11/15/1997 | 9 MINUTE READ

See the Possibilities

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Here's a look at a new automotive supplier on the scene—one that was organized in 10 months and which is the second largest in the world right from the start. It is a company with a visionary, passionate leader, Charlie Szuluk. Its name: Visteon.


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Charlie Szuluk, says Steve Delaney, is a man who has the inspirational qualities that can cause people to do things that they might not expect they'd be likely to do or be capable of doing. He's motivational, demanding, persuasive, and driven. When Szuluk urges, "Think breakthrough, think out of the box," the words resonate with passion, not empty platitude. When he describes what must be done is to "Make the customer successful," it is clear that fulfilling rote requirements doesn't cut it. Perhaps it is not surprising, then, that Szuluk is the man who is the president of a new organization formed by Ford Motor Co., an organization—or, as it is stated on the firm's business cards, an enterprise—that is unlike anything Ford has done in the past.

This enterprise, which is a reorganized array of the resources that had heretofore been Ford Automotive Products Operations, is both a part of Ford and, in a real sense, apart from Ford. That is, although it is a supplier to Ford, a supplier that Ford, in fact, owns, it is apart from the automaker in that not only does it have its own logo and identity—with nary a blue oval with flowing white script in sight—but Szuluk's mission, which he is taking on along with 78,000 others in the effort, is to get as much non-Ford business as is possible. This means, of course, working for other automakers. And if Szuluk's charisma and the enterprise's global design, engineering and manufacturing capabilities matter, then they should be getting plenty of orders.

The new organization: Visteon.

Delaney, like Szuluk, began his career with IBM. Delaney was with IBM for seven years; Szuluk was with Big Blue for 24. Delaney joined Ford Electronics Div. in 1989 as an engineer. Szuluk joined that division in 1988 as general manufacturing manager. Delaney went on to become plant manager of the Ford Markham Electronics Plant, then, in 1994, joined Ford's new Process Leadership initiative as area manager of the Ford Production System. Szuluk became general manager of Ford Electronics Div. in 1991, became vice president of Process Leadership in 1994, and was named group vice president of the then newly formed Ford Automotive Products Operations on November 1, 1996. Delaney had left Ford in January 1996, when he joined AlliedSignal Aerospace Electronics Systems as vice president, Operations. Delaney says that it was a good opportunity, particularly being able to work with a leader like Larry Bossidy of AlliedSignal. But then he was called by Charlie Szuluk, the man who insists, "We will be the best." And Delaney was let in on the vision that Szuluk had for a new type of supplier organization, the vision that would be given public life at a worldwide announcement in September 1997. Delaney was convinced by Szuluk to return to Ford, which he did in February 1997. He is now vice president, Supply and Logistics for Visteon.

The paths of the two men—fast tracks that are not exactly typical for the auto industry—are indicative of the nature of the new company.

"Our number-one resource," says Szuluk, "is our outstanding people, who make outstanding products."

Plenty of executives say things like that. Few of them really believe it. Szuluk is numbered among the few. He recalls his travels in the early `90s when Ford was building electronics plants in countries around the world. "Wherever I went, I found out that if we set stretch objectives, and our people put their mind to them, and understood that management had confidence in their ability to reach the objectives, there really wasn't anything they couldn't do. Meeting stretch objectives for our customers will drive our success."

One of the things that Szuluk says Visteon will be doing is paying attention to cost reduction efforts while making advances in technology. He maintains that while cost is certainly an important component to any calculations, as a supplier company, full focus on cost is an insufficient approach to being a competitor. "People who rely on low cost as a strategy and chase that don't do as well as those companies that both provide low costs and develop technology," he says. Certainly, if it is an issue of piece-part costs alone, companies can go chasing low labor rates and favorable exchange rates all over the world. Szuluk observes, "If a company is just focusing on things like labor costs, they can't win in this environment." As he puts it, "What's the differentiator?" That is, there is probably not a long-term advantage for any company that's competing on price alone, because in all likelihood there is another company somewhere that will be able to produce the component at a still lower price. If a company is able to combine other attributes—such as rapid product development coupled with lean manufacturing and excellent delivery logistics—then it becomes a more valuable company. And this is Visteon's approach.

As Szuluk stated in a speech at the University of Michigan Automotive Management Briefing Seminar last August, "Producing full systems and modules from engineering to manufacturing actually gives the supplier an opportunity to be much better. Let me share something we found to be very interesting: our competitiveness and our performance improves dramatically when our engineering responsibility increases. For every product that we have engineering responsibility, we are doing very well in terms of competitiveness and customer satisfaction. So very clearly, it makes sense to engineer what we manufacture. That's very important to our product strategy, and it should be to all suppliers."

But it probably isn't important to all suppliers, which explains why, in part, there will be something like just 8,000 major suppliers around by the end of next year—which is a fraction of what existed a mere decade ago.

Szuluk insists that the way to succeed in the automotive supply business is to think—and act—differently.

