There are three automotive industry ‘mega-trends’ at the moment, firstly a need to improve economy and reduce emissions, secondly a need to improve safety and finally a need to improve ‘consumer connectivity’ to in car entertainment systems.  The last trend is being driven by consumers who are keen to connect their mobile phones and MP3 music players to a car’s entertainment system.  Out of these three trends, the one that is getting the most coverage in the press at the moment is related to how the car manufacturers are going to improve the economy of their vehicles and how they intend to embrace new hybrid engine technologies. 

In recent months there has been a significant move in the mindset of the leading car manufacturers to embrace new hybrid and electric vehicle technologies.  This has mainly been driven by environmental pressure to reduce green house gas emissions and consumer demand for cheaper to run cars due to the high cost of fuel.  Some of the car manufacturers have decided that they can shift existing car stock by simply offering incentives, one that appeared a few weeks ago was from Chrysler who offered potential customers a new fuel card which effectively fixed the price of their fuel at $2.99 for three years, if the price went above this level which it inevitably will, then Chrysler would pick up the bill.  Naturally this is a knee jerk reaction to one of Chrysler’s more popular brands, Jeep, who saw a 50% drop in some of their vehicle sales in the first quarter of the year.  However what Chrysler seem to forget from a consumer perspective is that this might be helping to shift stock but the consumer will have to absorb the heavy depreciation costs, servicing costs and the negative image that is starting to emerge from running fuel thirsty SUVs.

Over the past few weeks there have been numerous press releases from car companies starting up new joint venture projects with high tech industry companies with a view of developing long life Lithium Ion batteries for use in cars.  Nissan have announced a new partnership with NEC, VW are now working with Sanyo and Toyota have decided to build three new factories in Japan, solely to manufacture Lithium Ion batteries for their next generation hybrid vehicles.  For the High Tech industry sector this increased interest in long life battery technology has proven to be an ‘unexpected’ revenue earner for them and this is a very good example of how two different industry sectors are working more closely together to provide consumers with more fuel efficient, greener cars. 

Electric powered vehicles have been around for many years now,  Ford produced the Think! Electric vehicle in 1999, shown above, and GM developed the EV1 at around the same time.  Both cars suffered the same problem, they weren’t blessed in the looks department !, and their batteries were not able to hold their charge for very long.  In fact GM’s EV1 was so expensive to produce that they ended up leasing their vehicles to consumers as they were prohibitively expensive to buy.  As a result of poor lease sales, GM pulled the plug on their electric vehicle projects and this was probably one of their biggest mistakes in recent years, and as shown by the pic below, their electric vehicle project ended up in the scrap yard. GM are so keen to secure market share in the electric vehicle market that they are determined to bring their new VOLT vehicle to market as soon as possible and they are working with a number of leading high tech business partners to make this happen, no matter what the cost to develop.

One of the leading electric vehicle manufacturers at the moment is TESLA, who build an electric car based on the Lotus Elise.  The car is rumoured to run on 8000 Lithium Ion mobile phone sized batteries, provides similar acceleration to a normal petrol driven car and retains a charge for around 200 miles of driving.  In addition, for an electric car, the TESLA is actually very desirable to own as can be seen below.

The XPRIZE corporation recently setup a competition to see who could develop the world’s first 100MPG car and already 60 teams, including leading car manufacturers, have entered the competition to win the $10Million prize fund.  The aim of the prize is to force industries to look for ways to solve complex problems and turn concept ideas into production reality.  In case you think this is a crazy idea, Richard Branson and his Virgin Galactic company won the last XPRIZE competition for developing a sub-orbital space rocket which is hoped will kick start the space tourism industry.

Which got me thinking, if companies are incentivised to develop fuel efficient and green vehicles by entering a global competition, what would happen if these companies were incentivised, some how, to develop greener supply chains.  What if there was some sort of global competition where companies could implement any form of B2B technology or services and at the same time prove demonstrable returns, either through improved supplier performance or improved exchange of information across a global trading platform.  Perhaps offering prizes to the company that can ramp up the most suppliers in the shortest amount of time, reducing the most number of paper based transactions in one year or which company can achieve the highest percentage of visibility of transactions across their supply chain. 

So I wonder how many companies would be interested in entering the  ‘Global B2B Challenge’ or perhaps more appropriately the ‘B2B Olympics’

Over the weekend I saw an interesting programme on TV about the levels of Broadband adoption amongst small businesses.  This programme focussed on one particular country where small companies felt their business was suffering due to inadequate high speed internet connections and a communications infrastructure that, in places, was heavily dependant on a network of telephone poles to connect remote regions of the country.  In fact the programme even compared the telecommunications infrastructure to one found in some third world countries. 

Now this particular country’s communications infrastructure is not as unreliable as those in some emerging markets such as India, as depicted in the image below, but the telecommunications infrastructure in the country highlighted in the programme is very outdated and leading experts estimated that it would cost £15Billion to provide a new fibre optic based communications network in this country.

This particular country does tend to suffer from one or two significant storms each year and internet users in remote locations have to hold their breath to see if their internet connection is still live after the storms have passed.  The main telecommunications provider for this country claims to have 98% coverage of the country. However the actual speed of the connection varies considerably and in many cases companies are having to relocate to major towns or cities in order to improve the speed of their internet connection and more importantly the speed of how these companies can respond to customer orders or queries. 

