Tier 1s want their suppliers connected

Tier 1 suppliers participating in a recent survey say they currently select only 15% of their suppliers based on their ability to handle e-business. But within three years, they will select 77% of their suppliers based on the criteria.

The Center for Automotive Research, the Environmental Research Institute of Michigan and e-business application developer SupplySolution Inc. sponsored the study of 16 Tier 1 suppliers with average sales of $4.4 billion and each with an average 1,300 production suppliers.

The survey also found that Tier 1 suppliers expect to save more money from e-business than they spend on it, and that capital spending on e-business will climb from 3% of total expenditures to 13% within three years.

When their e-business plans are implemented, the suppliers estimate they will reduce costs by 18% in the area of engineering and product design (compared to 4% today), 16% in procurement (compared to 7% today) and 19% in quality assurance (compared to 3% today).

The Tier 1 suppliers also say that concern about the longevity of e-commerce providers is causing their suppliers to resist e-business initiatives.