GXS Insights

SaaS—The Biofuel of Automotive IT

By Mark Morley, Industry Marketing Director, GXS

Today’s automotive industry is going through a radical transformation. Original Equipment Manufacturers (OEMs) and suppliers are under increasing pressure to reduce costs as competition increases through globalization. The OEMs are redesigning manufacturing and supplier networks to embrace lean manufacturing principles to become demand driven. This restructuring by the OEMs has had a direct impact on their supply chain. A shift in responsibilities has now emerged across all tiers in an OEM’s supply chain. The Tier1 suppliers are now evolving to take on greater roles in product design, vehicle assembly and supply chain management.

In addition to taking on more responsibilities, the Tier1 suppliers have to develop their own globalization strategies in order to support the OEM’s move into new emerging markets such as Eastern Europe and China. The expansion creates challenges for the Tier 1 suppliers who have to establish a B2B infrastructure at manufacturing plants in the newly entered markets.  A SaaS delivered B2B infrastructure would accelerate implementation time frames for new supplier plants in regions with low IT infrastructure support capabilities. In addition to simplifying B2B support requirements, a SaaS based supply chain management environment will also help smaller companies who may be working on a short-term basis with their customers. For example, using a subscription based SaaS environment, short-term suppliers can leverage the hosted B2B environment by paying only a monthly subscription fee rather than having to invest in perpetual software licenses. 

Automotive OEMs expanding aggressively around the world will have to find new ways to support their supply chains to ensure success. Having to establish electronic communications with a supplier community with each new market is costly and time consuming. OEMs that can provide a B2B infrastructure that is easy to deploy and available anywhere in the world will be able to fully engage with all their suppliers, even at the lowest tiers of the automotive supply chain.

SaaS-based B2B environments have the potential to completely change how companies interact with each other, removing traditional IT infrastructure barriers. Once a SaaS-based environment has been established, it is very easy to roll out to other potential trading partners.  From an automotive perspective this could include third-party logistics providers who transport the vehicles to retail dealerships and the spare parts to aftermarket service locations around the world. In summary, SaaS has the potential to transform today’s B2B platform used within the automotive industry, providing companies with access to the same information, anytime, any place and anywhere in the world using a simpler, easier to manage infrastructure.