“Cloud Computing” System from AIAG to Provide Billion-Dollar Savings

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Cost/Benefit Analysis Demonstrates How New Trade Collaboration System Streamlines Intercontinental Supply Chains

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Auto analysts estimate that trade collaboration systems, operating in a “cloud platform” could generate up to $1 billion in immediate savings to the ailing industry according to J. Scot Sharland, executive director of AIAG.

The Automotive Industry Action Group (AIAG), a globally recognized consortium of auto manufacturers and their suppliers, has developed a new way of handling automotive supply-chain information that could reduce transportation costs by $1.7 billion dollars over the next five years and support national security objectives as well.    

AIAG’s Material Off-Shore Sourcing (MOSS) project, designed to replace the complex mix of media currently in use with systems that will that enable strategic continuous improvement, is a user-led initiative involving all stakeholders in the supply chain: OEMs; suppliers; carriers, logistics service providers, applications providers, freight forwarders and customs brokers.

Auto analysts estimate that trade collaboration systems, operating in a “cloud platform” could generate up to $1 billion in immediate savings to the ailing industry according to J. Scot Sharland, executive director of AIAG.

A newly-released cost/benefit analysis, available via an e-document through AIAG, will assist individuals in identifying and assessing opportunities to improve supply chain logistics involving ocean shipments incoming to the U.S. and can improve the overall timing, consistency and costs of off-shore sourcing in a just-in-time environment through transportation lanes.

An AIAG survey conducted by AMR Research found that 79 percent of the information is entered into systems repeatedly by the various partners – owing largely to the fact that they are using various and differing communication media: paper, phone, fax, spreadsheets and e-mail. This mix of communication media tends to be created out of the necessity of the moment; its use has adverse consequences in operation. The survey also found that 15 percent of all inbound ocean containers are delayed enroute due to missing or incorrect data caused by the use of multiple, error-prone entry systems. Because of these supply-chain inefficiencies, many companies maintain expensive, higher-than-needed inventories to protect against material shortages and prevent work stoppage.

Conventional approaches to integrating information systems aren’t cost-effective where there are so many participants and so much “churn” in the mix of partners. Cloud computing and its “software-as-a-service” offer an attractive solution to the auto industry’s supply-chain problems.

AIAG’s experts have little doubt that retrieving information to support national security objectives from the technology landscape supporting automotive supply chains today is extremely difficult. “A fax here, a spreadsheet entry there, each increasing the possibility that mistakes will be made adds up to a lot of waste,” said Michael Comerford of Global Commerce Systems. “What has made these problems so difficult to address is the large number of stakeholders involved in the logistics processes and the disparate systems currently in use.”

Traditional information-technology deployment requires costly coordination among supply-chain partners and their IT departments. AIAG’s MOSS project demonstrates that its cloud computing offers a major cost-cutting solution with much less risk of deployment failure. The organization’s “Trade Collaboration System” software supports the complete process of order management and transport logistics. It brings together the participants “virtually” through a web browser.

But unlike web portals currently supporting trade logistics, it provides a much broader viewpoint, including the many functions of the trade: sharing of forecasts and conveyance of orders; booking of transportation; preparation of export and import documents; and reporting of shipment milestones. Also unlike web portals, it provides tools for performance measurement and costing. And unlike traditional systems, AIAG’s Trade Collaboration System doesn't require the installation of software on the participant IT systems.

More information on the Materials Off-Shore Sourcing Cost Benefit Analysis and the MOSS initiative are available on the AIAG Web site at http://www.aiag.org.

About AIAG
AIAG is a unique not-for-profit organization where for more than 25 years, OEMs, suppliers, service providers, government and academia have worked collaboratively to drive cost and complexity from the supply chain via global standards development and harmonized business practices. AIAG membership has grown to include preeminent OEMs such as Caterpillar, Chrysler Group LLC, Daimler, Ford Motor Company, General Motors Company, Honda, Navistar International, Nissan, Toyota and many of their part suppliers and service providers. For more information, please visit the organization’s Web site at http://www.aiag.org.

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Lorrie Kinney
AIAG
248-213-4676
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