Speaker: Jens Neumann
Title: Volkswagen AG board member responsible for overseeing e-business
Volkswagen AG rejected Covisint in favor of setting up its own electronic marketplace because it wanted to mine for e-business 'gold' on its own, the head of the automaker's e-business sector says.
'Joining Covisint would not have been consistent with the Volkswagen way we have been pursuing since 1993,' said Jens Neumann, the Volkswagen AG board member responsible for overseeing e-business.
'In particular, we probably would have lost precious time implementing our specific process improvement program. We firmly believe in one thing - the gold is in the process - and we want to dig for gold in our own back yard with our own tools, doing it our own way.'
Neumann told conference delegates that Volkswagen is not ruling out the possibility of other automakers using its marketplace in the future. But the company first wants to make sure that its marketplace works as planned, he said.
VW's private marketplace went live in September, about a month before the Covisint exchange began transactions. Its three main functions are online auctions, catalog purchasing and capacity management.
Since startup, Volkswagen has conducted 70 online auctions; it expects to have completed more than 100 by the end of the year.
Neumann said the company has saved an estimated E660 million euros on a yearly basis from the first online auctions, for indirect supplies only.
More savings are expected with catalog purchasing, because end users in the company order directly from suppliers who deliver straight to the user.
'They eventually will bring process cost reduction of up to 50 percent and shorten delivery time by 70 percent,' Neumann said.
'A simple pen for my secretary may cost about one mark, but the eliminated process cost of ordering, storage, logistics and payment add up to almost 200 marks.'
The automaker has identified 180 product categories suitable for online auctions, but will not go online for specific parts that will alert the competition to VW's future plans, Neumann said.
Volkswagen will continue to purchase sensitive parts from a handful of pre-selected and accredited suppliers for security reasons, Neumann said.