Automotive: Keep Pace On The Innovation Speedway

Vehicle manufacturers use IT to stay in tune with changing tastes

Beth Bacheldor, Contributor

September 19, 2003

8 Min Read

Ford has launched a Web site for its customers that provides E-mail alerts that can serve as service reminders or that can provide maintenance videos, vehicle warranty information, and links to their Ford credit accounts.

Electronic collaboration with suppliers and dealers isn't just the domain of the Big Three automakers. In 2003, Paccar Inc. built an enterprise portal structure for its 1,800 dealers worldwide, more than 1,000 suppliers, and thousands of customers. "Our intention is to be completely paperless and to be able to leverage information wherever it's at," says Patrick Flynn, VP and CIO at Paccar, which manufactures and sells heavy-duty trucks such as the Kenworth and Peterbilt brands. A logistics-management application on the supplier portal, called SupplierNet, lets many of Paccar's suppliers manage their deliveries. This will help Paccar and its suppliers streamline deliveries and pickups, consolidate shipments, and find the best carriers and modes of shipping for inbound deliveries. According to Flynn, Paccar expects the new app to save the company several hundreds of thousands of dollars with just its top 100 suppliers using it.

Paccar dealers can use a portal called DealerNet to automatically submit a financing request to Paccar, which can process and score it, and respond within a couple of hours. The quick turnaround is already boosting business. Earlier this year, the company was able to lure away a significant customer from another manufacturer largely because of its quick response. "We won because we were able to move the information from the dealer to Kenworth and back so quickly," Flynn says. "If we'd had to make phone calls and rely on faxes, it wouldn't have happened fast enough."

And because DealerNet uses XML, dealers can pull a Paccar document such as a financing contract off the site and automatically download it into their own IT systems. "The document is treated as a container of information, and the dealer doesn't have to rekey the information," Flynn says.

Built on Microsoft's .Net, Paccar's portal infrastructure also lets customers electronically submit questions regarding their specific trucks and get answers back in real time. For suppliers, there's automated matching of advance shipping notices and delivery receipts, so Paccar doesn't have to wait to receive an invoice before paying suppliers. The step eliminates all paper, saving the company time and money.

IT projects that improve the integration of business processes and the collaboration within a company and among its manufacturers, suppliers, dealers, and end customers have boosted visibility into the entire supply chain. At engine manufacturer Briggs & Stratton Corp., a newly integrated SAP ERP system that supports its European sales and distribution operations (the company has been using SAP for its North American manufacturing, sales, and distribution since 1998) means Briggs & Stratton can check inventories at locations around the world in real time. When an employee squeezes the trigger of a radio-frequency scanning device to log inventory in a warehouse in the company's Nijmegen, Netherlands, operation, the data is instantly shared with systems in Milwaukee.

"This visibility makes it easier to manage the business," says Richard Kolbe, VP of IT at Briggs & Stratton, which builds more than 10 million engines each year. "Our central warehouse in Milwaukee can easily view the inventories in the Nijmegen warehouse. Now if there's a chronic backlog for one part, for example, we can be much more responsive."

With an integrated ERP system supporting its worldwide operations, Briggs & Stratton can also leverage data from a variety of systems to improve products. "We can work with our warranty system to look for trends and early alerts," Kolbe says. "If certain issues start showing up, we can address the issue before there's a significant problem."

Data--and the practice of mining that data for trends and other information and then sharing it with others--is playing a significant role in Harley-Davidson Inc.'s business. According to Reid Engstrom, director of IS at the motorcycle manufacturer, as much as 70% of the IT projects the company plans will have some business-intelligence and data-mining aspects. "A lot of the value you get from transactional systems is pulling out the data and moving it into the data warehouse," Engstrom says. "A key initiative for us is how we leverage the information we have for each of the stakeholders in Harley-Davidson--the employees, the dealers, the customers, and the suppliers."

Harley-Davidson's Enterprise Data Warehouse team works with various business units, such as sales and marketing, to deliver business-intelligence applications. Self-service applications have been built for dealers to study their own performance as well as the company's overall sales and marketing efforts. Data culled from systems that house repair and warranty information has been leveraged to drive down the number of repairs per 100 motorcycles. As Harley-Davidson continues to add to its data warehouse and build new business-intelligence apps, Engstrom says, the company can fine-tune its motorcycles' performance and design--and ultimately, the business.

Fine-tuning the business should be the fundamental driver behind every vehicle maker's and vehicle supplier's IT project, particularly in such an intense and competitive environment.

"There's not a lot of room for not delivering value," GM's Szygenda says. "If you aren't a fast mover, if you're an old CIO that likes to build a 70-million code system that takes four years, you're going to get clobbered. If you aren't delivering value every three to six months, you've got problems."

INDUSTRY LEADERS Rank Company Revenue in millions Income (loss)
in millions IT
employees 12 General Motors Corp. $186,763 $1,736 1,804 16 Mitsubishi Motors North America Inc. $32,320 $308 1,060 32 Harley-Davidson Inc. $4,091 $580 395 33 DaimlerChrysler AG $156,838 $4,947 4,850 34 International Truck & Engine Corp. $6,784 ($536) 670 59 ArvinMeritor Inc. $6,882 $107 460 76 Paccar Inc. $7,219 $372 700 104 Delphi Corp. $27,427 $343 999 120 CSK Auto Inc. $1,507 $22 140 127 Ford Motor Co. $163,420 ($980) 45 146 JM Family Enterprises Inc. $7,800 -- 349 180 Tower Automotive Inc. $2,755 ($98) 110 219 AutoNation $19,479 $382 115 230 American Axle & Mfg. Holdings Inc. $3,480 $176 115 264 Johnson Controls Inc. $20,103 $601 850 265 Subaru of America Inc. -- -- 60 299 Federal-Mogul Corp. $5,422 ($1,629) 685 320 American Suzuki Motor Corp. $2,100 -- 38 347 Reynolds & Reynolds Co. $1,000 $79 730 360 Cooper Tire & Rubber Co. $3,330 $112 300 388 Goodyear Tire & Rubber Co. $13,850 ($1,106) 81 426 Cummins Inc. $5,853 $73 602 448 Advance Auto Parts $3,288 $65 200 493 AutoZone Inc. $5,325 $428 -- Financial data is from public sources and company supplied.
Revenue is for latest fiscal year.
Employee data is from InformationWeek 500 qualifying survey.

SNAPSHOT INSIDE COMPANIES Average portion of revenue spent on IT 2% Average percentage of industry applications and business processes that have Web-based front ends 41% Companies with real-time business processes in place 78% HOW COMPANIES DIVIDE THEIR IT BUDGETS Hardware purchases 18% Services or outsourcing 16% Research and development 4% Salaries and benefits 29% Applications 22% Everything else 11% INDUSTRY FINANCIALS Average year-over-year revenue change 7% Average year-over-year net-income change 215% DATA: INFORMATIONWEEK RESEARCH
See year-over-year shifts in business-technology practices for this industry. Compare and contrast this year's data with last year's.

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