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November 8, 1999

Exchanges Drive Auto Industry Shift

nline exchanges are helping to reshape the auto industry, which is struggling to change from a mass-manufacturing business model to one driven by consumers, who are clamoring for built-to-order vehicles delivered in days, rather than months. "The auto industry has had a very long history of saying to consumers: 'You buy what we build,'" says J. Ferron, head of the automotive practice at PricewaterhouseCoopers. "But consumers are saying 'No, you build what we want to buy.'"

The shift owes a lot to the Internet, which has put tremendous pressure on automakers to speed their processes as more consumers find a wealth of Web sites designed to aid the research, shopping, and ordering of self-customized vehicles. Speeding the buying and selling process with suppliers will help get consumers the vehicle they want faster and at lower prices.

"Exchanges can help create efficiencies in the manufacturing operations," says Chris DeNove, an analyst at J.D. Power and Associates. That's because automakers build products using parts from tens of thousands of suppliers worldwide. Bringing suppliers together at a single site promises to speed procurement--which in turn speeds manufacturing, which speeds product delivery to consumers. "The auto industry is becoming a forerunner in the use of exchanges," says Robert Parker, E-commerce service director at AMR Research. "They're realizing that six weeks to deliver cars built to consumer specs won't cut it much longer."

return to main story, "Exchanges Get Into Gear"

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