Looking both ways. (WIP).

"Supplier collaboration has historically meant: send an EDI request to my tier one supplier. In a best case scenario, by the time the order information got down to a tier Four supplier, it was two weeks later," That's Jim Kowalski, group vice president, Automotive, at Manugistics Group Inc. (Rockville, MD), busily not mincing words about the lack of efficiency of the auto industry's supply chain. His company makes software that manages that supply chain, and he sees lots of opportunities For companies to cut costs and speed delivery. Kowalski is a man of many mantras. The one that sums up his view of where the industry needs to go is "collaboration not dictation."

The standard model has focused on dictation. The OEM notifies the tier one supplier of its production plans and the information eventually cascades down to lower tier suppliers that may have been making the wrong parts for a long time. Manugistics' model promotes two-way communication between all levels of the supply process. The company offers an e-hub in which all order information is shared with the entire supply chain simultaneously. In addition, suppliers feed data about their inventories and production capabilities back up to the OEMs. This allows the automakers to create a base line forecast or virtual inventory from which they can promise units to dealers. They don't have to worry about not being able to provide the right vehicles because they know beforehand what the suppliers can handle.

On the dealer side of the equation, Manugistics software allows DEMs to collaborate with dealers to create a demand forecast that can then be fed over to the production side, The upshot of the whole enterprise is another Kowalski mantra, "right car, right time, right price." The "right price" part comes in when a dealer has the car that the customer wants sitting on the lot and doesn't have to offer an incentive to move the metal, Mitsubishi implemented Manugistics software and Kowaiski says that the maker was able to cut 35,000 vehicles out of inventory, reduce logistics costs by over $2 million and lower incentives by $500 per vehicle. One thing the software can't do is ensure honesty. Kowalski says that one of the biggest reasons for maintaining costly inventories is the low levels of trust between companies. He vents, "Let's stop telling each other lies and plan for what is actually in the system rather than planning for what we are telling each other."