GM does US$98 billion in transactions via Covisint

While Covisint LLC is still in the midst of deploying all of its online business-to-business marketplace functionality, online procurement via its quote manager for electronic RFQs appears to be gaining traction in the industry, to the tune of US$96 billion for General Motors Corp. and its suppliers.

Although there was no official announcement by either Covisint or General Motors, the giant automaker revealed at a management briefing in Traverse City, Mich., run by the Center for Automotive Research, that the total value of transactions it conducted over Covisint in the first seven months of Covisint's operation totaled $98.2 billion. The Center is based in Ann Arbor, Mich.

Of the total, $96 billion was done through Covisint's quote manager, which is used for procurement of direct materials rather than MRO (maintenance, repair, and operations) products, according to David Barnas, a GM spokesman.

Despite the huge amount of spend, which according to Barnas actually represents contracts going out over the next six years, the benefits do not come from finding either new suppliers or from reducing the piece price of any products.

New suppliers are not readily found when procuring highly engineered systems.

"There are only a handful of suppliers that are capable of giving us what we need," Barnas said.

The reduction in cost actually came in the time it took to close the deals.

"When you think about cost, we saved time doing RFQs electronically instead of the old system," Barnas said.

Although GM offered no time frame, a Covisint spokesman said one large OEM, which he declined to name, accomplished in two days what otherwise would take 10 months for certain business processes by using Covisint.

"When you can take almost 10 months out of a process, you are bringing significant savings to you and the other suppliers," said Dan Jankowski, vice president of Global Communications at Covisint.

The breakdown for the remainder of the $98.2 billion spend via Covisint was $200 million through catalog buying of indirect goods and $2 billion through online auctions where GM sold back into the market materials it no longer needs.

"If we have stamping machines, for instance, that we no longer need, there is still value that a supplier can use," Barnas said.

GM's annual spend on direct materials is about $86 billion. The $96 billion done in the first seven months of Covisint's existence represents the final sourcing decisions for systems and components for vehicles through the 2006 model year, Barnas said.

GM and the other automakers are trying to reduce time to market through online procurement as well as using design collaboration to take time out of the process.

"We are looking at ways to develop our systems faster and give suppliers requirements they need to produce parts which they in turn can relay to their suppliers all the way down the chain, and that is where the real benefit is," Barnas said.

Using Covisint for design collaboration, considered by most industry analysts to be one of the best ways to reduce time to market, is still to be determined, said Barnas.

"We know we want to do that but we haven't started that. The entire industry recognizes the need to do design collaboration, either through Covisint or on their own," Barnas said.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Ephraim Schwartz

Computerworld
Show Comments

Cool Tech

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?