Collaboration Is Built on Trust
Once collaboration becomes a reality at the business level, it can begin to radiate out to customers and suppliers.
The key, says Data, is to collaborate early in the manufacturing process. For example, the Next Generation Truck Program allows buyers of commercial trucks to participate directly in the design process. “If you’ve already got a certain component on the shelf, there’s only so much cost you can take out of it,” Data explains. The program has shaved two years off the traditional five-year time period it takes to get trucks from the computer screen onto the highway. As result, the company has already saved $40 million, and expects to save another $160 million in the next four years. In addition, International has improved on-time delivery from about 60% to 90%.
That kind of bottom-line result has allowed the Engine Group to increase its IT budget, even as the overall IT budget has contracted, reports Schlusemann. Next year, his division is bringing in new CAD workstations and recently acquired a new plant in South America.
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The company has also created an online portal called Compass that allows suppliers to offer ideas about how to reduce costs (outside of the current contract). That idea flows though all the various functions and, if approved, results in a savings that is shared 50-50 between International and the supplier. “If we reengineer something, then we both win,” Data explains. “We change a business process and realize efficiencies but it’s not a one-way deal.”
The company has also reached out to its customers in the automotive aftermarket. Data’s ultimate goal was to save money by managing the company’s inventory of parts directly at dealerships. Yet he knew that these independent businessmen did not relish the thought of meddling for its own sake. His solution was to offer them systems to manage their own customers’ inventory. “The system allowed them to raise their own revenue and reduce inventory. Once they saw the result, they wanted to work with us.”
Collaboration, Data insists, is about building trust along the entire supply chain, piece by piece. “We are not all there by any means, but we have a lot of the pieces.”
As both an OEM and a Tier 1 supplier to Ford Motor Co., as well as having a hand in the aftermarket and leasing businesses, International is uniquely positioned to gain efficiencies by collaborating across the supply chain. As Data points out, collaboration is a matter of combining several pieces in order to create a combination that cannot easily be matched by competitors. “If you’re just good at one thing, the competition can easily reproduce it. It’s how combine a number of elements to create a unified strategy that sets you apart.”
Eva Marer is a freelance business and technology reporter based in New York. She covers investments, personal finance and corporate technology issues for a variety of trade and consumer magazines. Contact her at [email protected].