DETROIT (Oct. 11, 10:50 a.m. EDT) — In the heady days of the Internet bubble just a little more than a year ago, e-commerce was seen as all things to all people.
Now that the computer-based tools of buying, selling and running day-to-day operations have entered the real world, real businesses are learning that it is not as easy as expected.
“During the dot-com frenzy, everyone was anxious to 'Web-ize' and 'Internet-ize' everything without a real broad eye on whether this is going to bring business value,” said Jim Buczkowski, director of manufacturing and supply chain information technology and e-business infrastructure for Ford Motor Co.
Now industry leaders are taking a long look at exactly what does make sense, he said during an e-business conference Oct. 4 in Detroit.
Covisint LLC, the on-line exchange program created by the North American automakers, is taking care to coordinate technology and product offerings that match the needs of its parent companies and the supplier base it relies on for growth.
Automakers, meanwhile, are separating the standard operations best handled by the industry as a whole, and those functions that are unique to their individual businesses.
“The industry takes time to develop a standardized product solution,” said Peter Weiss, Covisint senior vice president, global alliances and business development.
“We have to have a good and predictable deployment, not just throw it into the laps of the customer,” he said. “We are working with customers. We are sharing the roadmap and working together.”
Covisint's first order of business was to become the industry leader for online auctions — buying and selling raw materials, molded interior trim components, seals, gaskets and even used machines. That has happened, Weiss said, with billions of dollars' worth of business passing through its circuits.
The real key to using the platform to its fullest, though, is applying it throughout the supply chain to coordinate production, product development, delivery and assembly so automakers can build a car to a specific buyer's order, and do it quickly.
To do that, everyone from the carmaker to the lowest supplier in the tier structure must have a common language to communicate consumers' demands. Covisint aims to provide that language, and is gaining acceptance among large-scale operations.
About 70 percent of Tier 1 automotive suppliers are linked to the platform, but only about 35 percent of lower tier companies are tied in.
“It's not the Tier 1s that are the bottleneck anymore,” he said. “It's at the levels of the Tier 2, Tier 3 and Tier 4 suppliers.”
The use is trickling down, though. Delphi Automotive Systems Inc. will require its suppliers to use Covisint, and other companies are linking their own network system into the auto supply platform.
The e-business leaders, meanwhile, have to change the culture within the supply community, so that smaller companies realize that they must not only sign on to electronic commerce, but also continually check and update their information, Buczkowski said.
Every purchasing person, he said, has had the experience of calling a contact number and name only to find out that the particular person listed no longer is with the company
“The supplier is going to be responsible for keeping that information up-to-date,” he said. “We can't move to a self-serve system if we need to track down the people responsible for that information and make sure it is correct.”
Likewise, customers have to have trust in their suppliers, Buczkowski said, so they also can plug into the system.
Automakers themselves are still reviewing their operations to determine where they can find common links that will allow them to save money, he said.
Ford, for instance, has recently added holdings such as Sweden's Volvo Car Corp. and England's Land Rover sport utility vehicle line. Each one of those operations buys parts such as an under-the-hood water reservoir bottle, which have the same functions, but may be described differently.
“There's not that much difference between the washer bottle in a Volvo and one in a [Ford] Focus,” Buczkowski said. “They may be a different shape, but they're pretty much functionally identical.
“How do you tell the [computer] system that those are not necessarily exactly the same but at least in the same arena, so that when we do strategic sourcing that there ought to be a relationship between those two.”
There will always be some e-business operations that remain independent, though.
Collaborative planning, for instance, and on-line tools related to specific operations where a company like Ford can see a real dollar value likely will remain in house, Buczkowski said. Mass purchasing can go through a portal like Covisint that already is up and running and ready to do business, rather than having individual companies invest in an independent unit.
For any program, though, businesses must study what makes sense, not what is the latest trend.
“This is not just about saying, 'Hey, the technology is capable of doing it, so let's implement it in the business,' ” he said. “The business process has got to really be formed and be robust.”