The automotive experience of supplier portals

We have both a great opportunity and a difficult problem. Supplier portals – hosted websites that provide schedule, call-off and similar information electronically – are taking off. That's great for customers, and it can be good for suppliers too – except that there are no standards and portals are proliferating, meaning more time and money spent installing different software, logging onto separate portals... What looked like everybody's answer to the streamlined, real-time supply chain turns into, well, potentially expensive chaos. That's certainly the view at NSK Steering Systems Europe, the Tier One automotive supplier, making steering columns (conventional and electronic) for major OEMs like Toyota, Ford, Nissan, Jaguar, Honda, as well as the integrated cockpit and dashboard builders. Jon Dobson, systems manager, makes the point that electronic supply chain communications, automated machine-to-machine, have been around for years and working well in the form of EDI, with excellent standards, notably Odette, Edifact and VDA in Germany. He insists that supplier portals are an expensive but poor duplication "that's putting us back a decade." He, and many like him, mourn what looks like the impending demise of EDI in favour of what at first appear to be cheaper, easier, sexier web technologies. He blames the dominant supply chain players' poor adherence to the EDI standards for its failure to spread far beyond Tier One suppliers – and for the perception of EDI as expensive and complex. NSK has integrated and automated EDI with its customers, and Dobson says it works fine unattended. "If people used the standards as they were intended, EDI would be a really excellent tool and life would be extremely easy," he says. "The problem is that some customers just don't want to know. Their adherence to standards is abysmal – and that's putting it kindly." His is the voice of entirely understandable frustration. "The standards organisations went to a great deal of trouble to make the standards extremely flexible, and most of the time they're only used for schedules – this type, this number and this time. But then a customer wants an extra field, or to use an existing field in a different way. Software developers can cope with some deviation if enough of their clients are going to need it, but for the rest, it falls to suppliers like us to do the work." And hence the complexity and the cost. "When EDI works, it works brilliantly: it's literally fit and forget. What people forget is that EDI should be computer-to-computer communications, and the problem is, companies simply can't cope with all the variants." Hence businesses' attention turning to portals. It's not that Dobson objects to portals per se. "They're good for collaborative engineering and data exchange. But as a supplier, how many portals will I have to log onto?" he asks. "Toyota, for example, don't want to have standard Odette labels produced automatically and seamlessly through our EDI. They now want manifests, but from their supplier portal. Now I have to go onto the portal, give the user ID, get the right authorisation, download, print… Yes, we could automate that, but a lot depends on what you're trying to automate – interrogation, extracting data, downloading? What about ASNs, which by the way our EDI does automatically?. I've got to log onto another portal to deal with that." And so it will go on, potentially for more and more customers – not to mention the fact that he and countless others have already paid for their EDI. On the other hand, Jason Hargreaves, e-business manager at global automotive rubber components supplier Avon Rubber, points to the benefits of supplier portals. "We intend to implement Agilisys' Supply Web supplier portal and we expect big savings," he says. "One of the big automotive suppliers rolled it out across 70 sites and got ROI [return on investment] in nine months – and it's not a cheap product. We reckon it's going to cost us around £400,000 for our seven sites in Europe, including client licenses and supplier training." Savings for some... What kind of savings is he looking for? "We're expecting around 30–40% reduction of materials costs from this, compared with 20–30% from our European ERP consolidation project." That's from supply chain automation and visibility – and there are other benefits. "It will automate electronic delivery of schedules to our suppliers direct from our system, and they'll also be able to download our barcodes, for example, ready for our goods in." Ah yes: but what about supplier time and costs? "We'll need to get into discussions with our suppliers, but the technology is just web browser, PC and printer hosted internally off the back of our AS/400," says Hargreaves. "And they'll see benefits too. They'll get immediate visibility of changes to our schedules, for example, so that will minimise issues like special transport charges and who picks up the costs. Also, we'll be able to resolve problems much earlier and more quickly because we'll all be looking at the same, up-to-date information." It's an aside, but for Avon the supplier portal is just one of several potentially very valuable projects, all of which have been spawned by first taking the giant step of consolidating its ERP across all seven of its European plants. For the last two years, the company has been moving from its disparate legacy systems – Sanderson Pics in Chippenham, Mapics in France, Movex in Spain and no ERP at all in Portugal and the Czech Republic – to Agilisys, rumoured to be about to rename itself Infor, following the acquisition of that company and brand. Meanwhile, Thomas Neubauer, sales director at German supply chain portal services company SupplyOn, says that fears over portal proliferation is precisely why his company was set up, offering a single route to e-sourcing and 'Web EDI'. "With 10 buy-side companies – OEMs and Tier One automotive suppliers – and 5,600 sell-side companies [suppliers] on our marketplace, we have created a [de facto] standard, and just one portal to go to for everything." SupplyOn was formed just four years ago, with Siemens VDO, Bosch, Continental, ZF and SAP as main stakeholders, to host and operate mostly SAP-based applications for the European automotive industry. Beyond its Web EDI, which is based on the Seeburger suite, it also runs web systems for procurement (e-sourcing, with all the RFQ processes, e-auctions, supplier performance tracking etc), engineering document management and exchange and secure virtual project environments. "e-sourcing and web supply chain management are our biggest services," says Neubauer. "Companies like Bosch and Siemens and all their suppliers didn't want to have many different portals, systems and standards. They also wanted to reduce their development investment and to make it easier for suppliers to comply." And as for the suppliers: "If they are required to use multiple portals, they have costs, training on different applications, different passwords and so on… Our agenda is to get standardisation for suppliers. We can also make it much cheaper for the market because the investment is shared." How much cheaper? Neubauer claims that SupplyOn can save OEMs, suppliers and their suppliers "up to 50%" of the cost of developing and implementing portal systems. And that's not only for SAP users, although he concedes that's where the vast majority of the firm's expertise lies. "We can do the integration for other ERP systems too," he adds. "And we do the software customisation, release management, and feed back requirements into SAP." What's more, the company also handles all the issues around bringing suppliers online. "Our OEM and Tier One clients give us their supplier lists. We take care of the suppliers for Rover and GKN: we train them, activate them, provide documentation..." What about the actual costs for the suppliers? "They're based on value to the supplier. If there is no value because that supplier doesn't link to any other customer on the marketplace, then there is no cost to him. If they are connected, then there is value and so cost. It's very fair." It is indeed: perhaps there is some light at the end of the VPN tunnel?