Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Resin pricing news
    • Videos
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • CEO Issue
    • Diversity
    • Best Places to Work
      • 2022 winners
    • Processor of the Year
    • Rising Stars
    • Women Breaking the Mold
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • BRICS and Plastics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • K Show Livestream
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Processor of the Year submissions
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics News Caps & Closures
    • Women Breaking the Mold Networking Forum
    • Plastics in Automotive
    • Reuters Responsible Business Europe 2022
    • Reifenhäuser Technologies Livestreams
    • Polymer Points Live
    • Numbers that Matter Live
    • Plastics in Politics Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Resin Prices
    • All Resins
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Custom
    • Sponsored Content
    • LS Mtron Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
February 28, 2000 01:00 AM

Big 3 merging e-commerce supply chains

Rhoda Miel
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    When Ford Motor Co. wanted to show off its Internet savvy, it introduced new links with the Web portal Yahoo at the launch of the International North American Auto Show in Detroit. Competitor General Motors Corp. invited dozens of reporters for one of the first online auctions on its TradeXchange.

    Now the world's two biggest automakers have joined forces and drawn DaimlerChrysler AG into the mix, announcing Feb. 25 that all three firms will operate a joint Internet supply chain.

    But the key to electronic commerce for the companies' plastics suppliers lies beyond the smoke and mirrors of public announcements. The question isn't whether molders can log in to the automakers' sites, but rather how well they communicate in the long run.

    "You've got to get out of the marketing phase of this technology and into a perspective of what this technology actually means to your business," Bill Berry, vice president and chief information officer for Johnson Controls Inc. of Plymouth, Mich., said in a Feb. 17 telephone interview. "You have to extend it to [your] internal business."

    And if it all comes together, Berry believes suppliers can wed themselves to their customers, creating a solid sales base.

    "We just view this whole thing and where it's going as an opportunity," he said. "We already have a very close relationship. This is taking it to another level."

    Detroit-based GM, Dearborn, Mich.-based Ford and Auburn Hills, Mich.-based DaimlerChrysler plan to get all of their purchasing online through the exchange programs. They will share ownership and anticipate annual sales will grow to $1.3 trillion during the next four years.

    The companies expect to reach a definitive agreement on the venture by March 31.

    Before the announcement, GM had expected by year-end to have signed up about 300 suppliers to TradeXchange, representing about 80 percent of its purchases, said Al Harrah, GM global sales director for TradeXchange. He spoke Feb. 23 at Plastics News' E-Business briefing in New Orleans.

    The system will allow GM's Tier 1 suppliers to interact much better with the company and more efficiently deliver product, Harrah said.

    The world's largest carmaker still is considering which parts and materials will be bought exclusively over the Net, he said.

    At this point, automakers are targeting suppliers of commodity goods for their first online auctions. For example, GM purchased more than $150 million worth of rubber products in early February over TradeXchange.

    Ford had $75 million worth of bids pass through its AutoXchange at its first online auction for production parts in early February.

    The system allows pre-qualified bidders — who already have shown the automakers they can meet quality and quantity standards — to place competitive bids for specific products, said Scott D. Upham, president of Providata Automotive, an Ann Arbor, Mich., consulting company.

    "The Internet model takes out the person-to-person interaction and some of the favorite supplier status," he said. "This will open it up to companies that normally would never submit for Tier 1 products."

    But the automakers are a long way from taking that auction concept to custom components, noted Van Conway, president of Conway, MacKenzie & Dunleavy, a turnaround consulting firm based in Birmingham, Mich.

    Those parts are designed and built for particular models. A door handle, seat module or dashboard unit made for a Ford vehicle won't suit a Toyota, he said.

    "It's a dedicated commitment of goods," Conway said. "I see a lot of lip service being paid, but I don't know how it's going to happen."

    Other carmakers are weighing whether to join in with those Internet hubs.

    "It's absolutely amazing, the intensity [of e-commerce discussions]," said Thomas E. O'Reilly, vice president of purchasing for Collins & Aikman Corp. of Troy, Mich. "Everybody is saying, `Boy, you better get on, or your days as a business entity are over.' Each day it seems like there's a new partner added onto the group."

    Tier 1 suppliers will be able to do more than sell parts to the automakers online — they also will be able to buy raw materials or parts from Tier 2 suppliers. But suppliers that use the exchanges to buy supplies face a series of other questions, O'Reilly said.

