GM Migrating Suppliers To Covisint Data-Messaging Service

Few companies have pursued machine-to-machine communication harder than General Motors Corp. The automaker is rolling out an ambitious program to migrate its more than 7,000 suppliers to Covisint Connect, a data-messaging service based on electronic business XML and business-object document standards. The rollout follows GM's decision earlier this year to test the ebXML spec in 14 areas, ranging from parts procurement to engineering.

GM will support ebXML through Covisint Connect in an effort to replace traditional electronic data interchange transmissions to communicate advanced ship notices, forecasts, and inventory levels with its suppliers. The service is being offered through Covisint LLC, an independent E-business service provider for the automotive industry.. The move is expected to remove cost, reduce complex transactions, and promote interoperability in the automotive supply chain. The messaging platform acts like middleware to give multiple partners the ability to use the Internet or disparate software to connect through the Covisint hub. "This is the lifeline of our procurement organization," says Bob Booth, process information officer for worldwide purchasing from order to delivery at GM. "We use EDI to send forecasts, ship notifications, and verify inventory levels. When we migrate to ebXML, clearly there is an opportunity to send other messaging over this network--like purchase orders, invoices, and financial information reporting to streamline our worldwide purchasing."

A few pilots during the past six months are now complete, and Lear Corp. has just begun to connect its sites to GM's vehicle assembly plants. "A year ago, 14 suppliers and the Big Three embarked on a project to take the industry to this type of electronic messaging," says John Crary, CIO at Lear, a GM supplier. "It will provide more consistency, so all that participate will do so through the same methods. It also will allow us to communicate with current, cost-effective technology. Everything is based on machine to machine communications. We transmit tens of thousands of EDI transactions daily."

GM transacts approximately 2 million EDI messages per month, roughly 5 million kilo-characters, Booth says. To assist its suppliers make the transition, Covisint will provide GM with a complete service to set-up its trading partners. Those suppliers without EDI capabilities need only register on Covisint's Web site to make the transition.

The initial 2-1/2-year agreement with GM, disclosed Thursday, represents between 5% and 8% of Covisint's annual revenue. The potential to make a significant impact in the automotive supply chain is substantial, especially with Lear, and Johnson Controls' automotive business, JCI, also signing on in the last 60 days, according to Bob Paul, Covisint's CEO. "We've moved out of the application specific businesses like auctions and catalogs business, perceived problem areas, to focus on delivering efficiencies in the automotive supply chain," he says.

Compuware Corp., Covisint's parent company, said this month that it expects to post its strongest financials since 2000 when it reports fourth-quarter results May 12. Wall Street analysts project $326.1 million for the three months that ended March 31, but the company estimates $337 million for the quarter. Covisint will represent a little more than $25 million of Compuware's projected fiscal 2005 revenue, which is expected to be between 5% and 10% higher than the $1.26 million in fiscal 2004.