Sept. 11, 2000

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Supplier Looks Overseas To Avoid Labor Pains

By Bob Wallace

ike other big auto-industry suppliers, TRW Inc. is under viselike pressure from its automaker customers to cut costs and improve business processes. The $17 billion component maker is responding with a series of international supply-chain IT initiatives: It's shifting more development and support offshore, prepping a Web site for exchanging information with business partners, and planning eventually to offer all business partners faster and secure access to the data needed to streamline design, engineering, and manufacturing.

A search team made up of CIO Mostafa Mehrabani, top IT people, and engineers survived 10 days of blistering springtime heat and stifling humidity in a tour across India to evaluate software and services providers, eventually inking a partnership with Satyam Computer Services Ltd.

TRW's goal was to find a supplier that would enable the Cleveland company to move most of its IT work offshore, thus avoiding the headaches of hiring and retaining skilled workers in a tight U.S. job market. "Although the industrywide average of work done offshore is about 30%, our objective is to reach 70% because we can't find the IT professionals we need and because we want to offload more design and engineering," Mehrabani says.

Like other top-tier auto-component makers, TRW is offloading the engineering of individual parts so that it can focus on providing automakers with higher-value modules, such as cockpits, which are assemblies of many parts. This, in turn, lets the big automakers build cars and trucks more quickly. "With all the pressure on automakers to build cars to customer orders more quickly, these companies need their top suppliers to deliver modules, rather than tons of separate pieces, to speed vehicle assembly," says Tim Noble, senior manager of the auto-supply chain practice at Deloitte Consulting. "The more intense the pressure to produce to order becomes, the more the automakers will favor suppliers that can provide modules."

In an effort to cut costs and streamline buying and selling, TRW is phasing in a new Web site that it hopes will be used by all its suppliers to obtain unclassified information about the company. "We hope we can drive our entire supply chain to use this technology, although we're really just pouring the foundation for the new TRW.com now," Mehrabani says.

Under a related initiative, the company is creating TRW Enterprise Directory and Security Services, a public-key infrastructure that will let TRW provide partners with secure access to selected information on the TRW Global Network using standard Web browsers. TRW plans to use this to let customers get tailored, near-real-time access to product and pricing information. TRW is also undergoing a consolidation initiative expected to save millions, combining 86 data centers worldwide into just six regional ones.

With so many key business-enabling IT projects under way, does Mehrabani feel overwhelmed as he approaches the end of his second year at TRW? Apparently not, because he still retains his sense of humor. "I had heard that the average life of a CIO was about two years," he quips. "If that's true, I guess I'm nearing the end of the line."

Return to main story, "Industry Optimizes Supply Chains"

Illustration by Jeffrey Fisher

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