Byline: Tom Murphy
The purchasing chiefs of North America's largest auto makers face the unwieldy task of getting quality parts to their assembly plants.
From day to day, complications arise: Labor unrest at a supplier plant, fires, inclement weather and shipping accidents all can raise the likelihood that parts won't arrive on time - or at all.
But through the daily machinations of supply-chain management, the purchasing chiefs must keep their focus on the end product - the car, truck, minivan or SUV that will land in a driveway somewhere and hopefully meet the daily needs and desires of a discriminating consumer.
Ward's invited each North American OEM purchasing chief to select a recently launched vehicle and talk about the sourcing challenges and the suppliers involved.
General Motors Corp., Ford Motor Co., DaimlerChrysler Corp., Toyota Motor Corp. and Honda Motor Co. Ltd. eagerly accepted. Nissan Motor Co. Ltd. declined to participate due to recent changes in the company's purchasing organization.
In addition to talking about product, the procurement executives also responded to the pressing questions of the day, from the outlook for sourcing from China to the impact of the United Auto Workers' new 2-tier wage structure for many supplier plants.
Suppliers Rise to XLR Challenge
As General Motors Corp. was developing the Cadillac XLR luxury roadster, the company chose an unlikely benchmark: the Lexus SC 430 roadster.
Perhaps the more obvious competitor would be the more sporty Mercedes-Benz SL, which has dominated the luxury roadster market for decades.
But GM management - including Vice Chairman-Product Development Bob Lutz and GM North America President Gary Cowger - instead chose the much-newer Lexus because of its bullet-proof reputation for quality.
"You look at perceived quality and at fit-and-finish as a benchmark," says Bo Andersson, GM's vice president-Worldwide Purchasing, Production Control & Logistics. "We wanted to have this vehicle fully loaded with high-tech stuff."
GM set out to assemble a team of suppliers equipped with cutting-edge technology and capable of meeting rigorous quality standards. Andersson is convinced the No.1 auto maker succeeded.
Supplier partners include Denso Corp. (DVD navigation system), Siemens VDO Automotive (keyless entry), Delphi Corp. (adaptive cruise control, Magnetic Ride Control, Magnesteer and Stabilitrak), Nippon Seiki (head-up display), Lear Corp. (climate control seats) and Car Top Systems (CTS) GmbH (retractable hardtop).
Andersson admits GM set the bar high for suppliers to test their capabilities. "If we can do it on the XLR, then we can do it on other vehicles," he says.
The XLR, which launched in summer 2003, comes from GM's Bowling Green, KY, assembly plant - home of the Corvette. Although XLR and Corvette are derived from a common architecture, they share a limited number of parts.
"Most of the parts on XLR are unique," Andersson claims. "The whole element was to use the plant and to develop the vehicle from existing components, but make it best in class."
He reserves high praise for Collins & Aikman Corp., which acted as interior integrator and currently is struggling financially. The supplier paid close attention to detail, devoting considerable resources to ensure the map pocket opens and closes smoothly and that the fit-and-finish of the eucalyptus wood trim is world class.
"This was a stretch for C&A, and it was a stretch for us because the perceived quality levels for this vehicle are much higher than many other vehicles," Andersson says.
The XLR is only the fifth GM vehicle to launch with a supplier-integrated interior since the auto maker announced three years ago it would hand over interior integrator responsibilities to suppliers such as Johnson Controls Inc., Lear and Magna Intier Automotive.
JCI, for instance, handled the interior for the new Opel Astra, which is selling well in Europe, while Venture Industries Inc. was the interior integrator for the lower-volume Hummer H2. Andersson gives JCI and Venture high marks for their work on the programs, but says the Astra is particularly noteworthy.
"Look at the best of GM today, and I think that (Astra) is the best interior in production that has been in the hands of an integrator," he says.
As with every vehicle program, GM learned many lessons on the XLR, and some of that knowledge is being applied as the Corvette prepares for launch later this year.
For instance, Andersson recalls one Sunday when the team realized that the folding hardtop was causing black marks on the sun visors. That was in addition to rainwater being dumped in the trunk by the folding hardtop.
But CTS, as well as other involved suppliers, were responsive. "There were five suppliers I was hanging out with a couple weekends," Andersson recalls. "We worked like a small family. Even if we had tough challenges and tough times, we tried to stay out of emotions." And many of those suppliers now have contracts for the new Corvette.
Meanwhile, Lutz and Cowger were difficult to please. "They were obsessed that we not release the vehicle to market until it's perfect," Andersson says. - with Brian Corbett
GM purchasing - by the numbers
* $83 billion global direct purchasing budget (excluding alliance auto makers)
* 149 "spills" at North American supplier plants in 2001, 31 so far in 2004
* 3,600 suppliers globally for direct material
* $7.2 billion spent with minority-owned Tier 1 and Tier 2 suppliers
F-150 Set Tough Benchmark
As Ford Motor Co. was developing the latest version of its successful F-150 fullsize pickup, it looked over its shoulder and saw the competition bearing down hard.
Chrysler Group was getting rave reviews for the Hemi V-8 that powers its Dodge Ram, and Nissan Motor Co. Ltd. was winning kudos for its new Titan pickup. And Ford knew both General Motors Corp. and Toyota Motor Corp. were putting plenty of muscle into their upcoming fullsize offerings.
The No.2 auto maker decided the revamped F-150 would set a new benchmark for interior refinement. The seats would be firm, the instrumentation stylish and the materials of the highest quality. Noise levels would be minimized by a new 3-valve 5.4L V-8 and better underhood damping.
It is no stretch to say the new F-150's cabin rivals that of a luxury car from the standpoint of material quality, styling and noise levels. High-quality craftsmanship and materials in a pickup don't come cheap. Ford's purchasing chief says it was only possible because of the hard work of dedicated suppliers that were engaged earlier than usual in the program.
"This vehicle has more features in it, and some of those features cost more," says Tony Brown, vice president-Global Purchasing. "Certainly by working collaboratively, we're able to more cost-effectively do these types of things."
Brown declines to say whether the new F-150's interior costs much more than that of the previous generation. "What I would say is the level of investment that we made in the interior we think is appropriate given the marketplace," he says.
Brown credits several suppliers for their contributions: Visteon Corp. (center console and instrument panel), Dura Automotive Systems (on-floor shifter), Johnson Controls Inc. (overhead storage console), TRW Automotive (restraints) and Lear Corp. (carpet/insulation and door trim panels). Ford also gets its F-150 seats from two suppliers: Lear and Bridgewater Interiors LLC, a minority-owned joint venture between JCI and Detroit's Epsilon LLC.
Ford did retain a bare-bones version for traditional buyers who expect nothing more than a utilitarian hauler. "There are five different interiors, so we differentiated ourselves based on the type of consumer so we can keep things that are lower-cost for that end of the market and then move all the way up," says Matthew O'Leary, chief engineer of the F-150. "I'd say we've taken the upper end even higher."
Brown expects the F-150 to set the standard for interiors for future Ford vehicles, and he suggests some components will be commonized with other programs. "At that point it becomes affordable to start to put features like this into vehicles, given the volumes that we'll become capable of as we move across multiple generations," he says.
The '05 Super Duty F-Series lineup is one place where the new interior strategy has shown up.
Suppliers were active in component design and development for the F-150, and Brown encouraged suppliers to raise issues when identified, so the team could craft a solution. He also met with CEOs from the top suppliers on the program and emphasized a "no shortcuts" philosophy.
Beyond interiors, he says a host of suppliers helped differentiate the F-150.
