Car part manufacturers face IT spending pressure

Car part manufacturers in the UK are to come under pressure to invest heavily in information technology.

Car part manufacturers in the UK are to come under pressure to invest heavily in information technology.

Arlene Martin

The pressure will come from the opening of a UK office for Covisint, the online exchange for automotive parts backed by Ford, General Motors, DaimlerChrysler, Renault and Nissan.

In order to exploit the opportunities that involvement in the exchange will generate, IT managers at first-tier car manufactures and suppliers will have to undertake a complex systems integration project.

Petra Gartzen, research director at Gartner Group, said, "To become part of the e-marketplace properly, first- and second-tier customers will be required to invest a great deal of money in technology, especially if they wish to fulfil orders as quickly as possible.

"Providing accurate order information involves a lot of technology. IT systems need to link directly and quickly to their warehouses, suppliers and internal manufacturing systems."

Gartzen added, "Involvement depends on individual e-business initiatives and how far these customers want to involve themselves with Covisint, whether they want to just put their brochures up or whether they want to become actively involved in the e-marketplace."

The Covisint e-procurement centre was established in February 2000 to allow car manufacturers and their supply chain to participate in global auctions for goods and services, thereby reducing costs and increasing profits.

The online exchange expects to handle $240bn in orders when it is fully operational. In the period between October and December 2000, the company conducted $700m worth of transactions.

Covisint's two main technology partners on the project are Oracle and online marketplace software company, Commerce One.

Asked if participation in an online marketplace would require substantial investment, a spokesperson for Commerce One said, "We can't give a straight answer on that."

He explained that the sum invested would depend on how much revenue the company obtained from the online marketplace and whether it had an equity stake in it.

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