New C.A.R. Study Reveals Costly Errors in Suppliers' New Business Management Processes

TRAVERSE CITY, Mich., Aug. 8 -- A new study released today by the Center for Automotive Research (CAR) shows some serious problems in suppliers' internal processes related to quoting and managing new business opportunities and engineering changes. The "RAM/CAR Survey: A Study of Suppliers' Profitability and Revenue Acquisition Management" was conducted in July. Its purpose was to determine how suppliers carry out the revenue acquisition process, how well it works, and where improvements are needed. Preliminary results reveal some disturbing news for suppliers: * Nearly one-third of suppliers reported errors in pricing being submitted to OEMs * Respondents report their RFQ pricing models have a typical variation of about 25 percent from actual costs * Suppliers' win rate is only about 25 percent * Suppliers respond to an average of 390 RFQs a year, and expect this number to increase by 25 percent in the next five years * One-third of the suppliers reported that collaboration with sub- suppliers is a major problem

The study also corroborated what many suppliers say about industry exchanges: security is their major concern, and 76 percent have an unfavorable view of replacing their own RFQs system with one run by a third-party industry exchange. In discussing the results, CAR forecasting director David Andrea told suppliers that "a healthy bottom line starts with a healthy top line." "You can't keep making mistakes, underpricing your components and leaving money on the table. That's where the concept of revenue acquisition management comes in," said Andrea. The study, the first of its kind among automotive suppliers, was underwritten by Salion, Inc., of Austin, Texas and Detroit, which provides a suite of software solutions designed to eliminate the problems revealed in the study. Salion has been active in the Detroit automotive supplier market for less than a year, and has already signed up major suppliers including Delphi, Delco Remy and Dura. Several others are on the verge of adopting the new solution, as well, said Richard Hahn, president and CEO. "Several of the major suppliers have caught on immediately in our discussions with them about the concept of revenue acquisition management. They know their current processes are simply not where they need to be in terms of speed, accuracy, global vision, access pricing and profit history and all the other factors that go into good customer relationship management. "They also know they're facing price pressures today they've never experienced before. Add the confusion brought about by mergers and acquisitions, legacy systems that don't communicate with each other, auction sourcing by the OEMs and their need to diversify their customer base, and suppliers know they're heading for big trouble. They have an urgent need to get their business acquisition processes disciplined, automated and better managed," said Hahn.