Large Auto Companies Driving Fast to Link Systems With Supply Chain Partners
19 July 1999
Large Auto Companies Driving Fast to Link Systems With Supply Chain Partners
CSC and Automotive Industries Conduct Technology Survey
On Auto Companies' I/T Practices and Priorities
EL SEGUNDO, Calif., July 19 -- A new study released today by
Computer Sciences Corporation and Automotive Industries magazine
found that large auto companies are linking their systems with supply chain
partners as a way to enhance information flow and drive better integration
between product design and delivery.
The top strategic and information technology (I/T) priorities for survey
respondents include: "Integrating Systems" (40 percent), "Connecting to
Vendors, Customers, Dealers" (38 percent) and "Reengineering Business
Processes Through I/T" (34 percent). In addition, survey results indicate
that auto companies with revenues in excess of $1 billion are far more likely
to have formal information systems (I/S) strategic plans than companies of
lesser size (61 percent versus 39 percent).
The in-depth report on the I/T practices and priorities of auto companies
worldwide, "Information Technology Issues in the Automotive Industry,"
surveyed more than 235 senior-level executives from most sectors of the
industry, including assemblers, systems suppliers, parts suppliers, after-
market suppliers and distributors.
"Not long ago, auto makers not only assembled the car but were also the
primary assemblers of car components, such as the dashboard, seats and
interior trim," said Bob Baxendale, principal in CSC's Consulting Group and
developer of the automotive industry survey. "Car makers today have
streamlined processes to focus on their core competencies by partnering with
suppliers that provide the design, engineering and production of an
automobile's entire interior. Linking to members of the supply chain is more
critical today to reduce lead times, improve communications and manage costs."
When asked whether their corporate management views information technology
as a "cost" or as an "investment," the respondents were evenly divided:
50 percent said "cost" and 50 percent said "investment." When asked what
return on investment (ROI) their business is actually getting for its I/T
dollar, 45 percent of the executives surveyed replied "unknown," while
38 percent said ROI was "high" or "medium," and 17 percent said it was "low"
or "negative."
"A parts supplier is more likely to view I/T as a cost rather than an
investment due to system mandates handed them by assemblers," said Baxendale.
"However, those executives who view I/T as an investment were significantly
more likely to realize a return on their technology expenditures because they
identify and track both costs and business improvements."
Several survey findings confirm that higher levels of operational
performance are associated with perceptions of I/T as an "investment" rather
than a "cost." For example, respondents who reported that I/T was an
investment also were:
* Significantly more likely to conclude that their companies receive high
or medium returns from their technology expenditures.
* More likely to have developed an I/S strategic plan which, in turn,
helps companies identify technology alternatives, align with the
strategic business plan and deploy approaches that optimize their ROI.
* Finally, executives who considered I/T an investment are less likely
than those in the "cost" category to perceive their technology returns
as "unknown."
Not surprisingly, respondents cited Internet/intranet and electronic
commerce as the most important technologies impacting their organizations.
Eighteen percent of respondents reported that they were conducting more than
half of their organization's total transactions online, while another 18
percent reported conducting 20 to 50 percent of transactions online.
Auto companies with revenues greater than $1 billion were far more likely
to be engaged in e-commerce activities, with almost one-third of these
organization conducting half of their business transactions online. Of
various segments of the automotive industry, parts suppliers reported being
most involved in electronic commerce, with half of the respondents in this
category doing more than 20 percent of transactions online.
Other findings presented in the survey focus on ERP (a majority of
respondents prefer best-of-breed applications) and I/T spending levels (55% of
respondents increased I/T spending over the past three years).
For a complimentary copy of "Information Technology Issues in the
Automotive Industry," call 800-272-0018.
About CSC
Computer Sciences Corporation helps clients in industry and government use
information technology to achieve strategic and operational objectives. With
50,000 employees in more than 700 offices worldwide, the company tailors
solutions from a broad suite of integrated service offerings, including
e-business strategies and technologies; management and I/T consulting; systems
consulting and integration; and I/T and business process outsourcing.
Since its formation in 1959, CSC has been known for its flexibility in its
relationships with clients. Through numerous agreements with hardware and
software technology firms, the company is able to identify and manage
solutions specifically tailored to each client's needs. CSC had revenues of
$7.7 billion for the twelve months ended April 2, 1999. Its headquarters are
in El Segundo, California. For more information, visit the company's web site
at http://www.csc.com.