Covisint is making steady progress in auto eCommerce.
Covisint, the automotive eMarketplace has shown steady progress despite many other exchanges across industry sectors failing miserably. The exchange already supports procurement and auctions and has recently added supply chain services. It also has plans to add higher level functionality in the near future.
Covisint’s European operations began in the first quarter of 2001. Already, Covisint has hosted auctions totaling $85 million and this figure should increase significantly as more European suppliers come on board. The majority of the initial transactions conducted will be for commodity items but the collaborative relationships involving design and planning between the vehicle manufacturers and suppliers will take time to setup and build. It is the development of these relationships that will really boost transactions through the exchange.
So far, the exchange has commitments to join from a third of the top 150 suppliers, with another 30 close to signing. Capturing these suppliers is likely to ensure second and third tier suppliers are also pulled into the exchange. Currently, vehicle manufacturers are finding negotiations over costs with their suppliers more difficult and so Covisint will become an increasingly important tool to derive future cost savings.
The proposed seamless design collaboration between suppliers and automakers seems hopeful in the short term. The vehicle manufacturers must ensure that they commit their procurement needs through this medium to ensure the future success of the exchange. Over the next couple of years Covisint should become the fundamental intermediary in the automotive space.
