camera company was nonrecurring engineering (NRE) expenses," says Miklik. "We don't fund that for them, but they had the technology that we wanted. I talked to their president and got them to waive the $3 million NRE based on the possibility of winning our business."

The supplier won the business and now supplies the cameras for the system.

Miklik says the bottom line is suppliers must have the technology and still be competitive in the marketplace. "For the most part, we direct engineering to suppliers who we have a history with and can deliver the technology that we need," says Miklik. "Suppliers need to bring enough to the party for us to leverage and help us be more competitive."