Inside Magna’s Strategy: Winning Business Through Early Customer Collaboration

[Transcript]

[00:00:00] Jan Griffiths: This is the Auto Supply Chain Prophets podcast and we are on a mission to bring you the latest insights and thought leaders leading the charge on supply chain transformation in our beloved automotive industry. This podcast is powered by QAD and AIAG. I'm Jan Griffiths, your host and producer. Let's meet your co-hosts.

[00:00:27] Jim Liegghio: I'm Jim Liegghio from AIAG.

[00:00:29] Terry Onica: I'm Terry Onica from QAD. Let's dive in.

[00:00:36] Jan Griffiths: Hello and welcome to another episode of the Auto Supply Chain Prophets podcast. And we are celebrating our third anniversary. We have been running the podcast for three years, and we have passed the magical threshold of 10,000 downloads. And if that's not enough, this is the official relaunch of the podcast, because this podcast is now powered by QAD and AIAG. And we welcome AIAG to the podcast. Terry Onica, over to you.

[00:01:10] Terry Onica: Hey, Jan, it's good to be back again after a break. Excited about our new partner, AIAG. And so, without further ado, I want to introduce you to Jim Liegghio. Jim, can you tell us a little bit about yourself?

[00:01:25] Jim Liegghio: Yeah. Thanks, Jan and Terry. Jim Liegghio here from AIAG, a Manager of Customer Engagement and Experience. So, I really oversee a lot of the touch points with customers and members of AIAG. We're happy to have almost 5,000 member companies. So, again, my role is really customer facing and dealing with the journey of the customer, those who onboard and join as members and even non-members that participate in training and make purchases.

So, I'm really excited to be here. Looking forward to the podcast this season, bringing the listener the cutting-edge knowledge and awareness of issues that they need to navigate these waters of supply chain these days. So, again, happy to be here, I'm honored to be here, and thanks very much for the introduction.

[00:02:02] Jan Griffiths: And don't forget, have a little fun along the way, Jim.

[00:02:06] Jim Liegghio: Okay. Deal. Sold.

[00:02:07] Terry Onica: That's a must.

[00:02:09] Jan Griffiths: Now, to the serious business of our next guest. Jim, you mentioned the word customer. And when we talk about supply chain, we tend to be focused on suppliers—supply chain and suppliers. Makes sense, right? Well, it all starts at the customer—understanding what the customer needs. And sometimes, that process can take a long time to get into the supply chain. So today, our guest is doing something about that—interacting with the customer in a different way, in a more proactive way. And I can't wait to dive into this conversation. We welcome to the show today, Guillermo Cano, he is a Chief Customer Engineer at Magna. Guillermo, welcome.

[00:03:03] Guillermo Cano: Thank you, Jan. I'm very happy to be here with you today. And welcome, James.

[00:03:08] Jim Liegghio: Thanks, Guillermo—likewise.

[00:03:09] Jan Griffiths: So, Guillermo, tell us about what you do and what is it about your role that's more cutting-edge than a traditional Customer Chief Engineer?

[00:03:21] Guillermo Cano: In my role, I get the opportunity to look for collaboration work with our customers, and we try to get there early because that's where great things can happen. It gives you the time to work on more creative solutions for the complex programs that we have for our industry these days. So, I'm very proud to be in this role because they get to influence our beautiful automotive industry and help our customers get to their goals. And also for Magna, make sure that we meet our own goals and that we partner with our customers so that we're always alongside with them as we launch new vehicles.

[00:03:55] Jan Griffiths: You know, Guillermo, we've been saying that for many years in this industry. And we've been talking about—I don't know how many companies I've worked for that talked about customer intimacy and getting in close with the customer. Well, what is it that you're doing that enables you to do that? Because, let's face it, if you're not sourced the business, uh, it gets icky and messy, right? So, how do you get in there early?

[00:04:22] Guillermo Cano: Well, you're right. It could get complicated where we're not awarded the business, but that is part of the risk that we got to share as suppliers with our OEMs. So, how I do things—and what has worked for me in this role—is a couple of things. The first one is I have to understand my customer. I have to understand what is their mission, where do they want to go in the future, where can we come in and help them be successful in their goals before I start engaging with them directly.

