Automotive Web site hits the fast lane

By Staff -- Industrial Distribution, 1/1/2001

Newton, Mass.-Covisint, the giant Internet e-commerce portal begun by five of the world's largest automakers last February, revved up to full throttle as the year began. The site, the result of an agreement just a year ago among the five partners, has had transactions of $400 million by over 40 companies as of early December, according to spokesman Thomas Hill.

"Transactions could approach 1,000 in January 2001," Hill said.

With Covisint technology, New York investment firm Wasserstein Perella estimates America's "Big Three" will cut development time of new models in half, to 18 months, and save about $18.5 billion by putting engineering and design onto the Internet.

Watching Covisint are AK Steel, BASF, Borg Warner, Dana Corp., Federal Mogul, Lear Corp. and Visteon. They are development partners on the site.

The principals of Covisint are hoping auto market suppliers get on track with e-commerce but, according to an Arthur Anderson study for The Detroit News, 40 percent of suppliers have yet to define an e-business strategy. Many of those same auto industry suppliers are focusing on the uses of Covisint and other Web sites.

The site is friendly to second- and third-tier industrial distributors for several reasons, Hill said. "For many years the auto industry has used the EDI system, and OEMs and Tier-1 suppliers were supposed to train on down [in EDI]. That didn't happen. Also, the expense doesn't change for EDI for small or large companies. It's a large expense for all. With Covisint, all they really need is a Web browser and Internet connection."

Larger suppliers also have larger legacy systems, computer programs for selling, billing and shipping that they have used for years. Smaller companies with less involved software will integrate that much quicker into Covisint, Hill said. Smaller distributors can "pay as they go," as well, with Covisint hosting sales "events" for the distributor, one at a time.

"[Distributors] will have a window on the world of the OEM design meeting, actually get a chance in near real time to interface with auto designers," Hill said.

Downloadable forms and templates such as production schedules, logistical forms and order forms will soon be available to distributors to ease the transition, Hill added.