Karl F. Storrie is president and CEO of Dura Automotive Systems Inc. in Rochester Hills, Michigan, USA.
Along with 99 of my supplier CEO colleagues, I recently attended a meeting called by Ford Motor Co. purchasing. One of the subjects we discussed was e-commerce and the auto exchange cooperative venture announced by General Motors, Ford and DaimlerChrysler. Let me tell you what I saw, what I heard and what I believe will be true for the supplier community.
First, this is not a Ford program or, for that matter, a GM or DCX program. The auto exchange (called Newco because the name has not been decided) will be an independent company in which each of the three companies will have an equity interest. The suppliers at the meeting (Ford's top 100) also may be invited to participate as equity partners.
We were assured that this will not be an online quoting forum in which the vehicle makers have any two-bit-garage operation bid on our products. Instead, it will cover commodity items that represent less than 20 percent of a vehicle maker's total purchased products.
Ford's view of the sustainable competitive advantage e-commerce brings to the industry is certainly much broader than online quoting. Ford is focused on the opportunity to accelerate the elimination of waste, improve quality and improve the responsiveness of the value chain to consumer demands.
Ford even shared its vision of virtually integrating its multi-tiered value chain, the chief elements of which are:
Real-time quality feedback from the
market to suppliers
Transportation and customs improvement
Collaborative visual design studios
Collaborative demand/manufacturing planning
Rapid/instantaneous customer feedback
Accelerated time to market.
Given the above, I don't believe that designed and developed proprietary products will appear for online bidding.
The competitors that participate today also would participate in the online process, and each would be able to see the others' prices. That would provide no real advantage to the suppliers or the vehicle makers.
One need only look at how much of any given vehicle is designed, developed, tested and made by suppliers today. It will serve no one's purpose to use Newco to leverage the suppliers that provide engineered products, systems or modules, especially when the content provided by the supply community is increasing, not decreasing.
Cooperation is the only answer.
In my view, what Newco can do for suppliers is positive, not negative. However, I believe each supplier must develop its own independent e-commerce strategy to determine just how it will be involved in the larger process.
It might be wise, therefore, if a few Tier 1 suppliers developed a cooperative approach to procurement items such as maintenance repair operation in order to see how this process works and to learn from their mistakes.
There are no detailed answers to this issue, but I believe online quoting can be a positive experience for suppliers such as Dura Automotive.
In my opinion, both vehicle makers and suppliers have an opportunity to benefit from online quoting of selected commodity items that are not engineered and designed as proprietary products, systems or modules.
Plus, there is a larger opportunity for suppliers and vehicle makers to communicate in new and much more efficient ways through programs such as Newco to bring to market more quickly products that cost less and meet the desires of the consumer.
Let us set the proper tone on e-commerce. It's a good thing for everybody.