Global Fastener News

MEDIA SPOTLIGHT: Automakers Putting Suppliers on the Web

John Wolz

Editor’s Note: Articles in Media Spotlight are excerpts from publications or broadcasts which show the industry what the publis is reading or hearing about fasteners and fastener companies.

The 1999 holiday season was full of talk about consumers doing their shopping on the Internet, but business-to-business online is a much larger market. And fastener web sites are proliferating.
�Forget Amazon.com and eBay. It�s General Motors Corp. and Ford Motor Co. that are leading the charge to transform Internet commerce from a blip on the economic radar into the heartbeat of capitalism,� Gregory White of the Wall Street Journal led off in his article on �E-ssembly Lines.�
White noted that within hours of each other last November GM and Ford �rocked Silicon Valley by unveiling plans to set up massive rival online bazaars for all the goods and services they buy � everything from paper clips to stamping presses to contract manufacturing.�
The automakers hope to save billions by replacing personal contacts and triplicate forms �with a global electronic forum where deals can be done almost instantly,� according to White.
Ford and GM want suppliers to use web sites to make purchases and sell surplus.
�A company that provides suspension parts to GM, for example, might use GM�s virtual marketplace to get a more favorable price on steel by piggybacking on the automaker�s enormous purchasing power,� White explained.
Harold Kutner, in charge of GM�s purchasing, told White he can�t dictate prices suppliers charge to other customers on the site, but he expects them to be lower. Slow sales would indicate the supplier�s prices aren�t competitive, which means �we may be looking for a replacement supplier,� Kutner said.
Automakers estimate online buying will cut $100 of its purchasing bureaucracy cost from each of its hundreds of thousands of purchase orders each year.
Ford�s web site will be autoXchange, and GM�s will be TradeXchange. GM is operating a demonstration site at gmsupplypower.com
GM spends about $87 billion with 30,000 suppliers.
�By dragging their vast networks of suppliers online, the automakers will be plugging in a big chunk of the nation�s economy,� White wrote. �That could help catapult E-commerce from a roughly $200 billion-a-year business to at least $1 trillion� within a few years, according to market research Dataquest.
White pointed out the potential problem for automotive suppliers. If multiple automakers require suppliers to do all their business on their proprietary sites, �we�re between a rock and a hard place,� one major supplier told White.
Suppliers also worry that they won�t be able to charge higher prices to smaller customers to make up for �discounts big auto companies demand.� There also is some question as to whether supplier software will be ready as fast as the automakers want to proceed.
A year ago GM president Richard Wagoner Jr. noticed the Christmas E-commerce phenomenon and was hearing about the Internet from his teenage sons. He set into motion the process of figuring out how GM should use the Internet.