DETROIT - Small automotive suppliers are leery of committing to electronic links that could save big suppliers and automakers up to $71 per car, say two academic researchers.
The survey, sponsored by Wayne State University in Detroit, tried to find out why suppliers with less than $25 million in annual sales have been slow to adopt electronic data interchange services.
These suppliers are reluctant to do so even after automakers have mandated the high-tech connections as a condition for doing business, the survey concludes.
Allan Batteau, an associate professor of industrial engineering, and researcher Kirk Cornell contacted more than 70 lower-tier suppliers. They extensively studied eight as part of their ongoing 'Voice of the Lower Tiers' survey.
They discussed their findings at the Automotive Industry Action Group's Auto-Tech 99 conference here.
Electronic data links let suppliers and their customers share billing, bidding, shipping and management information directly. The technology is a key part of supply-chain management, in which smaller suppliers let larger suppliers and automakers coordinate their business.
A 1996 Automotive Industry Action Group study concluded that the auto industry could save $1 billion if such automakers and suppliers could link up. That change was predicted to be an easy sell.
Cornell said the Tier 2 and Tier 3 manufacturers fear they will use their time and money on trendy high-tech systems, only to be marooned when automakers move on to the next great industry-changing idea.
And the smaller suppliers do not trust the efficiency or fairness of their larger customers. In many cases, the surveyors found smaller suppliers already using some of the electronic connections the auto industry wants, but with other, bigger customers.
'When you account for only five percent of your supplier's business, it is hard for him to figure out why he should dance to your tune,' Batteau said.
Cornell said smaller manufacturers are so pressed for time that they cannot spare much for industrywide initiatives.
'I was interviewing one guy, and he was so busy that we literally ran from place to place on the factory floor,' Cornell said.
Batteau said smaller suppliers also are dubious of business 'solutions' that seem to come from academic circles rather than from the factory floor. For smaller suppliers with limited resources, Batteau said, 'Sometimes it just makes more sense to sit back and wait.'