It is well recognized that a lack of connectivity and integration is a key limitation in the progress of the supply chain in any industry sector, from consumer goods to health care.

While there are always individual company leaders which drive connectivity for their own benefits, rarely if ever has an entire sector really tried to address the issue, other than perhaps developing electronic communication standards, such as the VICS EDI standards in consumer goods to retail, RosettaNet in high tech, and others.

TThat's what makes the announcement earlier this month by IBM and a pair of automotive industry associations in India (Society of Indian Automobile Manufacturers (SIAM) and the Automotive Components Manufacturers Association (ACMA)) so interesting - and perhaps impactful. Together, they have launched a new communications hub that will connect all the country's manufacturers and suppliers electronically.

The Indian automotive supply chain is still characterized by a lot of manual communications in areas like purchases orders, invoices, forecasts and more - slowing down its speed and sometimes leading to errors. This is in part because a given supplier may be required to send EDI data in dozens of different formats and types to meet the specific requirements of different manufacturers - simply more than they can handle.

In this new program, suppliers will only need to create data in just one standard format, and send that to the Cloud-based network, called Auto DX. Manufacturers can either work directly with that, or IBM will transform the message into a manufacturer's own format. Some 14 different EDI transactions or document types are being supported. There are also web-based tools for those suppliers that are not EDI enabled.

There are many examples of private exchanges that do this sort of work for a given company and its suppliers. This new program is noteworthy because almost no one has been able to pull this kind of exchange off across an entire industry.
Surprisingly, there are more than 40 actual auto OEMs operating in India, as well as some 700 hundred suppliers. This obviously results in tens of thousands of potential connection paths, and even more when you consider that tier 1 suppliers will want to integrate with tier 2 suppliers, etc.

So the opportunity from automating these transactions is huge.

"There has been a lot of inconsistency with how transactional data is shared in India between manufacturers, suppliers and customers, resulting in processing delays, inaccurate transactions and other inefficiencies," said Sri Karumbati, CIO of SSS Springs and Deputy Chairman of the ACMA Technology Committee. "ACMA and SIAM are excited to come together with IBM and take advantage of their decades of experience in supply chain technology to help build a platform that enables all of our members to exchange data quickly, accurately and in a safe and secure manner."

Not Another Covisant?

Of course, to those who have been around for awhile, talk of a "hub" in any automotive sector may bring back bad memories of Covisant, the so called "exchange" launched by the Detroit OEMs in 2000. Launched with great fanfare near the top of the ecommerce bubble, Covisant was supposed to automate the procurement process for the OEMs, and had some saying the exchange would before long be worth more than the OEMs themselves combined.

(Supply Chain Trends and Issues Article - Continued Below)