Once I have a good understanding, then I have to connect with the right people in that organization—people that can make this kind of opportunities happen. Because there's been that resistance in our industry to share new programs because that's also a risk when you're handling confidential information.

So, you got to find someone that believes in the benefits of early engagement and collaboration and that have seen the benefits when you're launching a new program because you want to make sure that all your effort and all your communication goes to the right person—somebody that can make things happen. Now, when you connect with that person, what has worked for me is I try to connect with them as a person. In this industry, we tend to forget that we're not machines—we're not terminators. So, I made the mistake before where I connect with someone, and almost immediately, I jump and I throw 10 different projects or my company presentation, and I just bury him in information that he might not be even interested.

So, what has worked for me is once I connect with them as a person, you have to listen—actively listen. And most of the times, they're going to give the answers themselves. They're going to tell you specifically where are they struggling, how they see that you can help them, and start that collaboration on the new future of our industry. And lastly, this is where you got to make sure that once you start with that collaboration, that you honor your commitments and you deliver. I've heard directly from our customers—they see the value; they've had experiences where they've been successful. But at the same time, they had the experience where nothing happens or we're making progress too slow. And at the end, it wastes their time, it wastes their resources, and it also wastes our own. So, once you're there, make sure that what you commit to their customer, make sure that you'll deliver, and you keep your word.

[00:06:58] Terry Onica: So, in your role, I have to imagine you are working with a lot of departments, both internally and externally. So, how do you deal with silos and breaking them down and making sure everybody's on the same page?

[00:07:10] Guillermo Cano: So, we first start breaking our own silos. And what motivates me is the feelings that I had when I joined Magna. I went from working at a division to now working in a larger company. And I remember feeling lost, losing motivation, and not achieving the results that I wanted at the time that the program needed. Now, we have been doing better at Magna, and it all starts with our core value, which is be collaborative. And with our customers, we're trying to be proactive. We're trying to see where do they need our support? What are their goals? How can we help them get there and proactively approach them with solutions?

And what makes us different in Magna is that we have many different groups that are based on specific products, and where we all collaborate together. That's where we can give them a solution at a vehicle level by leveraging all the expertise that we have within our Magna groups. For example, last year, we hosted a Magna Tech Week in September. It was in our group office, and it was a great event. We had all of our main customers coming in through the week. We showed them all of our latest processes—our latest products. And it was such a fun event because we even had test vehicles that was testing our technology, and you could see that we were really helping them get where they wanted to be.

[00:08:39] Jim Liegghio: So, Guillermo, you've talked a lot about collaboration. I've heard you use that word a few times, and I think you mentioned trust a few times. Terry had the point about breaking down silos and you explained some of the ways that Magna has done that. So, at this point now, the fruits of your labor are paying off. You're having customers coming in and seeing your technologies. And I'm assuming things are coming faster and more agile, if you will, in terms of the product development cycles. What is your take on the end result to the customer in real-time? What the customer has been able to see as a result of the fruits of the labors of breaking down those silos.

[00:09:09] Guillermo Cano: For me, when you break down the silos, you create the environment for collaboration. And as you said, I repeated that word many times, and it's because it's very important in our industry and almost in any industry out there. Now, the benefits that you get is that when you do the collaboration, plus the early engagement, you get the time to do creative things that are focused on innovation. Like the Tech Week that I mentioned that we hosted all of our customers. You get more time to work on cost reduction, and you get more time also to improve your quality. From a cost reduction perspective, you can identify issues early in the development phase and avoid late engineering changes that drive unexpected cost. From a quality perspective, when you have time to develop the product and ensure that you're mitigating all the risk through the sign, that's going to reduce defects to our customers, warranty claims, and it's going to give our customers, and their customers a better product.

[00:10:13] Terry Onica: In your role, do you also work with your suppliers too? As a part of this, are you working both with the customers and then helping to develop the suppliers as well?

[00:10:22] Guillermo Cano: I do, but not as much. A lot of the discussions that we have are with the advanced engineering group, and there's confidentiality and it's mostly about the design. I rely more on the expertise from our divisions because they're the ones that have the knowledge from a manufacturing perspective. And when the time is right, I ensure that we bring them to these discussions and make sure that they have a seat on the table because, at the end of this whole process, they're the ones that are going to be producing the parts. And it's important to remember that we are their customer. We're here to support them and also meet their goals. So, I rely more on our divisions, Terry. There might be some new suppliers that we bring for new technologies, but we try to keep all within Magna and with our customers.