So where is this country I hear you ask, well it is the UK!

According to a recent article in Business Week, Northern European countries have one of the highest broadband penetrations in the World. For example, Denmark, Finland, Sweden and the Netherlands all saw broadband penetration rates over 30% at the end of 2007.  The UK, Belgium, Luxembourg and France are hot on the heels of the top four and these have penetration rates above those of the U.S or Japan.  The global Boradband penetration is shown below with leading broadband adoption countries shown in dark green.

According to a recent press release from Forrester, they estimate that the top four North European countries today will see penetration levels increase to 85% by 2013. In the UK, the broadband market is dominated by BT and due to the EU imposing new regulations on the telco providers, they are having to open up their networks to other companies wishing to provide Broadband connections.  There are two key factors limiting the speed of the UK broadband network, firstly the copper wires used for the point to point connection and secondly the distance from the telephone exchange.  At the moment you can only get a reliable broadband connection in the UK if you are within a 5 mile radius of a telephone exchange. 

Now in the rural parts of the UK many smaller businesses are starting to suffer due to the fact that their businesses are more than five miles from a telephone exchange.  This is a major concern to smaller UK businesses in rural areas who can see the benefits of being able to conduct business across the internet but they are limited to using the much slower dial up connections.  In a broadband speed experiment conducted on the TV programme, it took nearly 40 minutes to download a video from the BBC website, this business was just over 5 miles from his nearest telephone exchange.  Meanwhile a colleague of his who was about 1 mile from the exchange was able to sit in her garden and wirelessly review the video in real time.  So a simple example, but for other companies or indeed the growing home working community in the UK, the infrastructure needs to be significantly improved. 

Now the mobile network operators have spotted a gap in the market and they can now provide USB based wireless modem connections however again the mobile phone coverage across the UK, especially in rural areas is not very fast.  However for other people these USB based broadband connections will change the way in which people work, provider greater freedom and less reliance on having a fixed line broadband connection.

Another example given on the programme was of a computer animation company who were working on a new series for Disney.  In order to get a better quality of life the owners of the company decided to relocate their design studios to Truro in the South West of the UK.  They have now found that their business is being hindered by the slow internet connections available in this part of the UK.  They are currently having to send completed episodes of their animations on DVD to another office in London,  by courier, so that they can then be uploaded to a server and then sent across the pond to Disney Studios. 

So the adoption of eCommerce amongst smaller companies is in part being hindered by poor or unreliable internet connection speeds here in the UK and the only way this can be improved is by continued investment in the communications infrastructure.  BT are currently investing millions in the development of their new 21C communications infrastructure , lets hope they do not forget the thousands of smaller businesses located in rural parts of the UK and their desire to be connected to what will become one of the world’s leading IT infrastructures when it is completed.

I am of course referring to the global economy. The banks here in the UK are predicting that we are on the verge of a recession, interest rates are likely to remain at the same level until 2010 and the price of petrol has reached £5 a gallon!

Now if you are a relatively small company, comprising of perhaps a couple of manufacturing plants or a chain of ten retail stores, how do you remain competitive in this tough economic climate and how do you survive any impending recession that may be knocking on your door?. You can just imagine that there are board rooms all over the world full of executives trying to work out their strategies for riding the recession rollercoaster, looking for ways to reduce costs, restructure their businesses and at the same time try and remain competitive in order to make that all important and often elusive operational profit.

Normally when recessions come knocking on the door,  the larger global companies will delay implementing large scale IT projects, they will look to reduce costs by outsourcing key business processes and make their creaking IT infrastructures last until the economy picks up again.  But who knows when this will happen and in the meantime how are the smaller companies suppose to restructure their own IT infrastructures in order to reduce costs and keep their businesses above water.  Again, outsourcing is an efficient way to reduce IT related costs and streamline supply chain strategies, however outsourcing, especially from a B2B perspective, has traditionally been the preserve of the much larger companies. 

Until now that is, GXS has recently introduced a Managed Services offering called MX which allows companies of any size to outsource their B2B infrastructures.  But what are the business drivers for the smaller companies wanting to outsource their B2B infrastructures. Well, let us take a quick look at some of the more important business drivers and areas of a business where B2B outsourcing can help the smaller company.

Company Restructuring – each industry sector is experiencing company divestitures, merger & acquisition activities or more general company restructuring.  Often through a potential acquisition for example there will be a period of consolidation, rationalisation of departmental infrastructures.  In a similar way, IT and B2B infrastructures will have to be reviewed to see if cost savings can be made by for example having a common infrastructure or outsource B2B services to a single trusted vendor rather than having to deal with several vendors.  B2B outsourcing offers a means of managing your B2B trading platform during a period of change.

ERP Projects – many companies today, no matter what their size, will have a wealth of information locked away in back office systems such as ERP and CRM solutions.  As described by my colleague Steve Keifer in a couple of recent ERP related posts, ERP information will normally stay within the confines of an enterprise and yet a company is expected to work seamlessly with perhaps hundreds of different trading partners who may find this ERP information helpful, if only they could get access to it.  B2B outsourcing offers a way of unlocking ERP information and allows the relevant pieces of information to flow uninterrupted up and down the supply chain.  Many companies will not have the internal resources to undertake this kind of integration project, B2B outsourcing, especially through GXS Managed Services MX allows seamless ERP to B2B supply chain integration to take place.

