eCommerce Initiatives Can Save Truck Industry $1.5B Within Five Years

    DETROIT, Feb. 27 As the softening of the U.S. economy
continues to strongly reduce the demand for medium and heavy duty trucks,
leaders of the North American medium/heavy duty truck industry could be up and
running in five years with an innovative initiative to counteract this
shrinking effect: eCommerce.

    Roland Berger Strategy Consultants' latest eCommerce study, "Impact of
eBusiness on the Medium and Heavy Duty Truck Industry in North America,"
predicts that if the North American truck industry adds an eBusiness program
to its existing infrastructure, the industry could save up to $1.5 billion by
the end of Year Five.  This study is part of a series of Roland Berger B2B
studies designed to cost-effectively guide industries, such as the North
American medium and heavy duty truck industry, out of the Old Economy and into
the New.

    "Implementing eBusiness strategies will empower the North American truck
industry to realize a 5.5 percent savings per vehicle once they have been
operating for five years," said Michael Heidingsfelder, partner and automotive
practice leader of Roland Berger.  "With the average new medium or heavy duty
truck price totaling $52,000, B2B-related transaction savings could save the
entire industry approximately $2,800 per vehicle and the customer
approximately $2,300 per vehicle."

    According to Mahesh Lunani, project manager of Roland Berger's Automotive
Competence Center, the true winner of eCommerce in the truck industry is the
customer.  "At about the time when the North American truck industry brings
its eBusiness strategies to fruition, the truck customer or fleet operator,
will reap the rewards of the industry's increased efficiencies, more so than
any other industry player."

    The Study's Key Findings Are ...

    Several significant findings of the study discuss how a decisive and well-
structured B2B program will impact the medium/heavy duty truck industry as
well as the manufacturer individually:

    *  It's a revolution, not an evolution.  A historically conservative
industry typically views radical changes to existing processes and
infrastructures with skepticism.  Truck industry proponents of eCommerce will
need to make allowances for change to evolve, which could become a five or
more year process.

    *  Tier One Suppliers, OEMs and the entire industry will realize savings.
By applying B2B technologies over a five-year span, Tier Ones can expect to
save as much as $620 per truck; OEMs to save $1,350 per truck; and the entire
industry $2,800 per truck.

    *  B2B will impact several of the industry's general business processes
including:

    1) Demand forecasting
    2) Sales and marketing
    3) Product development
    4) Purchasing and procurement
    5) Supply chain management
    6) Manufacturing and logistics

    *  B2B will improve business processes through:
    1) Auctions or reverse auctions
    2) Collaborative design
    3) Customer relationship management
    4) Collaborative supply chain planning tools
    5) Process management and visibility

    *  Truck buyer and fleet owners will be the ultimate beneficiaries.  The
study predicts that the extremely high degree of competition in a strongly
slowing down market environment will force the OEMs to pass on most of the
savings to the final customer.

    *  The margins of OEMs and Tier One Suppliers will be meaningfully
impacted.  Some of the savings might stay with the industry, mainly the OEMs
and the Tier Ones, and will improve their margins by roughly one percentage
point.

    *  Purchasing savings vary by level in the value chain in terms of total
amount and source of the savings.  While Tier One Suppliers will be able to
leverage eCommerce tools across many different processes, lower tier suppliers
will mainly gain advantages in purchasing their parts and components as well
as MRO material by using eCommerce platforms.

   *  Industry leaders should not underestimate the investments required to
reach the $2,800 in savings.  The study indicates that investments associated
with these initiatives could reach as high as 25 percent of the expected
savings.  Savings would occur in software, hardware, systems integration,
consulting and training.

    But Serious Challenges Await ...

    While the cost saving statistics indicate economic promise, the study
points out real-life obstacles the trucking industry will have to plow through
as it electronically evolves:

    1) Industry Cultural Inertia -- forcing a traditional industry to accept
and embrace change
    2) Information Technology Issues -- understanding and staying abreast of
technology's breakthrough innovations
    3) Integration with existing B2B exchanges -- For example: gaining
admission to the car industry's Covisint
    4) Establishing Information Highways -- identifying the most effective
means to communicate among OEMs, Suppliers, Dealers and Customers
    5) Transparency in the Supply Chain -- resolving concerns about sharing
suppliers' cost data with their customers
    6) Human Factors -- motivating a work force to crossover into new types of
business practices

    Another obstacle is the current condition of the truck industry.  The
downturn in the market has left the North American medium/heavy truck industry
with limited resources with which to launch innovative initiatives.

    How To Make It Happen ...

    "Adding a B2B start-up to the traditional brick and mortar infrastructure
will require huge investments in time, money and up-front planning," noted
Heidingsfelder.  "We find that industries like the North American medium/heavy
truck industry can effectively minimize these risks by launching a B2B
initiative through a series of first steps:

    1) Create a strategy that is consistent with the industry's vision
    2) Build flexibility into the strategy so it can quickly adapt to
breakthrough Internet technologies
    3) Pick quick winners to realize early acceptance and confidence."