[00:11:11] Terry Onica: So, you really focus on the turnover, making sure that that's a smooth transition and the suppliers know what they're going to do. You're not a part of that actual transition with the suppliers, but you turn that over so that your divisions can do that. Is that correct?

[00:11:24] Guillermo Cano: Correct.

[00:11:25] Jim Liegghio: Is there one success story, Guillermo, you can share that comes out of that specifically? You've mentioned the process and your integration into that process, and with the way I hear it as a go between the customer, the end customer, and your internal product development teams or your engineering teams. Maybe you can share one success story about streamlining that process.

[00:11:42] Guillermo Cano: Yes, I'm happy to. I'm going to tell you my favorite story. So, it was about six years ago. We were at our office, and we had just finished our kickoff meeting for a program where we were doing an early collaboration. It was not awarded. Like you said, Terry, that's part of the risks. And I was talking with the lead from our customer, and he told me about some of the things that went wrong on their previous programs. And I was confident that with early engagement and collaboration, those issues could have been resolved. And he wasn't too excited to work with us, but after three years of working in a really collaborative environment, where we had the trust, where we were open about challenges and issues, and we found a way to resolve them with a win-win mindset. After launching through very aggressive timing through COVID issues, we were able to produce parts on time with the right quality. We peeped up on time, we met the cost targets, we met the weight targets, and he was so happy and so pleased that he went and nominated us for a supplier award. And I find this to be one of my best success stories because we were able to change the perspective of a customer that had a bad experience of issues that could have been resolved with early collaboration, and we got the chance to change his mind. And now, we meet twice a year, have lunch, and catch up, even though I don't work with that customer anymore.

[00:13:18] Terry Onica: I love that story. Jan and I are always talking about how customers and suppliers need to be more collaborative, not this command and control style of approach. So, it's so good to hear your story. That's a great story.

[00:13:32] Guillermo Cano: Thank you.

[00:13:33] Jan Griffiths: It is. And here's the bottom line to this, right? The CEO, Swamy Kotagiri, has a decision to make. He can follow the traditional legacy business process and essentially wait until the customer says, "We got this design. Come in, Magna. Come work on it." And then, maybe they go through a bidding process. Maybe you get the business. Maybe you don't. I don't know. Typical OEM-type behavior, right? And you can stay with that. And then, typically, you're at the end of the timeline because, by the time they source it, it's late. Designs are late. Everything's late. Supply base is late. You're set up for failure. Typical automotive routine. But if you make a decision to invest resources like you, Guillermo, because I'm assuming you don't work for free, so there's a cost, right? But it's a conscious decision to change the business process in the industry by investing in you and your team to be engaged way early on developing these relationships with the customer. And there's a risk. You might be spending months with a customer and starting to talk about a technology or even a type of application on a program. And then, they go, "Yeah. Sorry, just kidding." They're going to, you know, purchasing got involved, and now they're going to give it to another guy because they're 10 cents cheaper. So, there's a risk, but if somebody doesn't take the lead and start to reinvent these business processes, we are never going to reinvent this industry. How does that land with you? Does that feel right? Is that what's happening? You're making a commitment.

[00:15:13] Guillermo Cano: We are making a commitment when we approach our customers to support them meet their goals. Now, I know I said this before, but when you look at our approach, we are also being strategic. We need to know what programs are strategic for us—that aligns to our business plans and to our growth and goals. And we focus on, with our customers, on the right products, on the right programs, and it's a partnership.

There is risk, yes, that we might not get the business awarded. But like you said before, that's the way that you get time in a new program. And in my program management experience before, that was probably the most important asset that you could have. Time could be your best friend, or it could be your worst enemy—and usually it's your worst enemy. You're always against time trying to launch new things. And like you said, once a design is finalized, for us to come in and try to drive changes based on our best practices or R&D technologies, it's going to be too late. And it's going to be more costly for them to implement those changes. And I've seen programs where we've had great ideas, and unfortunately, it was too late to implement them. And all of those savings are just lost, and I've seen the face of our customers that it's frustrating. So yes, there are times where we get in, we work with them, and we don't get the business awarded, but we're being very strategic to know what are the programs that we bring expertise that nobody else has. And that makes us different. And that increases our chances of securing that business and continue that partnership with them until the vehicle launches.

