Covisint has a software deal that will boost the number of users while adding a revenue stream.
Covisint has become the exclusive provider of i-Supply Service, Web-based software from SupplySolution that gives suppliers a real-time view into an automaker's factory inventory. The software is used by about 750 suppliers.
The deal could be a turning point for the online marketplace that has been struggling for greater acceptance among suppliers.
'This may be the tipping point for Covisint, from being a novelty to a place where you really need to go to do business in the automotive industry,' said Kevin Prouty, senior research analyst at AMR Research in Boston. 'It's one of the few software partnerships that could potentially be a boon for both sides, and for the users. It gives users a real business reason to go and use Covisint.'
Current i-Supply Service users can switch to Covisint now. But if a supplier wants to continue using the tool after its existing annual contract expires, it will have to deal with Covisint and pay a subscription fee. Covisint and SupplySolution will share revenues from the tool, though neither would give projections.
But Chris Steele, supply-chain management lead at Covisint, said, 'I view this tool as a substantial part of our strategic supply-chain management business.'
SupplySolution, with automotive headquarters in Southfield, Mich., gains greater credibility and stability by associating with Covisint, Prouty said.
Covisint, formed in February 2000 by the Big 3, primarily has offered suppliers procurement tools such as online auctions. The exchange says it has handled about $1 billion in transactions since going live in October.
SupplySolution CEO Chris Moritz said the software has allowed suppliers and automakers to reduce inventory, overtime costs, parts shortages and premium freight charges.
Dajaco Industries of Chesterfield, Mich., a family run supplier of small stampings to automakers and other suppliers, was able to reduce its workweek to six days by using i-Supply Service, said company President James Ureel Jr.
'And we went down to a skeleton crew on night shift too.'