Is Automotive Falling Behind The Internet Curve? – suppliers, manufacturers need to develop a reliable business to business strategy

Is Automotive Falling Behind The Internet Curve? – suppliers, manufacturers need to develop a reliable business to business strategy – Brief Article

Now that the consumer Internet balloon has popped and come crashing back to earth, consultants at KPMG have released a study that encourages OEMs and suppliers to put aside their tears and work together on a B2B e-commerce strategy. Already, the study warns, the auto industry is far behind the financial services, chemical, pharmaceutical, electronics, consumer markets, and communications industries in terms of e-business progress. This measurement is based on advances in technology and the degree of senior management involvement in e-business implementation.

KPMG says it found that just 35% of automotive senior executives were involved in e-business initiatives. This compares to the 58% average cross-industry average. Cost was cited as a major reason by respondents, but KPMG’s Automotive Practice national director, Brian Ambrose, suggests another variable is at work.

“Waiting to see what the other guy is doing isn’t a sound strategy in the e-business world,” he says, “because those who take a leadership position stand to gain the most in terms of strengthening their balance sheets for acquisitions. Leaders will be rewarded, and followers will be forced to merge.

However, suppliers say they are not comfortable with the digital exchanges, believing them to be overrated, and nothing more than a more efficient way for OEMs to whipsaw them for even greater price concessions. In addition, Tier 1 companies are being pressured to adopt this technology, while many of their suppliers don’t have the capital to make the transformation. Ambrose says this will lead to further consolidation of the supply base.

“This will result in tremendous consolidation, and larger and stronger Tier 1s. There already has been some consolidation in the supply community, but the technology question will spur addition acquisitions,” he says. “It’s just around the corner.”

Ambrose says the economic downturn will make the shift to digital technology even more painful, but also more necessary along the entire value chain. And it will be difficult to earmark the money for this purpose. However, he feels it is necessary if the industry is to cut the waste out of its administrative, transactional and logistical processes in order to meet Wall Street’s–and the customer’s–expectations

COPYRIGHT 2001 Gardner Publications, Inc.

COPYRIGHT 2001 Gale Group