Suppliers to the automotive OEMs have two choices concerning the auto companies' e-commerce bandwagon: Join now, or fail later. Like it or not, e-commerce is arriving for automotive suppliers. And some of it isn't pretty.
Consider this quote from Raymond W. Pollard, director of sales and marketing for General Motors Corp.'s TradeXchange, a suite of Internet-based business-to-business trade sites. "E-commerce is going to turn everybody's beloved engineered product ... into a commodity."
Now there's a statement sure to chill any rubber product maker's heart. Pour your energy, your money and your soul into creating something that fits all the auto industry's rigid demands, and in the end all you have is a commodity, as far as the auto OEMs are concerned. So much for self-esteem—let alone survival—when a competitor in a low-labor cost nation can beat your price in an online auction.
E-commerce does offer some advantages for automotive suppliers. The Internet can reduce costs by enhancing communication, from order entry to design transfer to inventory and payment tracking. Auto suppliers should embrace the Internet for that matter alone.
That's the promise. The threat is that online auctions reduce suppliers to the one common denominator—price. If it takes a year, if it takes five years, e-commerce will happen for all automotive suppliers. Any company that wants to compete in the automotive sector needs to get on board now, because the auto OEMs will leave you behind with nary a goodbye.