Looking for a way to achieve greater supply chain accountability, flexibility and efficiency, Delphi Corp. in 2001 launched a major supplier portal initiative.
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| Bette Walker, VP and CIO | |
This was a hefty task, given the fact that the Troy, Mich.-based automotive product manufacturing giant has as many as 4,000 direct suppliers, says Vice President and CIO Bette Walker. Up until the portal rollout, suppliers used a variety of means to interact with Delphi—including phone, fax and mail—and there was no common set of processes. Nevertheless, the company needed to wring out costs and link more closely with its suppliers to make them more flexible to its supply chain needs.
"We can't have an arm's-length relationship with them," Walker says. "The suppliers are an integral extension of our organization."
While the exact technical details remain private, the portal is built around an architecture developed by online automotive marketplace provider Covisint, says Christopher Desautel, director of supply chain systems at Delphi. There is a mix of third-party and hosted applications, but the suppliers log on through a single interface that makes all the back-end plumbing invisible. Since the project went live in June 2001, Delphi has steadily added features to the portal, such as a system to receive requests for quotes electronically.
Walker says that for the rollout to work, there had to be benefits for the suppliers as well as for Delphi. "We're thinking of not just ourselves. What helps those suppliers helps them to help us," she says. To sweeten the deal for its partners, Delphi explained the benefits at the same time the requirements were laid down. For instance, by using the portal, suppliers can check on payment status, receive updates on Delphi's policies and manufacturing schedules, and forecast demand.
Among the biggest challenges to the project's success was responding fast enough to needed process changes, says Desautel. For instance, Delphi had created an online suggestion box for suppliers to give input, but the flood of suggestions was so overwhelming that the company initially lacked the personnel to keep up. Another challenge was ensuring process rigor around the system—for instance, taking away the option of receiving orders by fax, so suppliers would use the Web-based EDI capability of the portal.
James Governor, an analyst at RedMonk LLC, a consultancy in Bath, Maine, says Delphi took the project one step beyond the norm by implementing suppliers' suggestions for process changes. "It looks like Delphi understands the need for cultural change as well as process improvement in order to deliver successful outcomes from IT investment," he says.
The project, which cost in the single-digit millions, paid for itself within a year, says Walker. Supplier suggestions have helped Delphi generate $8 million in hard cost savings, and another $65 million in potential opportunities is being evaluated.
Delphi is now able to track and rate suppliers and can identify problems in the supply chain through root-cause analysis, slashing its quality defects by 50%, Desautel says.
| Delphi Corp. | |
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