    "What if I decide to buy ABS from the GM site, then does GM know my price? What if I'm supplying a part to Ford?

    "We end up finding ourselves at this moment trying to understand that picture. I think we're far enough along that we think we're going to have to do something more than what the major [original equipment manufacturers] are offering at their sites. But what and how much is another set of questions."

    Purchasing is only a small piece of the e-commerce puzzle, said Greg Dimit, business manager for the manufacturing systems group of Pyramid Solutions, a Novi, Mich.-based computer consulting company.

    "Any supplier of any size currently is hooked in electronically to the OEMs. They already have a mechanism in place," Dimit said. "When you're looking at e-commerce and making it work, you're looking at what happens with the data once it comes in, and that's where everything starts to fall apart."

    Dimit uses an example of seat manufacturers to show the differences between traditional and potential connections.

    One seat maker receives an electronic order from an automaker. One employee spends more than 30 minutes printing out the information, takes it to the manufacturing floor where workers manually find the seats, place them in the proper order and send them to shipping.

    Another company gets the electronic order, but conveys the data electronically to its computerized storage site where the system sorts and retrieves the seats.

    "Within two minutes, it's got the order placed for red bucket seats, it's on the shipping and receiving docket and two people have been involved in the entire transaction," Dimit said. "What the benefits of e-commerce are to traditional businesses is reduction in delivery times, reduction of inventory."

    That should allow part suppliers to cut their cost of doing business, and in turn produce less expensive parts, JCI's Berry said.

    Johnson Controls also is taking a close look at how it can use e-commerce to increase the information it can collect on parts once they're in consumers' hands. The systems can compile warranty data and customer satisfaction numbers.

    "We're looking at how we can understand our product performance in the marketplace," he said.

    The cost of joining the e-commerce revolution can vary widely. A simple Internet presence is fairly inexpensive, but Dimit said a company could spend $1 million or more to install a system compatible with its customers' software.

    An entire new computer system to potentially overhaul into e-commerce could carry a $6 million price tag, Dimit said.

    Some major suppliers are hiring Internet-savvy specialists to oversee their conversion to e-commerce, said Upham of Providata. They're in big demand and do not come cheap.

    "If I was a large Tier 1 supplier, I'd bite the bullet and spend a couple of hundred thousand dollars to bring someone in from Silicon Valley," he said. "It's going to be very hard for these traditional, old-school, Tier 1s to adapt, but the one-sentence phrase is: `Deal with it.' They're going to have to."

    Pyramid Solutions is hearing from a lot of businesses that know they must embrace e-commerce, Dimit said, but have no idea how they will do it.

    "The [e-commerce] buzz is in front of the reality," Dimit said. "If you can't extend it into your enterprise, if you can't make it good, you're going to be beat by someone who can."

    Plastics News senior reporter Joseph Pryweller contributed to this story.

    RECOMMENDED FOR YOU
    Hillenbrand cites recycling as 'strategic growth' area with Herbold acquisition
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    IRS provides guidance for how excise taxes will impact resin pricing
    2
    California passes strictest plastics law in US, with EPR and recycling targets
    3
    Industry veterans plan nationwide network of PET recycling plants
    4
    Newell closing Coleman plastics plant in Texas
    5
    PS prices jump in June, more increases on horizon
    SIGN UP FOR TO RECEIVE THESE EMAILS AND ENEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Urethanes Technology
    • European Rubber Journal
    • Tire Business
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • CEO Issue
        • Diversity
        • Best Places to Work
          • 2022 winners
        • Processor of the Year
        • Rising Stars
        • Women Breaking the Mold
      • Newsletters
      • Resin pricing news
      • Videos
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • BRICS and Plastics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • K Show Livestream
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics News Caps & Closures
        • Women Breaking the Mold Networking Forum
        • Plastics in Automotive
      • Industry Events
      • Injection Molding & Design Expo
      • Livestreams/Webinars
        • Reuters Responsible Business Europe 2022
        • Reifenhäuser Technologies Livestreams
      • Editorial Livestreams
        • Polymer Points Live
        • Numbers that Matter Live
        • Plastics in Politics Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
      • Processor of the Year submissions
    • Resin Prices
      • All Resins
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Custom
      • Sponsored Content
      • LS Mtron Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified