DETROIT - In a major new Internet offensive, Visteon Automotive Systems is buying parts from suppliers at global Web-based auctions.
Visteon, the company's new electronic commerce strategy, will bring about big changes in the way suppliers do business.
In mid-August, Visteon held its first Web-based parts auction, inviting bids for an estimated $150 million in supply contracts for printed circuit boards.
Seventeen suppliers from Europe, North America, Latin America and Asia - some of them new to the auto industry - bid against each other for 90 minutes as Kim Marslender, a purchasing manager, orchestrated the auction from her computer screen.
Visteon pre-qualified the suppliers, and company purchasers will make follow-up factory visits before Visteon signs its circuit board contracts later this year. Of the 17 suppliers that took part in the bidding, six had no previous business with Visteon.
The company declined to identify the bidders or discuss how far lower prices were driven by the online auction format. However, Marslender said the Web auction gives Visteon a much more accurate and timely sense of market prices.
Some current Visteon suppliers will lose business, she acknowledged.
'It's really going to change the way purchasing is run,' Marslender said. 'We're getting a little smarter, a little wiser.'
Using the Web to buy parts also elevates bidding activity to a global scale. Visteon said it was pleased to see Asian electronics companies in the auction because many are slashing prices on their products to cope with struggling economies in home markets.
Visteon plans to mount several more Web auctions for undisclosed commodity parts later this year. The company buys $8.5 billion in parts and supplies annually.
General Motors has also been buying parts via direct computer links to suppliers for about a year. Currently, GM makes 15 to 20 buys a month from suppliers with the help of a private online network. On August 10, GM announced it would remake itself as an Internet company and expand vehicle communications with a new business unit called e-GM.
Over a year ago, Visteon began a total re-engineering of its computer infrastructure - designed with a possible spin-off from Ford in mind.
Electronic commerce will help Visteon achieve its goal of expanding sales outside of Ford, said Dave Bent, chief information officer for Visteon. Non-Ford customers currently account for 9 percent of Visteon's $18 billion in sales. Visteon wants to expand that business to at least 20 percent by 2002.
During the next three years, the eVisteon electronic commerce program will spread throughout the company's original-equipment business, a global network of 77 manufacturing plants and joint venture operations.
The company is using business management software from SAP AG, e-commerce tools from Sun Microsystems Inc. and Netscape browser software from America Online Inc.
Software for the printed circuit board auction was supplied by A.T. Kearney Inc.