[00:17:07] Terry Onica: When you look at what you're doing in your role, how do you leverage technology to reduce timelines and the total cost of quality? What are you doing in that area? I love to ask about technology. I'm a big fan of technology.

[00:17:22] Guillermo Cano: Now, in this role, I've had the chance to get more involved in technology and R&D. My previous roles were in program management and manufacturing. It's great to see where our industry is going and the new technologies that you'll see in a few years from now.

In terms of how we use it to reduce the timeline, we have great correlation between our CAE studies and production tools that can minimize the time that it takes to build new production tools and new production lines. The correlation is very accurate, so that enables you to have your first parts at a greater quality level as opposed to starting from 20 percent or 30 percent from going to 100 in terms of quality—dimensionally or welding. So that saves you time and it enables you to launch programs faster. From a cost of quality perspective, because you're starting with such a higher quality as compared to not doing correlation or CAE, then you also get the benefit. You start with parts that are PPAP, right at production. You start with parts that have the right engineering level. And we also now have been using technologies like AI for the detections and the controls that have that are in our PFMEA or in our contract plans that give you information that is more reliable, that it's live, and it enables you to make decisions at the right time.

[00:18:57] Terry Onica: I love it.

[00:18:58] Guillermo Cano: Now, Jan, we talked a lot about early engagement and collaboration and breaking silos. You've had 35-plus years of experience in our lovely industry. Have any of this have helped you in your previous roles, and what kind of changes have you seen in our industry?

[00:19:13] Jan Griffiths: I would love to have had some involvement with a customer way, way early on in the process. And as you know, I've worked not only in purchasing and supply chain but also in program management. So, I know what condensed timelines do to people and to a business, and to the bottom line of a business. So, the soonest you can get in and understand those customer requirements, the better. But let's remember that the customer requirements are not just technical. There's a whole statement of work and a whole bunch of requirements that often get buried until it's too late and you're getting ready to launch. A classic one is one of, you know, Terry's favorites is MMOG/LE. So, some kind of materials requirement. Often, you get all these different requirements that are embedded, and then the poor supply chain person—i.e., me in my old job—would be like, "Wait a minute. What? We're launching this business. I didn't know about that." So, the fact that you're in there engaging early, I would hope that you would get your arms around that and start to filter that back into the sales team. And then, of course, the other issue is the poor supply chain person has to deal with you dealing with maybe Ford, maybe GM—who knows how many different customers. There's another one of you dealing with another group of customers, and they all have different requirements, and then they all funnel back to the supply chain person, who has to somehow make sense of it. And that's when I look to my colleague there, Jim Liegghio, because I would love that AIAG is taking a more of a holistic industry-view to these requirements. So, how's that for tying it all together? But it really is true. You cannot wait and then let the supply chain people know about these requirements. Whether it's about the product, the quality materials, whatever it is, we have got to get engaged early in the process.

[00:21:18] Guillermo Cano: Great answer.

[00:21:19] Jim Liegghio: You know, Jan, it's interesting—as a former supply chain guy by trade—and Guillermo hearing your answer from your standpoint, I can relate to all of it. And. I vehemently agree: more communication, more clearer communication, and earlier involvement between the customer and the supplier. And involving the supply chain—the poor supply chain people, as Jan refers to the supply chain folks. So, I can fully agree with you guys.

Let's change gears just for a second here. Guillermo, we have a challenge in the industry. We have a challenge of bringing forward the next generation of leaders, the next generation of practitioners, the people that are going to roll their sleeves up and do the work. You've come a bit of a way in your journey as have some of us here. So, what is your advice for that next generation growing up into the industry, just coming out of college or trade school? What are a couple of pieces of advice you would lend to the listener in that case?

[00:22:04] Guillermo Cano: When I get the chance to talk with a new generation, I take the approach of sharing with them the lessons that I wish somebody would have shared with me when I was their age. I don't know about you, but the advice that I got 20 years ago was: study, get a job, save, buy a house, and get married. That was the typical advice—at least in Mexico back then. And that really wasn't helpful. My advice for the new generation is focus on your communication skills. I spent a lot of years working on my technical skills which are needed for our industry. I thought communication was about just not being nervous in front of people and being able to do a presentation. If you look at all the things that we talked about today, communication is key to linking early engagement, collaboration, working with customers, working within our own organization or our industry. There's so many different ways that we can communicate, and we communicate and use most of them every single day—whether you're speaking or not speaking. I talked about active listening, which is a very difficult skill to master. You got non-verbal cues. And that's the difference of what's going to enable you to create and build positive relationships, and have an emotional connection, and not be a terminator, as I've said before.

