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Jethro Joseph is senior manager for diversity supplier development at DaimlerChrysler (Auburn Hills, MI). This is his eighth year on the job, but the program itself began twenty-one years ago, in 1983, long before Chrysler Corp merged with Daimler.
The '83 program, he explains, was just the formal one. "The original program started after the urban unrest in the late 1960's," he says. "It started pretty much as a social consciousness program and then we migrated to entitlement and now we're entering a phase we call "business imperative.'
"Since the '83 timeframe we've made a point of sourcing with both tier one and tier two MBEs."
Target 11
DaimlerChrysler's target for itself is a firm 11 percent spent with MBEs. In the past fiscal year this translated to about $3 billion.
While the 11 percent is a fixed requirement for DaimlerChrysler itself, the company has also set a diversity target for all its tier one suppliers. "The objective is for our suppliers to source 7 percent of their sales to us with minorities," he says.
"Next year the objective will be 7.5 percent and the following year 8 percent."
That, of course, is "the target we put out there. It's not always met right on the button," he admits, but "We make sure that a lot of our suppliers do hit it. We follow up, we monitor, we track the achievement of those objectives," he says.
The tracking is a Web-based system, Joseph explains. "Our suppliers report monthly on their activity with minority suppliers. We turn that information into internal reports for our buyers."
Eliminating the barriers
Mentoring the MBEs is part of the program. "We assess their capabilities to grow and note whether there are restrictions or barriers to growth." The problem areas, he says, might be in organizational structure, program management, manufacturing or salesforce.
"If we can, we work with them to eliminate the barriers," he says. "We've hired consultants to help." Out of about 300 minority suppliers, fifty have enjoyed the mentoring help, designed as a win/win way to grow better suppliers.
Certification
DaimlerChrysler is a member of the National Minority Supplier Development Council (NMSDC), Joseph notes. The company's exec VP of global procurement and supply, Tom Sidlik, has been vice chair of that organization for the last three years. Before that he was chair of the Michigan branch of the NMSDC.
DaimlerChrysler is also a corporate member of the Women's Business Enterprise National Council (WBENC).
The matchmaker
For five years now, DaimlerChrysler has supported MBEs with an annual matchmaker trade show. Joseph maintains a database of 400 suppliers and prospects, and they're all invited. "If you're certified, have a financial history and have referrals, we'll consider your application to be a participant," he says.
To make sure the event will be efficient for everyone, some prescreening is done based on DaimlerChrysler's areas of need or interest. "This is a whole year's worth of planning," Joseph says.
Over the five years the event has been held, "We've generated $500 million of commitments, so it's a pretty major event," he declares. "It creates some excellent results." Engineering and IT suppliers are part of the mix, he notes.
Joseph and his diversity supplier development crew of eight also attend about twenty trade fairs put on by various regional councils. "We go around the country. We just came back from one in Atlantic City, NJ, representing New Jersey, the Philadelphia area and Delaware."
Saturn Electronics: an overlapping MBE
In the automotive industry, many companies are willing to refer their good MBE and WBE suppliers to other companies. "We do that all the time," Joseph says. "It's informal, but we think that in the Big Three auto companies we have about 65 percent overlap with suppliers."
MBE Saturn Electronics & Engineering, Inc (Auburn Hills, MI), he notes, "is a big player with all three of us. We have been mentoring Saturn for the past four or five years and they are one of our good providers." Saturn is a major minority supplier, he says, with revenues around $250 million.
MBEs like this are especially important to DaimlerChrysler "because we like to create a supplier base that's reflective of our customer base. It's a business imperative to us that we buy from representatives of communities that will eventually buy from us."
Meet Saturn's Wallace Tsuha
Wallace Tsuha, founder and chair of Saturn Electronics & Engineering, is an Asian Pacific American. "I'm part Japanese and part Korean, and my grandparents came to Hawaii to work on the sugar and pineapple plantations," he says. Tsuha grew up in Hawaii, but when he went into the military he was stationed in Michigan, and he's stayed there.
