The introduction of e-business methods leads to 'significant improvements' in supplier relationships by speeding up the purchasing process, according to the head of purchasing at Robert Bosch.
Wolfgang Colberg, senior vice president for corporate purchasing and logistics, said web-based material purchasing can reduce process costs by 50 per cent and the number of steps in the purchasing process from 12 to 7.
Indeed, he said, speed was a major reason for setting up SupplyOn, the supplier purchasing network organized by Bosch, Continental, ZF, INA/LuK and SAP, the software company.
The suppliers wanted to develop a system that would quickly improve communications between Tier 1 and Tier 2 suppliers.
'Vehicle manufacturers are working on Tier 1-OEM relations,' Colberg told conference goers. 'We wanted to drill down to the second tier.'
SupplyOn has been running tests since July 2000, and rolled out operationally last month.
Colberg said 40 of Bosch's suppliers already are connected.
In addition to this 'we need a neutral platform that can talk to all OEMs,' Colberg said. Bosch was worried that if each OEM and supplier started its own development 'our small and medium suppliers would be confronted with a variety of technologies and user interfaces,' he said.
Under terms of the joint venture agreement, Bosch has 36 per cent of SupplyOn; Continental, ZF and INA/LuK each hold 18 per cent; and SAP, 10 per cent. Another 13 companies are associate members.
Newly joined members will be able to buy shares in 2001, Colberg said, which will dilute the holdings of the founding partners.