Automotive:<br>New Approaches Speed Product EngineeringAutomotive:<br>New Approaches Speed Product Engineering

Automakers and their suppliers continue to leverage IT and the Internet for a growing number of supply-chain management and product-delivery applications. But the real advances in the last year revolve around product engineering. "Product development is probably the most critical IT strategy that automakers are pursuing right now," says Kevin Prouty, an AMR Research analyst.

At General Motors Corp., increased use of computer-aided design and product-development management tools, combined with reorganizing GM's engineering staff into a single global team, has cut what was a 40-month engineering-design process six years ago to just 18 months on average and slashed $1 billion in annual engineering costs. While GM's move to digital tools has been under way for the last four to five years, those efforts really came to fruition in the last year, says Tony Scott, the automaker's chief technology officer. "You'll see us announce a new vehicle every 27 days on average, and we couldn't have done that with the old technology," he says. GM has 20,000 engineers using computer-aided design tools and 17,000 using product-development management software.

Product-development collaboration is a critical element of a joint business venture between Ford Motor Co. and International Truck and Engine Corp. to build trucks and provide parts and service for both companies. Product developers are relying on collaboration tools such as Microsoft NetMeeting to make the venture work.

Carmakers also continue to expand their use of IT for improving connections to suppliers and customers. International Truck and Engine implemented a new supplier-managed inventory system that has increased parts-inventory turns from 38 to 118 per year, reducing inventory-management costs. GM relies on software from i2 Technologies, Oracle, and SeeBeyond to improve how it handles vehicle orders in its manufacturing facilities, reducing order-fulfillment lead time by half and inventory costs by 20%, and increasing delivery-date reliability by 22%.

Automakers and their suppliers are making greater use of portals to improve customer service. Next year, GM will roll out its DealerWorld portal, providing a single point of entry for dealers around the world. Parts suppliers are doing likewise. Six of Goodyear Tire and Rubber Co.'s business units have portals (the seventh is building one) for their dealers; several of these dealers account for more than half of Goodyear's sales.