After seven months of industry and government speculation, ArvinMeritor on October 3, became the first company to make a transaction using the online purchasing exchange created by DaimlerChrysler, Ford, and General Motors.
The US supplier of drivetrains and exhaust systems held a two-hour online auction that chose a supplier for an injection-molded plastic part.
ArvinMeritor held a second two-hour auction October 5, for a related part.
ArvinMeritor plans to hold more auctions this week to buy other related parts, said Dan Jankowski, Covisint spokesman.
Covisint chose ArvinMeritor for its first auction because of the supplier's early involvement with the exchange, Jankowski said. ArvinMeritor was not the only supplier who wanted to be first.
This week an unnamed supplier will use Covisint for a collaborative product development project. It was not disclosed if the supplier would be working with an automaker, another supplier or with different locations within its own organization.
Jankowski said D/C, Ford, GM, Nissan and Renault each will conduct business on Covisint by the end of the month. Forty customers are expected to either host an auction or use the collaborative product development and supply chain management tools by the end of the year. The first 40 are organizations helping to develop the Covisint products.
On January 1, Covisint will open up to 'thousands of suppliers' and other automakers, should they choose to participate.
'As the organization matures over the next few years we expect to have upwards of $240 billion and more going through Covisint per year,' Jankowski said.
Although Covisint representatives want to make sure the industry views the exchange as more than an auction tool, Jankowski said the first transaction was an auction because it is a simpler process than collaborative product design or supply chain management.
'The collaborative product development tools are far more sophisticated,' he said. 'The suppliers need a little more education to use it.'
Delphi Automotive Systems plans to host its own Covisint auction in the next two weeks. The supplier will look for a company to supply gray iron castings for a chassis.
Delphi already has qualified and invited a group of suppliers to participate in the auction, which will be monitored by its buyers in Dayton, Ohio, USA. The selected suppliers will run through a practice auction before the auction date.
The auction will be used as a way to find the lowest bid, said Ann Macrino, a manager in Delphi's supplier relationship group. However, Delphi will do a 'deeper dive' on the three lowest bidders to make sure there are no quality issues after the online auction is complete.
'If you [a bidder] are in the middle of a huge quality issue with a sister division, that would certainly impact final outcome,' Macrino said. 'All else being equal, there's every reason for the low bidder to have a very good chance of attaining that business.'