[00:23:37] Terry Onica: That's interesting that you say it. In my early career, when I worked at Ford, there was a director, his name is Jack Loeffler—I'll never forget him. And we were talking about issues in the supply chain, and he said, "Terry, whenever there's a problem, it all boils down to communication."

So I love what you're saying. And after that, I always reflect on that, like yeah—every time there's a problem, typically something wasn't communicated properly, and that's what was the source of the issue. So I love that. That's great.

[00:24:03] Jim Liegghio: Yeah. And I agree. Guillermo hit it on the head earlier—he said behind everything is people. There are people. We're not robots; we're not terminators. And so much in supply chain is people and communication. I love that answer as well. Guillermo, thank you for sharing that advice with us. Appreciate that.

[00:24:16] Jan Griffiths: I feel a quote coming on. Are you ready?

[00:24:18] Jim Liegghio: Absolutely.

[00:24:18] Jan Griffiths: George Bernard Shaw: "The problem with communication is the illusion that it has taken place."

[00:24:25] Terry Onica: Oh, that's a good point.

[00:24:27] Jan Griffiths: Think about that.

[00:24:28] Jim Liegghio: That's a good quote.

[00:24:29] Jan Griffiths: So true, right? So true. Okay. Let's close it out today. Guillermo, what is the one thing that our audience—remember, our audience are leaders in supply chain—one thing that you would recommend, one action that they could take right now to help with that connectivity to the top of the supply chain to the customer? One thing. What would it be?

[00:24:54] Guillermo Cano: On this podcast, you talk about a lot of key points that are going to change our culture in this industry. The one thing I want to touch today, and how I want to leave our conversation, is we have to prioritize our mental health. And I say this because once I started doing this almost seven years ago, it completely changed my mind. And I still see that, in our industry, this is seen as a weakness. And I can't get my head around it—because why is it okay to go and see a doctor when some other organ is hurting or you're sick, but when we talk about mental health, there's still that taboo, that this is a bad thing? I was going through a very difficult phase in my life, mostly because of the pressure that our industry has. We're always against time, there's always that pressure to do things better and cheaper. And I was at a point where I was almost about to break down, but Magna and my family supported me through my mental journey. Magna has a great well-being program, and I'm very grateful because that's what motivated me to start my journey. And now, seven years later, I'm a completely different person. I still have bad days, as anyone, but if you look at the ratio of the good days and the bad days, I have more good days—and I know how to handle the bad days. And there's many ways that you can start your journey, you should know that there's free resources out there. What had worked for me was cognitive behavioral therapy, positive affirmations, and journaling. And then, I also see a therapist every so often. So there's not a one-size-fits-all—you have to find your own journey. But I want to tell the audience: it's okay to not be okay. And like I said many times—we are not machines.

[00:26:59] Jan Griffiths: Thank you so much for being so vulnerable. Vulnerability is an incredible strength and a key trait of authentic leadership. And it is so refreshing to have somebody in your role address that issue.

And let's be perfectly honest here—you can't build relationships, build trust, redesign processes with your customer unless you're okay. You've got to be comfortable in your own head and your own skin. So forget all these changes that we got to make in this industry. You got to take care of yourself first. There's a reason why they tell you on a plane to put the oxygen mask on yourself first. And you are exactly right.

Thank you so much for sharing everything that you've shared with us on the podcast today. It has been a true pleasure having you on the show. Thank you, Guillermo.

[00:27:49] Guillermo Cano: Thank you for the invitation. I really enjoy our conversation, and please keep doing what you're doing, Jan and Terry, and James now. I'm really happy that we have this leadership in our industry trying to change our culture—we need it. Thank you.

[00:28:03] Terry Onica: Thank you.

[00:28:04] Jan Griffiths: We love to hear from our listeners! Reach out to any one of us—our contact information is in the show notes. And if you want to dive deeper into our content, check out our website at autosupplychainprophets.com.