ANN ARBOR, Mich. - If the auto industry expects to lower costs, cut product development times and make build-to-order carmaking a reality, it will have to start sharing ideas and supporting more 'Covisint-like' initiatives.
So says Kenneth Baker, a former General Motors executive who is CEO of the Environmental Research Institute of Michigan, a nonprofit scientific research and development organization here.
Baker said he believes that as automakers redefine core businesses to increase profits, nonprofit research that has the backing of industry, government and the educational community will be the source of an increasing amount of r&d.
'Generally speaking, industries are divesting themselves from core engineering and are expecting more innovation from suppliers,' he said. But suppliers, having a tough enough time cutting costs and meeting current demands, won't be able to keep up. Only those who plug into an e-based supply and development chain will win, he said.
Covisint, an online trade exchange, was created by DaimlerChrysler, Ford Motor Co. and GM and began operating in October.
Baker also said the auto industry needs to use information technology professionals more effectively.
A study released in September by Automotive Consulting Group Inc. of Ann Arbor puts the shortage of industry information technology professionals at 60,000. The group estimates $174 billion in annual savings by 2005 if the worldwide supply chain uses new digital technology. Still, less than 20 percent of suppliers have even partially implemented an e-business strategy.
Baker agrees there will always be a need to increase the number of information technology professionals and improve or create company-specific e-business strategies, but he thinks the solution may not be that far away.
Said Baker: 'Instead of going out and strictly hiring (to meet need), you need to also leverage what's already out there through virtual integration and partnerships.'