Manual Process Improvement – in today’s ‘green’ culture, removing waste, especially paper from a supply chain is one of the key goals of B2B automation.  Implementing an e-Invoicing solution for example helps alleviate the need to send paper copies of invoices across a supply chain, which ultimately helps companies to get paid much more quickly.  Hosted web based form environments allow your suppliers, no matter what their technical capability, to complete order forms etc in a very short time, reducing the need to re-key in form related data and ensure that all transactions can be accurately traced across all trading partners.

Improve Global Connectivity – many automotive companies for example are being asked to support their customers in new emerging markets where a multitude of different communication standards or document formats could be in use.  GXS Managed Services MX is built on GXS Trading Grid, so companies will have access to a B2B platform that can connect to any trading partner around the world, no matter where they may be located. GXS has operations in over 18 countries around the world.  As a result, GXS can support your supply chain operations in Asia Pacific, Europe, North and South America.

Trading Partner On-boarding – B2B outsourcing can help to improve the way in which you work with new trading partners and it can help reduce the time it takes to get new partners up to speed with new B2B technology and integrated within a company’s B2B infrastructure.  For new customers projects, adopting an outsourced B2B strategy will allow your trading partners to engage in projects much more quickly, this improving the efficiency of your supply chain.

Legacy System Upgrade – B2B Outsourcing also allows a company to upgrade legacy and outdated IT infrastructures with a state of the art B2B platform. The outsourced environment shields users from learning about how to manage new connectivity options or document translation standards. GXS provides the ideal opportunity to employ new Software as a Service (SaaS) or Service Oriented Architecture (SOA) based B2B environments. These are easy to deploy  to trading partners as there is minimal implementation required and a company can be rest assured that every trading partner is using an identical ‘version’ of the B2B platform.

If you feel that your company, irrespective of size, could benefit from outsourcing your B2B environment then please feel free to visit our website for further information, click here to visit the GXS Managed Services MX specific page.  In further blogs we will take a more in depth look at how some other recession related business issues could be addressed through the adoption of leading edge B2B services & technology.

Last week I was fortunate to be able to visit China for the first time.  I was presenting at our ASPAC CIO summit in Hangzhou which is about two hours south of Shanghai.  The event brought together about 20 of our key customers in the ASPAC region to allow us to update them on GXS, our solutions and an opportunity to hear from some customers and partners on how they are managing their B2B infrastructures.  It was interesting for me to hear first hand about some of the challenges they faced, especially from automotive and high tech companies, on how they have established their supply chains in this region.  Establishing these supply chains has been even more difficult for western based companies who not only have to work in a completely different culture and environment but they also have to overcome some significant IT related infrastructure challenges as well. 

China has been making great strides in improving both their IT and transportation infrastructures recently, both are key enablers for the growth of their economy. Take their transportation infrastructure for example, I landed at Shanghai airport last Wednesday morning, their International Terminal was only a few months old, nearly half a mile long, and apart from our flight arrival, the terminal was more or less empty when we arrived.  The airport is connected to the centre of Shanghai via a state of the art Maglev train system, allowing you to get to Shanghai in less than 30 minutes.

To the south of the airport a new three lane toll road allows you to reach the southern regions around Shanghai with great ease. I must have travelled on this toll road for at least eighty miles and I hardly saw any other cars.  No doubt in a few years time, as more and more cars find their way onto these roads, they will become as busy as other major highways around the world. The key thing here is that the Chinese transport authorities have had the foresight to put this superb transportation infrastructure in place now to allow the region to start planning for future growth.  There is no doubt that the Beijing Olympics have had an impact as well, many visitors from western countries will be visiting some of the great tourist hot spots around Shanghai.  This Olympics will be a showcase for China to demonstrate to western companies that they have the transportation infrastructure in place to allow them to get a foothold in this region. 

In addition to improved transport links, China is making great strides in improving its IT infrastructure.  Until recently it was the more prosperous areas on the east coast of China that have benefitted from having access to the internet.  Interestingly last week it was reported that internet usage in China has now surpassed the U.S with nearly 16% of China’s population using the internet. China has seen a 61% growth from 137million to 221 million users in the last year alone and by 2012 it is estimated that China will have 490million internet users.  Now this growth wasn’t due to an overnight improvement in the country’s phone and broadband network, nearly a third of this growth, 75million, was due to the rising popularity of Cyber Cafes.  Many users realising that Cyber Cafes have much faster broadband connections than the modem dial up connections found in many houses, well those houses that have a phone line installed.

Today’s internet is already bursting at the seams and you can imagine by 2012, with an influx of new internet users in China and other parts of the world, that the performance of the internet will dramatically slow down.  So as with China’s foresight to build a state of the art transportation network, what plans, if any, are in place for improving the performance of the internet? 

Well, in the same month that China became the largest user of the internet, a new internet infrastructure was announced by CERN, the original architects of today’s internet infrastructure.  They have built a global replacement for the internet which is estimated to be 10,000 times faster than today’s broadband connections allowing for example a full length feature film to be downloaded in a matter of seconds.  The project, know as ‘The Grid’ (a name probably inspired by the film The Matrix!) will become live this summer when the Large Hadron Collider Particle Accelerator becomes available for the first time. The grid will be used to transport the terabytes of data that are likely to be produced from this machine. 

