Though once part of General Motors, Delphi Corp. is remaking its vast purchasing operations in the image of Toyota and Honda.

Most senior Delphi executives are American, came from GM and are steeped in the culture of the world's largest carmaker. But on the purchasing front at least Delphi is rejecting the ways and means of GM.

During four years of independence the ex-GMers discovered they prefer dealing with Japanese carmakers. Privately, Delphi executives complain about the procurement tactics of their former owner.

"When we meet with them the discussion is usually one-sided," said one senior Delphi project engineer.

Said another Delphi manager: "The atmosphere is always very contentious."

GM purchasing executives are often not prepared to discuss projects in detail, he said.

"The only thing they are ready to do is demand price cuts," the executive said.

In contrast, Delphi insiders say Toyota and Honda purchasers are knowledgeable about component costs and the supplier's overall business. They are less argumentative and more open to discussion.

So Delphi, which spends $US14 billion a year on parts, concluded that its own suppliers would appreciate a similar approach.

Not all top Delphi executives are from GM. Purchasing director Dave Nelson came over from Honda's North American operations two years ago and is a key driver in Delphi's new direction.

Cost-management director Hiromichi Kamimura, a long time Toyota executive, is another influential figure.

Runkle factor

But the driving force behind the change is an American executive with deep GM roots - vice chairman Don Runkle, who now has global purchasing under his wing.

Runkle is a former GM product development leader -- a Bob Lutz-like legend among many of Detroit's auto journalists - who has taken to purchasing like an impressionable young engineer on his first big assignment.

"I've been very interested in this arena since maybe two years ago," he says. "I felt that we should be on a different tack on how we do cost reduction in material, and also how do technological innovation there."

Runkle has Delphi's purchasing operations focusing on cost standards.

"We are putting together a good database on what things should cost," he says. "When you know what things should cost, the whole dynamic of the quoting process and the bidding process switches from one of auction and what I call poker playing to one of a common focus on cost."

Runkle says Delphi is also focusing on commodity and supplier strategies, which he called "fairly in-depth analyses that result in sort of a one pager by commodity and a one pager by supplier on what the strategy is for that particular commodity."

He says the analyses cover all the key points.

"Do we need one supplier, do we need 10 suppliers, where's the region that is most competitive in this, should we be making this commodity or buying it? And then the same with the suppliers -- are they like-minded, are they interested in lean and so forth, and so forth."

Runkle says purchasing is among the most important elements for Delphi's entire lean enterprise approach.

Delphi has taken about 47 lean experts from its manufacturing operations and installed them in purchasing to work with strategic suppliers. The lean supply experts are working with 68 strategic suppliers.

Runkle says: "We had 29 of these suppliers come in recently and we had seven of them present to everyone on their progress in lean supply development. The results were amazing."

He says that when measuring productivity, total product cycle time, inventory, first time quality and other metrics, gains of 30-50% were seen.

"The results were really remarkable," Runkle says.

SupplierBusiness.com