Delco Electronics' Business Process Engineering Experience

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Written by Ronald W. Cox, Process Owner

Need for Reengineering Delco Electronics' Business Processes

Delco Electronics' Business Process Engineering Experience started with General Motors' globalization of supply efforts in 1993. Prior to that change, General Motors required by policy that all vehicle electronic components be sourced from Delco Electronics. GM Chairman, Jack Smith, introduced the change to GM leaders in a closed circuit TV broadcast in early 1993. In that broadcast we were introduced to Jose Ignacio Lopez de Arriortua, the new head of GM's Global Purchasing System. From that moment on, the world of Delco Electronics changed and it was very important for GM's turnaround. GM had lost $4.5 billion in 1991 and had lost $23 billion in 1992, the largest loss in U.S. business history. GM's circumstances were dire, its organizational structure was inefficient, its costs were out of control, and its products and processes were in Jack Smith's words, "grossly uncompetitive." 1.

With this background in play, Delco Electronics sales teams were starting to lose some future GM programs to competitors. Engine control programs for Saturn were lost to Motorola, and the Cadillac Northstar engine control program was lost to Siemens in Germany. DE's CEO Gary W. Dickinson and other executive staff members were convinced that a plan of action had to be developed to meet this challenge.

About that time, Michael Hammer and James A. Champy published Re-engineering the Corporation: A Manifesto for Business Revolution. This book was instrumental in capturing the focus of the business community towards Business Process Reengineering. 2.5 million copies of the book were sold and the book remained on the "New York Times Best Seller list" for more than a year.

Implementation of Reengineering Teams

Dickinson's staff at that time consisted of John Joyce, Chief Financial Officer (now retired), Mike Burns, Business Director, Body & Chassis Electronics (Future, Delphi/Harrison CEO, DE CEO, GM Europe VP, and CEO of Dana Corp.), Jim Cain, Business Director Powertrain Electronics (now retired), Bill Spellman, Business Director Radios/Heating and Air Controls and Instrument Clusters (now retired), Tom Evernham, Director of Engineering (now retired), and Ron Gill, Director of Quality (now retired), Jim Smidebush, PR (now retired), and Carl Anderson, Director of HR (now retired).

Ron Gill first read the "Reengineering" book and then passed on copies to Dickinson and Joyce. Later they met to decide how to proceed, Dickinson made the decision to implement a program of reengineering at Delco Electronics. The consensus of the three of them was: "this was something they had to do!"

John Joyce prepared a “Case for Action” and presented it to the leadership of DE. This was key to helping the leaders understand why Delco Electronics should embark on such a large effort and why they should allocate personnel assets from their organizations to the endeavor.

The staff met and selected Edwin Craig, an engineering executive with a passion for organizational improvement, to lead the Delco Electronics Business Process Engineering effort. Dickinson discussed the project with Craig, and Ed requested permission to interview all of the executive staff members to determine the level of commitment. Ed determined that there was a high enough level of commitment in the executive staff to see the program to a successful conclusion. He also understood the need for speed in such a program because this staff would completely changed in 3 to 4 years.

Next, Ed meet with Ron Gill to identify the main processes to be reengineered. This is the list they determined to be Delco Electronics' primary business processes:

1. Custom Product Design (Product Engineering)

2. New Product Design (Advanced Engineering)

3. Order Fulfillment (Manufacturing/Shipping)

4. Customer Support (Service)

5. Manufacturing Development

6. Change Management (HR)

7. Strategy Management (Executive staff)

8. Customer Discovery (Sales)

Ed requested the following guidelines for organizing the effort:

1. Full time executive level process owners would be assigned for each of the named processes. This would insure that the organization took the recommendations seriously and that the companies' leaders were involved leading the effort. Also the issue of speed was there from the start. Anything less than a full time effort would not be completed in time to be effective for the organization. Each process owner would have an executive staff mentor. Each process owner should be the currently recognized process owner in the organization for credibility.

2. Teams of the organizations' "best and brightest" would be formed for each process improvement team. About ten 7th and 8th level people per team were needed for the same reasons above.

3. Outside consultants from the Boston Consulting Group would provide experienced leadership advisors to the overall efforts and for each team as required. The consulting team need to be experienced in this type of activity and would lead the leaders.

