DETROIT — Automakers forming a new joint Internet exchange have learned some valuable lessons about working together. Each U.S.-based automaker has a separate computer-aided-design system, uses separate purchasing forms and has differing systems to gain requests for quotes.
That has led to inefficiency and waste as suppliers attempt to wend their way through those channels, said Alice Miles, president of B2B ConsumerConnect at Ford Motor Co. Miles was part of a panel that included representatives from rival automakers General Motors Corp. and DaimlerChrysler AG at a March 6 e-business briefing in Detroit.
"We decided to collaborate on an efficient, single exchange instead of using individual standards. We have a common platform to work from," Miles said.
Many details of the joint exchange from GM, Ford and DaimlerChrysler still must be determined. But the automakers explained some of their vision during the panel discussion.
An ultimate goal is to create an Internet portal that is used for all transactions by suppliers serving those firms. The automakers would like to launch the site by midyear and sign up at least 500 suppliers as soon as possible, said A. Alan Turfe, executive director of GM's online TradeXchange. It also plans to hire about 500 people as soon as possible, and hold an initial public offering.
"We need critical mass for the IPO," said Turfe, who added that in this case, suppliers will be the customers.
The GM executive also suggested the new firm could be profitable in the next two to three years.
Turfe and Miles both stressed that the Big Three will not attempt to blend or combine their online purchasing operations in any way. Purchasing is a core business to each automaker, and hence will remain distinctly separate, for privacy, security, data-integrity and competitive reasons.
Suppliers will be pre-selected and given a password to work with the carmaker of their choice once on the exchange, Turfe said.
The firms already are beginning to lay the groundwork for an IPO, partly because a separate company independent from any of its parents should help ease any federal antitrust concerns, the auto officials said.
When questioned by an attendee as to why the venture partners are placing such an emphasis on an early IPO, Turfe replied: "Because the first player is going to win."
The automakers are considering several ways to generate sales for the new exchange. One could be charging transaction fees of about 1 percent to use the site, Miles said. Another possibility, she noted, is a subscription fee, similar to a monthly fee charged by Internet service providers, to use the site. The firms also are considering allowing advertising on the portal.
If the trading site proves successful, the automakers may leverage it into other, nonautomotive markets, Turfe said.
"I don't see why it wouldn't work there, too, if our suppliers use it," he said.
Another hurdle will be coming up with a common language and process that automakers can agree to. Over the next three months, the firms plan to discuss an aggressive course of action.
A combined site is welcome news to some suppliers.
"If you would have asked me two weeks ago if there was any chance [automakers] would get together, I would have lost my bet," David M. Cote, president and chief executive officer of Cleveland-based supplier TRW Inc., said during the Society of Automotive Engineers World Congress. "My worry two weeks ago would have been how will we comply with all these different systems."
Plastics News staff reporter Rhoda Miel contributed to this story.