Automakers and suppliers are laying a new pipeline that one day may connect the entire industry, from Detroit to Delhi.
The pipeline, unlike those built for crude oil or natural gas, will carry bits and bytes.
Using Internet-based technology, the U.S. auto industry is developing a global extranet — a network that will enable authorized users to do business electronically. If successful, the system may expand beyond assemblers and parts suppliers to include dealers, fleet buyers, finance companies, trucking firms and customs brokers.
The Big Three are telling suppliers: If you want to do business with us in the future, get connected. The extranet, known as the Automotive Network eXchange, offers a common computer language that promises to cut communication costs and speed information flow.
But businesses still worry about sending information over the Internet. Automotive Network eXchange designers, now running the system in a test phase, will have to prove they can protect sensitive business data.
Although the network is only being tested for real-world use, some suppliers already are using similar systems.
Purchased Parts Group, a distributor based in Memphis, Tenn., supplies batches of small parts such as fasteners and plastic cable ties on a just-in-time basis to Johnson Controls Inc. of Milwaukee. Next year, Johnson Controls will grade Purchased Parts on how well it uses Internet technology to handle routine business transactions. So Purchased Parts needs to speed communications to its own 400 or so suppliers.
The distributor expects to weed out as many as 150 of its suppliers that do not or will not get connected, said Gary Baltimore, executive director of information systems.
``We're going to have to pull the plug on them,'' he said. ``We don't know what else to do.''
The Big Three, through the Automotive Industry Action Group trade association, has backed the development of the Automotive Network eXchange for a range of business-to-business communications. Suppliers could use the network for such things as e-mail, transmission of computer-aided-design drawings and the routine exchange of purchase orders, shipping notices and invoices.
``The Internet will be our major way of talking to suppliers,'' said Joey Lebovic, General Motors Corp.'s manager of electronic commerce.
In August, the Automotive Network eXchange was demonstrated in public for the first time. The network looks like and functions like the Internet. But it is protected by software ``firewalls'' designed to keep intruders out. In theory, Automotive Network eXchange access can be tailored to each user to prevent competitive snooping.
The network, which now is targeting production and nonproduction suppliers in the United States, Canada and Mexico, may expand to Europe in late 1998. If the system proves technically successful, a full global expansion will follow. The real test of the network, Lebovic said, will be whether the system can deliver electronic communications without delays or data loss.
Until very recently, smaller suppliers could claim they did not have the money or the computer expertise to do electronic data interchange: the transmission of business documents over what the computer industry refers to as value-added networks.
These networks, operated by private companies, charge fees based on the amount of electronic traffic. Suppliers that did get connected to the value-added networks often complained that they had to pay for a separate network connection for each customer.
Extranets promise to make these business-to-business communications easier.
At the Automotive Industry Action Group's Auto-Tech trade show in August in Detroit, Actra Business Systems LLC demonstrated ECXpert, extranet software that can be used on a system such as the Automotive Network eXchange.
For the purposes of the ECXpert demonstration, Actra sent shipping notice forms and other electronic documents over the network to its headquarters in Sunnyvale, Calif. From there, the documents were transmitted to the Chrysler Corp. computer gateway in Center Line, Mich., and then relayed to Chrysler's booth at Auto-Tech at Cobo Center in Detroit.
Automatically, the system sent a confirmation notice via the Internet back to the Actra booth across the show floor. All that took three seconds.