4. The entire effort was to be done transparently with regular updates to the executive staff and the organization at large.

5. All full time personnel involved would be temporarily transfered to John Joyce's finance department where it would be budgeted and monitored.

Process Owners

The following process owners were selected by the executive staff:

1. Custom Product Design (Product Engineering)

Ronald W. Cox, from Powertrain Software (executive level)

2. New Product Design (Advanced Engineering)

Robert Hoffman, from Advanced Insturment Clusters (executive level)

3. Order Fulfillment (Manufacturing/Shipping)

Gary Robertson, from Manufacturing (executive level)

4. Customer Support (Service)

Bob Burton, from Service (executive level)

5. Manufacturing Development

Donald Rodeman, from Manufacturing Development (executive level)

6. Change Management (HR)

Byron Prahm, from Quality

7. Strategy Management (Executive staff)

Kathleen Ligocki, from Manufacturing-Mexico

8. Customer Discovery (Sales)

Larry Weaver, from Sales (executive level)

Reengineering Teams

The organization was encouraged to let BPE have anyone it needed, but the process owners were helped to fill out their teams with talented people they did not know well by the organization. For example, the Custom Product Design team Process Owner picked one person from his own organization, all others came from other areas. Here is the diversity make up of the Custom Product Design Reengineering team:

1. Male Caucasian

2. Male Caucasian

3. Female Asian-American

4. Male African-American

5. Male Caucasian

6. Male German national

7. Male Caucasian

8. Male Caucasian BCG Consultant

Reengineering Results

Within 90 days of the team's creation, initial recommendations were expected. I will list here the recommendations from the Custom Product Design team and encourage the other former Process Owners to add their results to the list. I may be able to recall some of the other recommendations on my own, so we will see how this goes.

1. Establish and use cross-functional teams. An example would be a powertrain control module product development. Team members would be assigned from the following competencies as required:

    A. Program manager
    B. Mechanical Engineer
    C. Electrical/Digital Engineer
    D. Software Engineer

2. Establish and use centers of excellence or competencies. This would be a group that would be appraised competitively. The only time they would meet as a group would be for a "group photo" type meeting. The individuals in the competency would focus their work output to serve the team(s) they are assigned.

3. Formalize and encourage design reuse. Design reuse is too important to just let it happen. Planning and promotion of design reuse is required.

What Delco Electronics Customers Want

One of the most important efforts of the assignment was to clearly determine what our customers want. To obtain creditable data, a standard interview was established for use of selected members of all the teams that went out to interview our customers at their locations. I was on the team that traveled to see our customers in Korea and Japan. I participated in interviews with purchasing and engineering managers from Daewoo in Korea, and Isuzu, Toyota, and Nissan in Japan. The interviews were done in Korean and Japanese by using interpreters that the Boston Consulting Group had used before. The interviews started in Seoul, South Korea March 13th to 17th, 1994 and finished in Tokyo, Japan on March 17th to 26th , 1994. Spring was in the air at both locations and I recall that at the Imperial Hotel in Tokyo, a full sized cherry tree full of blooms had been brought into the lobby of the hotel. Across the street from the Imperial Hotel was the Emperor's gardens, and classes of school children were meeting there to have their annual spring photos taken that week.

Fourteen years later my memory can still recall some details of the customer interviews. The common customer expectations were that our US based company must match the cost, quality and service levels that these companies already have from their other global and domestic suppliers. For quality, the expectation was that parts would meet single digit parts per million defect rates. For cost, we would be expected to meet or be less than their domestic suppliers. Asian suppliers have their people in the auto assembly plants ready to respond to any perceived problem. The same level of service would be expected from Delco Electronics.

All these observations were brought back to Kokomo and the Boston Consulting Group team leader, Rob Lachenauer, worked with me for about two weeks on a presentation for Gary Dickinson's Executive Staff to report the results of this trip. Rob did a great job preparing me for this presentation. We practiced so many times that I had every word memorized and was able to deliver it well per Lachenauer's excellent preparation of me. After the staff presentation the message was presented repeatedly to various Delco Electronic groups and became an organizational benchmark for a period of time on what Delco Electronics' customer's want.


2. Personal Interviews with Edwin Craig 5/23/08, Byron Prahm 5/25/08,