Automotive Suppliers Meet to Discuss Future Impact of Trade Exchanges
23 August 2000
Automotive Suppliers Meet to Discuss Future Impact of Trade Exchanges
Experts Help Develop Strategies for a Digital Supply Chain
At eReadiness Roundtable
BIRMINGHAM, Mich., Aug. 23 Executives throughout the
automotive supplier industry gathered here today to discuss how Covisint, the
industry's planned trading exchange, and other emerging industry trade
exchanges will affect their businesses, and how to prepare for the inevitable
changes to existing business models.
Kevin Prouty, senior analyst for the automotive industry at AMR Research,
reviewed the impact of e-business strategies on automation, plant processes,
and plant-supplier relationships, and presented an overview of the strategic
impact of Covisint, including its potential for success, possibility of
failure, and its current state.
"While new technology will certainly have an impact, it's important to
keep in mind that e-business is just business," said Prouty. "The critical
factor for success in this changing market is still relationships-between
OEMs, suppliers, and end-customers. Covisint has been a struggle from day one
due to its complexity, and the politics, speed, and cultural issues involved.
I foresee that it will play a role in the industry, but I do not believe it
will be the all-encompassing solution to supply chain management and
collaboration as originally intended."
Nevertheless, Prouty said that suppliers must be able to quickly respond
to business drivers changing the industry. "Cost, recall and warranty
pressures are accelerating, channel conflict is increasing, we're seeing
consolidation in modular construction and among suppliers, and lead-times and
design cycles are shortening. Flexibility and speed are essential for New
Economy suppliers."
Nick Johnson, vice president of Thomas Group, corporate host of the
roundtable, agreed with Prouty's assessment. "The new digital supply chains
bring dramatic increases in efficiency and productivity across the entire
supply chain. However, in order to truly operate at Internet speed, it is
important to have a strategy that is aligned with the business processes,
technology and people within the organization, as well as an implementation
plan in place. It is the execution of the strategy that will determine future
success or failure."
According to Prouty, the real potential for Covisint lies in cost savings
from improvements to demand management, quality management and indirect
procurement. The exchange could bring about improved demand data to reduce
supply chain inventory, reduce the cost of quality management and warranty
support, and control purchasing cost and spending. The resulting impact on
OEMs would be accelerated manufacturing outsourcing, more consumer-direct
exposure, better control of information, accelerated Deliver-to-Order (DTO)
and design cycles.
"Unfortunately, this also gives OEMs another tool to pressure suppliers,"
said Prouty. "Ultimately, suppliers are left with three options: allow OEMs
to dictate the terms, set up an individual e-business strategy and execute it
for short-term ROI, or collaborate with other Tier 1 suppliers to complement
the super-exchange."
The roundtable was held at the Birmingham Country Club.
About Thomas Group
Thomas Group, Inc. is an international, publicly traded professional
services firm . Thomas Group focuses on improving operations,
competitiveness, and financial performance of major corporate clients through
process improvement, and by strategically aligning operations with technology.
Recognized as a leading specialist in operations consulting, Thomas Group
creates and implements customized improvement strategies for sustained
performance improvement. Thomas Group, known as The Results Company(SM), has
offices in Dallas, Detroit, Frankfurt, Hong Kong and Singapore. For
additional information, please visit Thomas Group on the World Wide Web at
http://www.thomasgroup.com .
About AMR Research
AMR Research is the preeminent industry and market analysis firm providing
independent advice on e-business strategy and infrastructure. AMR's
experienced research team analyzes the impact of technology on industry and
understands how to align new technology with real business goals, industry by
industry. AMR maintains research and analysis on more than 2000 software,
technology infrastructure, and service providers. This intelligence is used
to help global companies evaluate, select, and manage new systems. AMR also
provides analysis, advice, and market data to software and services providers
and members of the financial community. Additional information on AMR
Research's reports and alerts is available on the World Wide Web at
http://www.amrresearch.com .