"I was pretty fortunate," he says. "I got a couple of years of college and night school. I worked on radar and missile sites in the military, and when I was discharged I got a job at General Motors' research labs."
That was the start of a long technical career in the auto industry. "I was fortunate to be there at the time that automotive electronics was just emerging. It was a good time to be involved."
Tsuha did product engineering at GM from 1966 to 1976, developing advanced electronics for automobiles. The technology wasn't cost effective back then, but "Concepts were being developed," he explains.
He moved on to Rockwell International Corp for a few years, working on trip computers for heavy-duty trucks. Then he spent seven years at TRW, helping put together an automotive electronics group.
The next startup
At that point he'd been in auto electronics for nearly twenty years and had worked on startups at Rockwell and TRW. "Then I said, "Well, the next startup I'll do on my own." He launched Saturn Electronics in 1985.
The new company started very small, literally on the kitchen table, and Tsuha did some contract work to help support it.
At first he worked for one of TRW's suppliers, doing engineering for programs he'd been involved with when he was employed there. It was a win/win, he says. "They knew my work was good. And I didn't need a lot of overhead because I had engineers working for me part time."
Manufacturing at last
Tsuha was aiming for the time when he could also handle production. "Within a couple of years I was able to put a loan package together and then I started to do low-volume manufacturing," he says.
He obtained minority funding from the Michigan Strategic Fund and more from a GM fund available for minority entrepreneurs. This helped him get credit from the bank. When he added in his own savings, he was able to swing the equipment he needed. The company's work was mainly automotive, except for a few military contracts he got through the government's 8A program.
Design or build to print
Today Saturn Electronics has about 1,800 employees, some 500 of them in the U.S. It has plants in the U.S., Mexico and the Philippines.
"We're a manufacturing/assembly company for electrical and electromechanical automotive products," Tsuha explains. With eighty-five product engineers on staff, the company can begin with a list of requirements and deliver a completed product. "Or, we can build from prints that are given to us."
Working with DaimlerChrysler
The company's first substantial contract with DaimlerChrysler occurred about ten years ago. That was when Saturn Electronics acquired three plants that were already working on Chrysler programs.
"Over a period of time there are products that phase out and programs that phase in, but we've had a pretty steady relationship with them," Tsuha reflects. "DaimlerChrysler is one of our top five customers."
Products being supplied at the moment include wire harness assemblies, solenoids and motorized actuators. "We are working on some future fuel- saving products with them as well," Tsuha confides.
Mentored MBEs
Within DaimlerChrysler itself, Saturn is enjoying a mentoring program that involves meetings with top people. "They bring in some of their economists, manufacturing and quality people to speak to us, and they update us on what's happening in the company and where the priorities are. They also give us an idea of how the mentored suppliers are doing compared with others so we can do a little benchmarking."
Mentored MBEs are being developed in commodity areas like chemicals, metals and transportation as well as Saturn's electrical and electronics work. "In the new global competitive environment you have to be able to satisfy a need and add value," Tsuha stresses.
Saturn's supply chain
Of course a supplier the size of Saturn Electronics has its own supply chain as well. "We make an effort to bring in MBEs to pass on our good fortune. We have annual goals and objectives, and next year we hope to do 8 percent," Tsuha says.
"I think it's important that all MBEs make a commitment to purchase from diverse suppliers on their own. As we grow larger I believe we have a responsibility to do our part."
Corporate Plus
Tsuha is on the national board of NMSDC through its Corporate Plus program, which helps successful MBEs reach beyond their own regions. "It gives you exposure to the Fortune 500 companies," he explains. "You get a chance to say hello to DaimlerChrysler's Tom Sidlick and meet some of the other Fortune 500 executives on the board. You also have the opportunity to be a role model for the minority community," Tsuha concludes.
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