Covisint — The Only Game In Town - Analysis - Brief Article

Automotive Industries, Sept, 2000 by Andrew Cummins

This is probably going to tick some people off -- especially the uninformed. Anybody who believes they will participate in the reinvention of the automotive industry without joining the Covisint ranks is wrong. This is not to say you can't embrace e-commerce without it. Rather, you just won't be doing business with DaimlerChrysler, Ford, or General Motors.

I remember when the Covisint concept was rolled out for industry dissection. I was director of corporate communications for a tier-one supplier and conventional wisdom said that this was just another way for the OEMs to get into our pockets and steal our profits. Of course, at the time we didn't have a clearly defined corporate e-commerce strategy and assumed that we were about to be commoditized, along with every other supplier in the industry. We weren't alone.

But it's more than just procurement and, contrary to popular belief, reverse auctions are only a small part of the Covisint vision. They will be limited to those products and materials that today are already considered commodities.

By now most people understand that e-commerce is the use of the Worldwide Web, the Internet, and computer applications to store and access information within the global business environment. You can participate in e-commerce and e-business without Covisint, but you won't be part of the global supply chain.

There's still a lot of distrust on the supplier side. Get over it. It's here, it's happening and it's out of your control. There must be one common e-structure that organizes the entire supply chain. To minimize costs and maximize efficiencies by reducing inventories, handling supply logistics, speeding information, and reducing order-to-delivery time, Covisint is not an option. It's a necessity.

This concept of an automotive e-structure has ushered in a whole new focus on the customer. It understands that customers are entitled to design their own vehicles, select options and colors, and take delivery in a reasonable amount of time -- 18 days, to be exact. It can't happen without the total integration of the supply chain. it is impractical and inefficient to address one e-process at a time. A total, integrated e-structure must be executed including people, process, and technology.

I believe that Covisint is the tool that will make that 18-day car vision a reality. But it's still a "site under development." It doesn't have a leader, and its complexity is enormous. It also will force every OEM and supplier to rethink and reshape the way they do business, in everything from engineering to supply chain management and logistics.

Does the customer really care if he has an 18-day car? Possibly not right now, as today it's an impossibility. In the future it will be commonplace. But the vision of the 18-day car is also inventory driven. By delivering on a build-to-order system, costly inventories will be greatly reduced, taking billions of dollars in cost out of the system. It's a win-win situation for consumer and automaker.

In the past year we have seen countless e-business/e-commerce ventures spring up only to see them disappear overnight. Why? Because they are generally stand-alone forays into e-mania with great vision and little substance, lured as the 49ers were to the smell of gold. The gold is there, but it's difficult and costly to mine.

The e-structure that Covisint will deliver is what is needed to make all these fledgling ventures pan out. It will function as an entry point for suppliers with generic software and common process which will produce enormous efficiencies.

I can't envision an automotive industry that doesn't embrace this concept. We're in an e-world where everything is moving at light speed. How can this industry not capitalize on the global architecture of the Worldwide Web? It can't!

Last year, 93 percent of the $17.2 billion of venture capital investment went into clicks, not bricks. We need a common system that allows our bricks to move as fast as their clicks. As an industry we must share the vision and accept Covisint as our common partner. It's coming, it's real, and it's the only game in town.

Andrew Cummins is Editorial Director of Automotive Industries.