Whereas today’s internet was created by linking together cables and routing equipment destined for making phone calls, The Grid has been built with dedicated fibre optic cables and modern routing centres.  Within the next two years there are expected to be 200,000 servers connected to the grid around the world, providing unparalleled processing power.  The global fibre optic network is being built in a hub and spoke fashion, for example the UK regional hub has 8000 servers connected to the grid system already.  Most of these servers will be located at academic institutions, but how long will it be before the power of The Grid is made available to other users around the world? 

There are many parallels between the new infrastructure that CERN has created and GXS’ own ‘Trading Grid(R) ’ B2B infrastructure that has been implemented around the world.  We have world class hubs or data centres located in North America and Europe, connected by high speed OC12 fibre optic connections. We provide a means for any company, no matter what their technical capability to be able to connect to this network and begin trading with partners anywhere in the world.  We are investing a significant amount of money in our Trading Grid infrastructure as we believe that for companies to grow they will need access to a best in class B2B trading platform that will allow them to trade with partners any time, any place and anywhere around the world. 

So, an interesting trip for me, an opportunity to learn about a new culture and the rapid technological progress being made in this region.  But despite all this progress, one of my main memories from the trip was seeing a house being demolished at the side of the toll road leading from the airport.  Nothing unusual in this you may think until I tell you that this three storey house was being demolished by four men standing on the top floor pounding the brickwork using only sledgehammers!

In the meantime, if you have a quiet moment and you want to learn more about particle accelerators, you can find more information aboout them here  

Over the past couple of years there has been a significant convergence between the automotive and high tech industry sectors.  Satellite navigation systems, entertainment systems, mobile phone and iPod integration, today’s consumer is partly helping to drive the convergence of the automotive and high tech industry sectors.  So I thought it was about time I found out a bit more about the high tech sector, particularly in Europe.

Last week I attended a meeting hosted by CompTIA, the Computing and Technology Industry Association, in Brussels. CompTIA have been around for 25 years now and along with EIDX in North America and EDIFICE in Europe, they provide an invaluable service to companies looking to implement or manage B2B infrastructures in the high tech industry sector.  This particular meeting was hosted by Ingram Micro and it had good representation from companies such as Computacenter, Toshiba and Dell to name but a few.   

The main theme of this event was to discuss why companies were struggling to implement B2B technologies and what could be done to overcome these adoption barriers.  There were a number of presentations during the course of the day and many drew the same conclusions as to why companies were struggling to adopt B2B technology.  One of the main barriers was a lack of awareness of the benefits and technology that are employed within a B2B environment.  In terms of awareness, one of the interesting ideas to come out of the sessions was to establish some form of certification process for employees of companies that were thinking of implementing a B2B environment.  In many other industry sectors, employees are provided with training in using specific systems or are put through recognised accreditation to specific industry bodies.  A suggestion was put forward that perhaps CompTIA could pull together a B2B accreditation programme to ensure that employees of companies know about the latest B2B technologies and best practices and would therefore be able to identify areas of a business where B2B technologies could be implemented. 

I had an interesting conversation with a researcher from the Henri Tudor Institute based in Luxembourg.   They had developed a software tool that allowed a company to map out, visually, all message transactions between trading partners and then actually run a visual simulation to see what would happen as the transactions flowed around the ‘virtual’ company. Such a tool could help sell, or make a company more aware of, the benefits of B2B before they have implemented any B2B technologies. This tool could easily be adapted to help a company evaluate the ROI that could potentially be expected by replacing old manual processes, such as invoicing, with an electronic B2B solution. 

There was also a presentation from SEPA, the Single Euro Payments Area, an initiative to try and standardise the e-Invoicing process across Europe.  Not an easy task when you think that each country in Europe has a different tax law and each government has a different approach to improving B2B adoption in their respective countries.  For example e-Invoicing adoption levels in the Nordic countries, ie Norway, Sweden and Finland is far higher than any other country in Europe. This is mainly due to government pressure for companies to remove paper from their invoicing process and making local tax rules and regulations easier to navigate through from an e-Invoicing point of view.  

ComputaCenter also provided an interesting insight into the challenges they faced when dealing with software companies who had complex or inaccurate product data in their price lists.  Computacenter suggested inviting software companies to their next meeting to see if there was a way that they could work together to simplify the exchange of information between hardware and software technology companies.  For example if Computacenter could receive just 15 pieces of information or attributes to describe a software product, rather than the 100s of variants they receive at the moment, then it would improve their B2B process no end.  Product Data Quality is becoming increasingly more important within the high tech sector and this example from Computacenter highlighted the trend very well. 

The day was concluded with a discussion panel, this was originally made up of myself representing GXS, OB10, Apple and Inovis.  As Apple and Inovis did not turn up to the event at all, Ingram Micro and GE EDF took part in the discussion panel instead.  Again, the theme of the discussion was to find ways to increase B2B adoption levels and each of us went into our thoughts as to how this could be improved.  B2B Outsourcing was seen as a key way for companies to remove the barriers to B2B adoption and not having to worry about how to manage a B2B infrastructure. They could just get on with their day to day activities and leave the management of their B2B infrastructure to a vendor such as GXS. GXS provide B2B outsourcing services to companies of all sizes, no matter where they may be based in the world.   

