Automotive Network eXchange links carmakers to suppliers
By Tom Stundza -- Purchasing, 2/11/1999 2:00:00 AM
A North American automotive trade association, the Automotive Industry Action Group, along with several suppliers, has launched an electronic communications initiative.
The Automotive Network eXchange, or ANX, is a new communications technology that could have a major business impact on the global automotive industry and associated supply chains, including steel, according to Doug Buchanan, business technology manager for Dofasco in Hamilton, Ont. ANX is designed to upgrade the links between automakers and suppliers. The exchange's goal is to better integrate the electronic business transactions with redesigned business processes. The benefits of the service include cost and time savings, while potential strategic benefits include faster business cycles, innovation of redesigned business processes and new products, and industry-wide cooperation.
"Historically, electronic communications in the North American auto industry were driven by separate applications in such areas as engineering design, procurement, and finance," according to Buchanan. "As a result, a supplier may be required to connect to the same automaker by multiple networks and proprietary protocols that are dependent on the application."
Another problem is that suppliers and automakers often do business with each other. "The existing legacy communications environment is complex, costly, and inflexible, while communications service quality and security vary widely," says Buchanan. But structural changes to automotive business relationships are escalating the communications challenge. For example, tightly coupled just-in-time practices require much higher levels of reliability and around-the-clock availability.
"Increased use of suppliers to provide vehicle subsystems (as well as systems) increases the communications complexity by requiring parts suppliers to link with the subsystem suppliers in addition to automakers," points out Karl Schohl, ANX business manager for Detroit-based aiag. He points out that 50% to 60% of a vehicle's cost is accounted for in the supply chain that leads up to the automaker. "The challenge of improving supply chain operations, therefore, lies mostly outside the walls of any individual company," he says. "So if you only focus on internal solutions, you will fix less than half the problem."
The purpose of ANX is to increase the agility of the supply chain by improving communications and business practices with the intent of optimizing information and material flow, thereby reducing costs. One of the pilot programs involved DaimlerChrysler, Ford, and General Motors, and some of their suppliers in an automotive seat assembly application.
Under the umbrella of the aiag's manufacturing assembly pilot (MAP) project, work has been under way to increase the agility of the supply chain by improving communications in business practices and thereby improving information and material flow. This project involved a two-year cooperative effort of three automakers and 13 suppliers in multiple tiers.
"Before the MAP project, it took about four weeks to get information down the supply chain, or an average of one week per tier. The resulting late, inaccurate, and untrusted data led to considerable excess cost hidden in the supply chain. MAP showed that redesigned business processes, combined with electronic communications, could cut transmission time from one week per tier to about one day per tier," says Schohl. The MAP report indicated a potential savings for the North American auto industry of $1 billion a year--and that's about $71 per car in a typical 15-million production year.
"About 70% of this benefit came from redesigned business processes while about 30% came from electronic communications," notes Buchanan. "So electronic communications are important to achieving business process improvement, since the MAP project illustrated the benefits of integrating electronic business transactions with redesigned business processes."
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