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Automakers Try to Overcome Suppliers' Mistrust For Online Purchasing Exchange

1 April 2000

Discussion Presented on TV Show 'Autoline Detroit'

    DETROIT - On the television program Autoline Detroit, Harold Kutner, the 
group vice president of GM Worldwide Purchasing, announced a number of sweeping 
moves to entice suppliers to use the industry's new online purchasing exchange.  
In a move to cut costs General Motors, Ford and DaimlerChrysler have banded 
together to form a new company that will handle all their purchasing online.  
Their combined purchasing buy is $240 billion annually.  Mr. Kutner acknowledged 
that suppliers still mistrust automakers' intentions and are reluctant to use 
the exchange.

    He announced that automakers are going to invite supplier executives to
sit on the board of directors of the industry's new online purchasing
exchange.  Mr. Kutner said the exchange, which as of yet has no name, will
have 13 board members.  Six of those board members will come from GM, Ford and
DaimlerChrysler, the remaining seven members will come from supplier
companies, possibly from technology providers, and will include the new
company's CEO.  Mr. Kutner also said that automakers also want other suppliers
to serve in "some sort of advisory capacity."

    Yet, far from joining automakers, suppliers are looking at forming their
own online exchange, something that Mr. Kutner calls "really disappointing"
that will only create waste.  "It would be a major mistake for them to do
that," he warned.

    General Motors has communicated with hundreds of suppliers about the
benefits of the exchange, yet only has 10 to 15 suppliers actively using it,
mainly for indirect purchases such as materials and plant supplies.  Yet, Mr.
Kutner said GM is currently running 2,000 to 3,000 transactions daily.

    Autoline Detroit is a weekly television program that airs on Detroit
Public Television on Sunday mornings at 10:30 a.m.  It is hosted by John
McElroy and produced by Blue Sky Productions.  Video streaming of the program
is available right on THE AUTO CHANNEL and at http://www.theautolink.com