So this was an interesting meeting to attend, especially when trying to appreciate the B2B challenges that some of these technology companies faced and how similar they were to challenges faced by companies in the automotive industry.

Just in case you think I am about to review a new Star Trek movie!, I am actually going to draw comparisons between old and new generation car models and how some of the characteristics of these cars are similar in many ways to how GXS has evolved over the years.

The automotive industry has many examples of companies that have stood the test of time, not only in terms of how long they have been producing cars but also how long a particular car model has remained in production.  In 1967 the Chevrolet Camaro was introduced to compete with Ford’s Mustang, an era that saw many ‘muscle’ cars take to the streets in the US.  In 2007, Chevrolet introduced their vision for what the next generation Camaro would look like, taking strong design cues from its 1967 predecessor.

In 1967, Porsche was one of the leading producers of high performance sports cars. Today’s 2007 Porsche 911 Turbo stays true to the original and contains many styling cues from its early predecessor.  Porsche are one of the industry’s most profitable car companies and they have partly achieved this by sticking to a ‘tried and tested’ design.

The final example I want to refer to is the Mini. This car, when it was introduced in the late 1950s by the British Motor Corporation, completely changed how small cars were designed and packaged. It was also very affordable meaning that more people could take to the road for the first time. Today’s Mini, albeit produced by BMW, stays very close to the original design concept and because of this has seen strong sales growth in all major car markets around the world.

The interesting thing about all these cars is that the external shape of each has changed very little over the past four decades. Each generation or evolution of the afore-mentioned cars has seen significant improvements in terms of performance, economy, quality, reliability and even service levels at garages has improved considerably over the years. Like a fine wine, these cars have become much better with age but still manage to remain true to the original concept.   

GXS has been around for forty years as well, hence why I highlighted these particular car models, and it is interesting to draw comparisons between how these cars have evolved over time and how GXS has evolved over the same time period.  Each of the afore-mentioned cars was brought to market for a particular reason, similar to GXS who in a former life was responsible for setting up one of the world’s first private email networks.  GXS has successfully transformed itself from being a mere provider of Value Added Network services to becoming a leading provider of On-Demand B2B solutions and services. GXS provides global coverage and with the introduction of our Trading Grid Ultra infrastructure, customers and their respective trading partners now have access to a high performance and highly available B2B trading platform. 

Today’s cars also contain relatively complex engine management systems and they are not as easy to maintain as their 1960s predecessors.  For this reason you will probably use an authorised garage to undertake any repair or service work.  Similarly, GXS know that there are many companies out there today that do not wish to look after their own B2B and EDI platforms and so they think about outsourcing.  GXS Managed Services, as discussed recently by my colleague Mark Mixter in his blog, offers the complete solution for companies wishing to outsource their B2B infrastructure. 

There are many other companies and products out there that have ‘reinvented’ themselves over the years and GXS are a great example of this. Our Trading Grid infrastructure will continue to evolve and our next release will contain some exciting new capabilities, more about these in the near future.  So what will the next generation B2B trading platform look like?, well this is an area that I will be discussing at the Odette conference in Prague in a few months time, I will post some thoughts on this in the very near future, but in the mean time do you have any thoughts about what you would like to see in the next generation B2B platform?

This was the first time I had visited AutoTech so I didn’t really know what to expect, but as it turned out, the format and presentation subjects were very similar to the Odette conference that I attended in Munich last year.  AIAG claimed that there were around 1000 registered for the event but in a large venue such as the Rock Financial Showplace in Novi, Detroit, it felt as though there were less attendees than this. 

The event was split into two main areas, an exhibition hall where the software and services vendors could showcase their solutions and a number of presentation rooms where attendees could listen to the latest trends in Automotive related IT and supply chain management initiatives.  GXS did not have a booth at the event, we decided, from a networking point of view, that we would sponsor the first night cocktail party and also the internet booth.  The internet booth was actually quite a large space, more like an executive lounge with about 20 PCs, wireless connectivity, leather sofas and coffee served throughout the day. We were able to hold a number of informal discussions with both existing and new customers. 

Another interesting exhibit was from Microsoft who showed their Ford Sync car concept.  This was a great example of how Microsoft wish to see their products integrated or embedded with car entertainment systems.  In short, the Microsoft system within this car was a fully integrated, voice activated in-car communication and entertainment system for your mobile phone and digital music player.  As a demonstration of the theme of AutoTech, co-opetition, the Sync system offers support for both the Apple iPod and Microsoft’s own Zune music player.  A good example of a company listening to what the customer wants rather than forcing only one option, ie the Zune integration upon the Sync’s potential customers.  Further information about the Sync concept can be found HERE

