Delphi Corp. has established a secondary purchasing network in low-cost regions of the world as part of its drive to cut costs.
But North America is not included in the new four-office network.
In the past three months, Delphi has set up purchasing offices in low-cost regions of Europe, Asia Pacific, South America and Central America. The supplier's purchasing agents sought out and bought low-cost parts in the areas and encouraged Delphi's core suppliers to manufacture there.
``It's a twofold strategy to support our manufacturing footprint and lower our overall costs,'' says William Eagen, Delphi's director of global purchasing in Europe. ``A supplier who has that business today has the option of moving with us or giving up the business.''
Delphi, of Troy, Mich., wants to cut its supply base from 7,000 companies to 1,000 in the next five years.
The pursuit of a lowest-possible ``world price'' for components is one facet of Delphi's plan to make itself and its suppliers lean. About nine months ago, the world's largest supplier launched another facet of the plan, sending engineers into some of its suppliers' plants to improve manufacturing processes.
Delphi expects to cut its purchasing costs by 30 percent in five years, says David Nelson, vice president of global purchasing.
In Europe, Delphi expects to triple its purchases with suppliers in low-cost countries in the next five years, accounting for 25 percent of the total European buy, Eagen says.
``We've found that if we're going to make the big move, you've got to implant people in the region, so we've initiated a purchasing office in Krakow, Poland,'' says Eagen about the European office and its 29 employees. ``We'll probably have to locate another office in Northern Africa and then one over in Eastern Europe - Ukraine, Russia or something like that.''
The key is for all the purchasing offices to communicate.
``As the suppliers meet our manufacturing processes, our quality processes, then we recommend them into the global team,'' Eagen says, ``and the global team can consider these suppliers for export purposes into other regions.''