GM turns to Internet for supply-chain management

WARREN, Mich. (Feb. 2, 2000) — Putting greater emphasis on co-ordinating its massive supply base, General Motors Corp. has enlisted the help of i2 Technologies Inc. for its online e-marketplace initiative. The automotive giant announced earlier this month that it will partner with Dallas-based i2 to provide supply-chain management services for its GM Trade- Xchange program.

GM TradeXchange was launched last November and is a virtual marketplace for various products and direct and indirect materials.

Working with e-commerce solutions provider i2, along with Commerce One Inc., a Walnut Creek, Calif., company that specializes in linking buying and selling organizations on the Internet, will allow GM to shift many of its supply-chain operations into a faster-moving Web environment.

“This is another clear indication of General Motors’ transformation into a fast global unit that’s driving electronic technology into every facet of our business,” said Harold R. Kutner, group vice president of worldwide purchasing at GM, based in Warren, Mich.

Building on Commerce One’s open-architecture portal solution, i2’s offerings will enable trading partners to collaborate more efficiently, improve responsiveness to customers, shave supply-chain costs, and reduce inventories.

By setting up the Trade-Xchange infrastructure, GM, which spends about $87 billion annually on direct and indirect materials from 30,000 suppliers, hopes to ease the supplier transition from a “push” system to one that is based on the “sense and respond” philosophy.

Sense and respond is an advanced supply-chain concept of switching from a practice in which vendors ship product through the pipeline from stockpiles of inventory, to a method of interpreting end-user demand and responding with a just-in-time delivery schedule.

“We have to be faster in the way materials are supplied to the plants, the way we build products, and the way we ship them to the customer,” Kutner said. “In our company and in others in the industry, there’s a significant amount of inventory between suppliers, assembly plants, and the dealers. We have to go from a push system to a sense system.”

Kutner noted there will be a fee for using some of the TradeXchange services, but the details are still being hammered out.

GM isn’t alone in its effort to bring the automotive industry up to Internet speed. A few months ago, Ford Motor Co. and ERP provider Oracle Corp. unveiled a similar initiative called AutoXchange.

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