During Autotech, six OEMs, GM, Ford, Chrysler,Toyota, Honda and Volvo gave a presentation on the work they are currently doing to improve their supply chain management processes.  This blog will describe what GM, Ford and Chrysler had to say, the others will be covered in another blog entry.    GM talked about the car industry as a whole. They highlighted a number of misconceptions about the automotive industry, none of which were true, namely that it was a stagnant / non growth sector, it was unprofitable, receding in importance to customers and the 20^th century technology used in the cars was old fashioned. In fact, did you know that the global market for the automotive industry was $1.2 Trillion and growing, the U.S market alone was estimated to be about $500Billion, the market was increasingly consumer driven and technology such as GM’s Volt and Microsoft’s Sync concept were leading technological change.  They also highlighted that China was one of the leading manufacturers, with 50% of all worldwide cameras manufactured there, as were, 25% of toys, 60% of bicycles and now 9% of cars.  GM also highlighted that they were now a true global manufacturer with a manufacturing presence in nearly every region of the world.  They presented some incredible statistics from their daily, global logistics operation.  Every day they use 8600 trucks, 750 rail cars and 1400 shipping containers for the delivery 160,000 car components to their 81 assembly plants, 97 manufacturing plants around the world.  In addition they also distribute 21000 vehicles, 14000 via rail and 4000 via sea, every day as well.  These figures are astounding and when you think the other U.S based OEMs have similar operations, you can understand why supply chain and logistics management is such an important area for them. 

Chrysler gave a very upbeat presentation after their recent acquisition by Cerberus.  They presented a very positive outlook which was going to be driven by what they call their Recovery and Transformation Plan (RTP).  The recovery part of their plan would sharply focus on cost, revenue management, material and fixed costs, capacity and efficiency and finally employee retention.  The transformation part of the plan will improve focus on customers and brands, increase global presence and increase the number of partnerships. They mapped out a 3 year plan for how they would return to profitability, which included bringing 20 new vehicles to market and spending nearly $3Billion on new powertrain systems. They were also keen to explore global growth strategies including forming a new joint venture partnership with the Chery car company in China.  Chrysler also talked about their supplier management program and how they use a process called Value Stream Mapping to improve efficiencies and reduce waste in their manufacturing process. 

Ford decided to talk about their Global Product Development System, GPDS, this system was developed from two AIAG standards, namely PPAP (Production Part Approval Process) and APQP (Advanced Product Quality Planning).  The resulting GPDS includes 31 elements covering everything from quality processes, change management processes and revision control.   The intention is that Ford will adopt their GPDS across all their brands and across all car platforms by 2009.  The intention is to have a global car development process and all suppliers that wish to work with any Ford related brand must be able to use and comply with this process.  In addition the GPDS also includes a single, common reporting tool for suppliers, and a standardized management reporting tool for Ford execs.  The GPDS will help Ford to improve the quality of design and engineering related information that is sent to them by their suppliers. 

Overall the presentations were very positive and on the last day of the event all of the purchasing directors, from each OEM present, attended a joint panel to discuss future purchasing strategies.  They all agreed that moving forwards, one of the only ways to help reduce costs still further was for the OEMs to try and work together and try and share sourcing programs between them.  This would ultimately mean that the OEMs could eventually end up sharing parts sourcing strategies between them.  The aim of this would be to help share production and logistics costs.  Many OEMs are already working together on joint engine development programs already but significant cost reductions can be realized still further by sharing component sourcing costs.  This strategy comes back to the theme of the event, Co-opetition, working together and creating supply chain value.  So here is a question for you, if the OEMs are willing to work together on joint strategies such as this, how long will it be before we see software and service vendors working together more openly on joint projects?

The second part of my AutoTech 2007 review takes a look at some of the presentations that were made during the event.  In addition to the presentations made by the various OEMs, there were also presentations from numerous AIAG project teams, reporting back on the progress made on their projects.  In addition there were also presentations made by the various software and services vendors that were in attendance at the event.  These vendors also had a chance to demonstrate their solutions on the final day of the event, but I decided to skip those demonstrations as trying to get into some of them, bearing in mind some were competing companies to GXS, was like trying to get into Fort Knox!.  So this blog entry will focus on some of the key AIAG project reviews that took place and as there were multiple presentation tracks I can obviously only provide a review of the ones I attended.  This will hopefully give you a flavour for the type and breadth of projects that AIAG gets involved with.  I will provide a summary of others once the presentations are posted up to the AIAG website. So where do we start, OK, how about…

Interoperable Electronic Business Messages in the Enterprise - the first presentation I attended.  This session looked at the progress being made in the area of web services, which has been around now for about 7 years.  There are about 180 companies that are working together as part of the Web Services Interoperability (WS-I) organization.  This is an open industry effort, from both companies and vendors, with a common aim of achieving interoperability and where possible work with bodies such as OASIS, W3C etc to ensure that the web services being developed are compliant with global standards.  The WS-I value proposition is to reduce complexity and risk, improve productivity and accelerate time to market, and simplify web services buying decisions. The OEMs are interested in web services as they can realize significant cost savings, improve supply chain communications with more, if not all, companies in their supply chain, and many of them require secure asynchronous processing of information.

