DETROIT - Automotive suppliers should not wait for the right e-business solution if they want to succeed.
Instead, the time for large and small suppliers to prepare themselves for e-business is now, said speakers at a panel session on e-business at the SAE World Congress on Monday, March 5.
Waiting for Covisint, the trade exchange created by DaimlerChrysler, Ford Motor Co. and General Motors, to complete its suite of products would not be advisable.
'A lot of solutions aren't significant dollar investments,' said Ramzi Hermiz, director of global purchasing for Federal-Mogul Corp. of Southfield, Mich. 'You can use the Web for lower-cost solutions. Look at what's important to your business and add some small steps.'
Suppliers should take advantage of automaker pilot programs for e-procurement of indirect goods - goods that are not part of a company's manufactured products - representatives of the Original Equipment Suppliers Association urged.
Choosing one indirect good and following its pur- chase from cradle to grave is helpful for discovering kinks in the system.
But suppliers should make sure their houses are in order before jumping into e-business, panel participants agreed.
This would include making sure all aspects of the business, especially manufacturing and inventory, are organized on paper before increasing reliance on e-business.
The suggestion for suppliers is to have the best of both worlds, which would be to make sure their internal systems are in order, while preparing to participate in public e-markets, said J Ferron, Americas automotive practice leader for PricewaterhouseCoopers. 'This year, your customers are basing you on how far you are on e-tools,' Ferron said.
Paying the price
However, using preliminary solutions sometimes comes at a price.
Catering to automakers' individual computer-aided design programs has almost tripled the size of Dermot Madden's staff at Federal-Mogul.
Yet Madden, director of product technology, said his beefed-up design staff is essential for his company to be proficient as it uses five different CAD programs required by its customers.
If the industry does not establish a standard for electronic collaborative product development, Madden says he might need more staff.
'We already appreciate how ugly it is to have multiple CAD systems,' Madden said. 'That's kind of a tip of the iceberg compared to cost and resources required for collaborative product engineering.'
Although the Original Equipment Suppliers Association does not intend to set standards for the industry, the association says joining with groups such as RosettaNet and the Automotive Industry Action Group would pave the way for standards to be established.
Despite the notions that e-business will shorten order-to-delivery time and enable 24-hour, seven-day-a-week product design, it will take time for suppliers to become e-enabled.
The rate of adoption for e-business is comparable with suppliers' acceptance of lean manufacturing practices, said Rick Radecki, corporate director of e-business for Delphi Automotive Systems Corp. of Troy, Mich.
For example, the majority of Original Equipment Suppliers Association member companies surveyed said they would use consultants to help launch e-procurement programs at their companies.
Although the goal for suppliers is to be able to find a global standard, three barriers to establishing electronic systems for supply chain management could include: not having the right technology, prohibitive cost and not enough resources.
Once those barriers are broken and companies are using standard e-business programs, suppliers' competitive advantage will not show up in how they submit their bids but how they handle their business.
Said Neil De Koker, managing director of the Original Equipment Suppliers Association: 'The advantage goes to those who are moving quickly, assigning people, getting their house in order. Those doing that are achieving savings without anybody else telling them how.'