For example, Szuluk says that they are aiming at a 10-month product development capability. One of the enablers for this is overall systems thinking. Szuluk points out that some organizations operate in a mode wherein the whole is separated into little pieces. A problem that can—and often does—arise is that there is ultimately misalignment. Each of the little pieces may have been developed exceedingly well, but when an effort is made to put them together, things may not fit quite right. It may not be back to the drawing board—but darn near.

The Visteon methodology is one in which the development profile is examined from start to finish at the initiation of the program. "We are looking for the value-adding steps," he says. Once a determination is made of which steps are, in fact, value adding, then they are pursued. The other steps are eliminated. Visteon is also employing CAD/CAM/CAE tools (like parent company Ford, it is using I-DEAS software from SDRC) so that the engineers throughout the organization can detect errors before cutting steel—or molding plastics, integrating electronics, or what have you.

The name Visteon is a neologism that combines the words visionary and eon. A long outlook, in effect. When it is suggested to Szuluk that the name sounds more like the moniker of an outfit in Silicon Valley than something headquartered in Automation Alley, he broadly smiles and nods his head. They are decidedly in favor of sending the message to the auto industry that they are not just some sort of parts manufacturing operation—a "Widgets `R Us"—but are an organization positioned to help serve their customers with advanced systems needs, as well as with components. Szuluk knows that it will take some time before vehicles are more silicon-based than fundamentally ferrous, but he also recognized the inevitability to the transformation of the automobile during its second 100 years. If the first 100 years can be characterized by a gear set, think of the next as being more aligned with solid-state devices.

One interesting aspect of the new company is the types of companies that Szuluk and his colleagues benchmarked as they set about to create what would become Visteon. Many of them—Dell Computer, Intel, Hewlett-Packard—are outstanding electronics manufacturers. Two of the things (or it can be considered as one, with the first facilitating the second) that interests Szuluk about these companies is their fast cycle times and low (or practically no) inventory. He notes, for example, that a customer can telephone Dell and in 24 hours have a computer configured as they want it delivered to their door. Not only does this mean that there is no finished goods inventory on hand, but that Dell has been paid within this period of time (i.e., the consumer provides a credit card number at the time of order, so Dell gets paid in fairly short order).

This fast cycle time requires a capable (as in robust and flexible) manufacturing system. Visteon is working to strengthen its capabilities in this regard. Szuluk references the company's electronics plant in Markham, Ontario, which reduced its manufacturing cycle time from 12 days to less than one. And the plant received an award from the Canadian government analogous to the Malcolm Baldrige National Quality Award to boot. A company cannot just be fast. It must also be good.

Markham's fast cycle will not be the exception within Visteon, but the rule, as Szuluk says their goal is a total dock-to-dock time of one day—as in raw materials coming in and finished goods going out within that period of time. "We're giving our people the responsibility and the authority to move Visteon forward," Szuluk says. And they'll be moving fast.

How will they handle the additional work that Szuluk has targeted? The Ford Production System is, Szuluk says, the answer. By rooting out the non-value-added aspects of operations—and by giving the people the authority and the responsibility for dealing with them—he is convinced that they will get the job done.


Why Visteon?

The initiative that led to the creation of Visteon started in November 1996. What became apparent to Ford management, which was well underway making the overall changes and modifications to the overall corporate organization known as "Ford 2000," was that the competitive landscape was changing in the global auto industry. Charlie Szuluk was intimately involved in Ford 2000; he helped create the framework for reengineering the business and an enterprise model to run it.

One of the observations that was made by Ford management is that the $250-billion supplier business is growing at a better clip than the automotive assembly business. There may be overcapacity in the assembly part of the industry, but component manufacturing has potential—especially, Szuluk notes, for those suppliers that have the capability of quickly developing and supplying total systems solutions.

Ford Automotive Products Operations had, they concluded, the critical mass necessary to be a leading supplier not just to Ford, but to other auto manufacturers. So, to clearly position those resources as a business that other auto manufacturers can work with, Ford Automotive Products Operations was not only reorganized on a systems basis, but the resulting organization was given an independent identity, Visteon.

Note the cycle time involved in the creation of Visteon: from November 1996 to the announcement the second week of September 1997. Speed is one of the characteristics of the company.


Visteon At A Glance

•What is it? An enterprise of the Ford Motor Co., formerly organized as the Ford Automotive Products Operation.

•How is it organized? There are seven divisions: Chassis Systems; Climate Control Systems; Electronic Systems; Exterior Systems; Glass Systems; Interior Systems; Powertrain Control Systems. At a lower level, these are arranged in 24 strategic business units that have profit and loss accountability.

•How big is it? There are 78,000 employees. It has 74 plants in 19 countries. It is the second-largest automotive supplier in the world.

•1996 sales: $16.4 billion.

•Why was it created? Of its revenues, about 95% are derived from business with Ford. The near-term objective is to increase that 5% of non-Ford business to 20%.

•Competitive advantage: The ability to provide components and systems. A fast product development system (objective: 10 months). Lean manufacturing methodology (based on the Ford Production System).