Supply Chain RFID International Standards Effort -  The aim of this presentation was to try and provide an update on the standardization efforts being made in the area of RFID technology.  The first slide of the presentation highlighted that there were five areas of RFID technology that needed to be standardized, namely: Technology, Data Content, Conformance, Network and Application Standards. The ISO TC122 project looks at a standard for packaging which includes bar code labeling, linear bar codes and a range of 2D symbols to represent the contents of packaging.  ISO TC 104/SC looks at a standard for sealing shipping containers, three tags have been developed, a supply chain tag, an electronic seal tag and a container ID tag.  The container ID tag provides automatic identification via RF technology, allowing easier location of a container at a port or distribution center. Finally the ISO TC 122/104 Joint working Group project is looking at supply chain applications for RFID.  This covers RFID tracking of shipping containers, transport units, pallets, packaging and products.  The final area presented was on EPCGlobal which is looking at Active tagging, sensors and long life battery developments, item level tagging and UHF / HF air interfacing.

Their main conclusions were that RFID, at the moment at least, is an evolutionary technology rather than a revolutionary one.  Bar code labeling has its place and will work alongside RFID technology as a backup and EPC global will require a complete change in the infrastructure of a company for it to work effectively. It was also interesting to hear that Walmart and the U.S Defense Department were the leading users of RFID technology with the Defense Department having the largest RFID network in the world.  RFID is a very effective technology for container and pallot tracking, but item level tracking still appears the most difficult to achieve.  Tracking a spare part, such as a gearbox, for a tank may be worth the effort of RFID tagging as it is a relatively expensive component, but tracking a can of tuna through Walmart’s supply chain network may prove a bit more difficult to achieve!

Materials Offshore Sourcing: AIAGs Long Distance Supply Chain Project – The MOSS project was interesting as it ties in very well with GXS Logistics Visibility solution.  This project was essentially looking at improving the visibility of shipments around the world, initially focusing on two ‘trade lanes’ Europe to the U.S and China to the U.S.  The project is developing a recommended best practice to enhance the use of electronic communications across all trading partners using standardized, reliable data based upon international standards.  One statistic quoted during the presentation was that nearly 15% of all inbound ocean freight is delayed in route due to data deficiencies.  Many of these deficiencies are as a result of extensive use of paper, documents, e-mails, faxes and phone calls involved in these complex movements.  This project involves ocean shipping companies, logistics providers, U.S customs and a number of automotive OEMs looking to improve their global shipment of cars and spare parts.  This project is currently in the ‘demonstrator build’ phase.

Global Recommendations for B2B Messaging in China – This project was conceived two years ago and the final report findings were given at this presentation.  China still represents the fastest growing car market in the world and with many domestic and joint venture car companies being established there, the need for a common B2B messaging format has become very important for this region.  This project has been a true global project involving a number of industry organizations including AIAG, JAMA, JAPIA, ODETTE and STAR.  The project undertook a couple of extensive surveys to find out the current ‘state’ of B2B / EDI adoption across China and the conclusion was that EDIFACT was by far the most popular EDI format in use today.  However due to implementation and cost issues it was felt that an XML based messaging format would eventually become a standard for use in China.   The report however recommended, due to the infancy of the XML standard, that UN EDIFACT and / or OAGIS XML BODs based on the Joint Automotive Data Model are the recommended standards.  Ultimately the JAIF will eventually recommend the UN / CEFACT XML standard, however this is still in development but will, in a few years time, provide the B2B standard for conducting business in China.   The presentation also highlighted from their surveys that GXS were one of two B2B service providers who had a well recognized presence within the Chinese automotive industry.

Developing the Joint Automotive Data Model – This joint AIAG, ODETTE, JAMA and STAR related project is an attempt to try and standardize on a model to allow for true global data exchange.  This model will not only be able to carry standard supply chain messages but also engineering type data traditionally associated with the ENGDAT format. ENGDAT is widely used as a format for transferring engineering computer aided design (CAD) models. Given that the car industry has become so globalized, there is a strengthening need to be able to exchange supply chain and engineering related data seamlessly around the world.  This project is an attempt to try and combine and enhance many existing formats into one common messaging format that can be used in any region of the world.

Global Automotive Update from Europe (Odette) and Japan (JAMA) –  The final session that I attended was an update on the work being carried out by Odette and JAMA.  During this session the most interesting development was about the new OFTP v2 standard that Odette are working on. The current OFTP standard has been in use within the European automotive industry for many years now, OFTP v2 is an attempt to bring the OFTP standard up to date and embrace the internet as a viable communications platform.  OFTP v2 looks promising and will offer a number of key features to allow companies to exchange information via the internet.  These include secure authentication via digital certificates, data confidentiality (whereby the file is encrypted before being sent to a trading partner), use of digital signatures, file compression, SSL session security, signed receipts and finally, support for international file descriptions.  These enhancements will mean that a company does not have to have a permanent internet connection, it will support large file transfers, reduce transmission times, it is ideal for emerging markets and it will become the chosen method for EDI and CAD data transfer over the internet.  Only time will tell if this last statement will be true as many car companies still prefer to use secure private networks for engineering related message / data transfer, there could for example be great hesitation in sending car related design information across the internet.

In addition to OFTP enhancements, ODETTE are also working on expanding the reach of the Global MMOG / Logistics Evaluation project.  KPI4GMML will look to improve materials management, particularly focusing on six key performance indicators for improving how parts / materials are shipped between a supplier and customer with a particular emphasis on improving the performance of logistics and 3PL providers.  KPI4GMML essentially measures the effectiveness of the logistics processes between parties. This project is in its early phase at the moment but is being built on the tools developed already as part of the MMOG/LE project.

