Leo Hernandez, Co-Founder
Leo Hernandez is a Spanish Mechanical Engineer, with a Post-Bac. Degree from the U. of Florida,
joined GM Components plant in Spain as a manufacturing engineer and shift supervisor in 1989.
The company name changed to Delphi, then became Product Engineer, Program Manager and
then Lean Implementation Leader for key suppliers. All the time, he struggled to determine the
components cost, first during product-development phases to establish what could be the optimum selling price while being profitable and competitive, and then, while he was performing different supplier Lean workshop, to be able to determine what was the cost impact of all the improvements and process modifications that were being proposed. How he had wished to have today’s cost tools and knowledge at those moments!!
In 2007, he joined Delphi Cost Management team, the first European position in the team. Gerry was already there and that’s how they got to know each other. Leo’s main job became to introduce Cost Management culture into European operations, and in order to do so successfully, results had to be solid, well understood, easy to defend, and easy to explain to buyers and to product engineers. The reason for the success of this task was the right background in manufacturing and the understanding of many different suppliers’ processes.
A reliable cost model or process cost calculation can’t be done without proper knowledge of those processes; there are tools out there that will give you a first cost estimation for relatively simple processes like castings, forgings or plastic injection, but when processes get complicated, a good understanding of the processes involved is key to determine the right costs accurately, because there are many factors that will determine the optimum manufacturing process among the different ones available: yearly volumes, tolerances, plant geographical location, etc. And that’s how the job requests in Europe started to get exponential, all new parts to be purchased required a cost model that could be compared later to supplier quotes and processes. Today, everyone around the world knows, trust and respect our cost models. Leo was included as an active member of the Sourcing Table by proposing suppliers that could have a competitive advantage depending on the right processes required for each particular part.
One of the most difficult challenges was precisely approaching the suppliers and claiming “open-book” policy. Leo tried to explain that there was no reason to hide information, that we wanted both sides to be profitable and that a trust relationship can only be achieved by sharing information, of course being very cautious and sensitive in order not to share know-how from different suppliers. Once this trust was established, he was able to share the new products being
developed, decide together on the best processes to make them, and to establish a cost for each step of the production in agreement with the supplier, thus knowing where to focus in order to make the best cost-effective decisions. This is the key of cost management.
Today, Leo is a cost engineer with main focus on machined parts, powder metal parts, castings, forgings, stampings, and assembly processes. He still works with different and new suppliers with this open-book mentality and is constantly improving his cost models as technology changes. The desire to create this Society of Cost Engineers comes from the need to standardize certain concepts and calculations, and to expand the should-cost and transparency mentality.
Meet the Rest of the Team