New Approaches Speed Product Engineering

CAD tools, collaboration, and portals help automakers get cars to market faster
Automakers and their suppliers continue to leverage IT and the Internet for a growing number of supply-chain management and product-delivery applications. But the real advances in the last year revolve around product engineering. "Product development is probably the most critical IT strategy that automakers are pursuing right now," says Kevin Prouty, an AMR Research analyst.

At General Motors Corp., increased use of computer-aided design and product-development management tools, combined with reorganizing GM's engineering staff into a single global team, has cut what was a 40-month engineering-design process six years ago to just 18 months on average and slashed $1 billion in annual engineering costs. While GM's move to digital tools has been under way for the last four to five years, those efforts really came to fruition in the last year, says Tony Scott, the automaker's chief technology officer. "You'll see us announce a new vehicle every 27 days on average, and we couldn't have done that with the old technology," he says. GM has 20,000 engineers using computer-aided design tools and 17,000 using product-development management software.

Product-development collaboration is a critical element of a joint business venture between Ford Motor Co. and International Truck and Engine Corp. to build trucks and provide parts and service for both companies. Product developers are relying on collaboration tools such as Microsoft NetMeeting to make the venture work.

Carmakers also continue to expand their use of IT for improving connections to suppliers and customers. International Truck and Engine implemented a new supplier-managed inventory system that has increased parts-inventory turns from 38 to 118 per year, reducing inventory-management costs. GM relies on software from i2 Technologies, Oracle, and SeeBeyond to improve how it handles vehicle orders in its manufacturing facilities, reducing order-fulfillment lead time by half and inventory costs by 20%, and increasing delivery-date reliability by 22%.

Automakers and their suppliers are making greater use of portals to improve customer service. Next year, GM will roll out its DealerWorld portal, providing a single point of entry for dealers around the world. Parts suppliers are doing likewise. Six of Goodyear Tire and Rubber Co.'s business units have portals (the seventh is building one) for their dealers; several of these dealers account for more than half of Goodyear's sales.

Rank Company Revenue in millions Income (loss)
in millions
3 DaimlerChrysler AG $136,072 ($590) 4,200
19 General Motors Corp. $177,260 $665 1,630
46 International Truck and Engine Corp. $6,722 ($23) 637
51 Harley-Davidson Inc. $3,363 $438 370
57 Mitsubishi Motor Sales of America $25,939 $314 860
72 Saab Cars USA Inc. $1,800 $130 20
111 Subaru of America Inc. $4,100 -- 60
118 Goodyear Tire & Rubber Co. $14,147 ($204) --
133 ArvinMeritor Inc. $6,805 $93 463
177 American Suzuki Motor Corp. -- -- 33
197 American Axle & Mfg. Holdings Inc. $3,107 $115 80
276 Paccar Inc. $6,089 $174 700
283 Deere & Co. $13,293 ($64) 1,227
289 Cooper Tire & Rubber Co. $3,155 $18 300
361 Delphi $26,088 ($370) 670
370 Johnson Controls Inc. $18,427 $478 722
380 Reynolds & Reynolds Co. $1,004 $100 409
393 Briggs & Stratton Corp. $1,529 $53 85
414 Federal-Mogul Corp. $5,457 ($1,002) 600
420 Tower Automotive Inc. $2,467 ($268) 110
458 Cummins Inc. $5,681 ($102) 602
463 JM Family Enterprises Inc. $7,800 -- 419
Financial data is from public sources and company supplied.
Revenue is for latest fiscal year.
Employee data is from InformationWeek 500 qualifying survey.

Average portion of revenue spent on IT 2%
Companies providing customized solutions to customers 55%
Companies seeking IT patents, trademarks,or copyrights 32%
Hardware purchases 20%
Services or outsourcing 24%
Research and development 4%
Salaries and benefits 13%
Applications 34%
Everything else 5%
Average year-over-year revenue change -2.5%
Average year-over-year net income change -95.1%
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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