There were many other sessions over the two days, and some of the more notable developments were in the area of Plant to Business (P2B) communications, a number of projects looking at how companies can improve communications between their HQ offices and their various manufacturing plants around the world.  I will post a separate blog entry about this development at a later date.

Overall, the presentations at AutoTech were very good and informative, they managed to cram a lot of presentations into the two days and I still have a lot of reading to do of sessions I didn’t get to attend. Further information about AutoTech can be found at the official site at autotech.aiag.org and www.autotech.org

So no sooner do I get back from a two week holiday, I fly out to Detroit to attend the AIAG Autotech 2007 Show.  AutoTech is one of two major B2B related Supply Chain Management shows this year, the other major one is Odette which is taking place in Prague in late November.

This year’s event is being held at the new Rock Financial Showplace just outside Detroit. AutoTech is one of the leading B2B related shows for the U.S automotive industry and as GXS has many North American based automotive customers we decided to provide sponsorship to the event.  AutoTech is run by the Automotive Industry Action Group, a body set up to help automotive companies improve how they do business with each other.  In fact the theme of this year’s show is Coopetition, now this is a term that I had never heard of before and therefore I had to do some Googling (other search engines are available!) to find out exactly what it meant! 

In essence it means cooperative competition, a way for competing companies to work together to achieve a common goal.  The best example of coopetition between automotive companies is when they work jointly on a new car or engine programme that will be sold by both companies. From AIAG’s perspective they are encouraging coopetition between North American automotive companies to try and solve complex business problems, improve supply chain efficiencies and help develop global supply chain strategies.

The event itself has two parts, firstly an exhibition area where various B2B software and services vendors can showcase their solutions and secondly a twin track set of presentations delivered by OEMs, suppliers and B2B solution providers.  The aim of these presentations is to provide education in the latest B2B industry trends, provide updates from the various industry standards bodies and allow the OEMs to discuss their latest supply chain strategies.  More importantly it provides a great opportunity for networking and discussing business issues with both automotive companies and B2B solution providers.

I will be attending both days of the event and I will provide further updates and key highlights from each day of AutoTech via this blog.  I will also highlight GXS involvement with the event and hopefully get round to posting up some pictures over the next couple of days.  So hopefully you will find it useful and if you are interested in finding out more information about this event then you can visit the AutoTech 2007 official website

Every year GXS attends the Odette conference, event website, the leading B2B conference specifically aimed at the automotive Industry.  This year the event is being held in late November in Prague, Eastern Europe, quite a timely event given that this region is one of the fastest growing automotive manufacturing regions in the world.  GXS will have a stand at this event and yours truly will be delivering a presentation during the conference. 

My presentation this year will look at the future of B2B trading environments, and trying to predict what B2B related technologies and services will be used by supply chains in the future.  I will be taking a look at how Software as a Service (SaaS) will impact the deployment of B2B and Supply Chain Management solutions in the future.  As you may or may not know SaaS provides a hosted method of delivering software applications across the internet and this is seen by many as the next big thing to shake up the software industry.  The combination of web based delivery of software applications, subscription based payment methods, ease of deployment and minimal ongoing application management requirements make SaaS a very compelling environment to adopt.  Its success will rely on mainstream adoption by the big companies around the world and of course how quickly the B2B solution providers can provide this type of application delivery model.  SaaS shows strong promise, especially for use in the emerging markets where IT implementation skills are limited and I will be taking a closer look at the implications of running a SaaS based B2B environment in my next blog entry. 

In addition to SaaS, I will also be taking a look at how outsourced or Managed Services environments are likely to affect how B2B infrastructures are managed in the future.  Recently, GXS has won two significant automotive Managed Services deals, one with Mitsubishi Motors in Japan, press release, and the other relating to a global Tier1 supplier.  Cost savings and company restructuring is becoming key to improving competitiveness and GXS Managed Services offering is a proven method of significantly reducing B2B related infrastructure costs.  But just how far can a company continue to outsource elements of their business without compromising the way in which the company operates.  This part of the presentation will address this issue as well as see how Managed Services will evolve over the next few years. 

The final part of the presentation will take a look at the increasing importance of electronic invoicing, or e-Invoicing.  Invoicing and exchanging purchase orders etc has been a key activity of many EDI systems for many years now.  But how do member states of the European Union share invoices across different countries, having different tax laws,  and invoice processing requirements?  How will a B2B platform of the future be able to process all these different invoices electronically having varied regulatory requirements?  This section of the presentation will try and answer these questions and see how they will impact B2B trading environments of the future.  We have discussed the ‘green issue’ a couple of times in my blog and you would think that implementing an e-Invoicing solution would significantly help to reduce paper consumption, saving trees etc.  Well it does, but only if you can get your entire trading community using an e-invoicing solution. 

Yes, there are many other new and exciting B2B trends and technologies out there, but I will only have a 40 minute presentation slot, so this will have to do for now.  In a previous blog I discussed about how the virtual world called Second Life is likely to change how we do business between companies and last week it was announced that a company is looking to develop B2B applications for the new Apple iPhone.  The iPhone, like the Blackberry before it, could significantly change how companies integrate with their B2B platform whilst on the move.  I think this will make another interesting blog entry, so until next time!