Info Flow Critical To Auto Suppliers

April 14, 2003
| By Katy Rent |
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GRAND RAPIDS — Communication is central to any company, but to automotive suppliers it makes the difference between being a supplier and not being a supplier.

One thing that is a constant in the automotive industry is that it will change, said Bob Belmonte, director of business development for Harmon, Lynch & Young Inc., (HLY) an Auto/EDI software firm.

To help keep Tier I and Tier II, and even some Tier III suppliers in line with the automakers, Belmonte says HLY has developed software called EDICOM, to provide universal communications among OEMs and their galaxy of suppliers.

“EDI software, or Electronic Data Interchange, has been a constant in this industry for the last 25 years for how these OEMs communicate with their suppliers to tell them how many parts they need and when they need them,” Belmonte said.

“It is simple. If you don’t have a software program that allows you to communicate back and forth with your OEM, you are not going to be a supplier. Simple as that.”

Belmonte explained that EDI is the way OEMs communicate orders to suppliers. After contracts, pricing and service orders for the year are settled, he said, the OEM needs to contact its suppliers, most likely on a daily basis, about specific needs.

He explained that information transmitted back and forth is called a transaction set, of which there are about 20 different varieties.

“We have what is called an 830, which is a forecast transaction set — say a 12-week forecast — that is sent to the suppliers, allowing them to plan out 12 weeks what they need to do,” said Belmonte.

“Another one is an 862, which is a shipping transaction set, so the supplier knows what the OEM wants them to ship out today — and that overrides the 830.”

With so many transaction sets flowing back and forth, Belmonte said the supplier needs a way to read and send the correct documents to its OEM. That is where EDICOM comes in.

He explained that EDICOM — developed by HLY’s four programmers — receives the electronic orders and then integrates them into the supplier’s enterprise planning system (ERP), an acronym used to describe software developed for manufacturing companies.

This, he said, allows the supplier to plan production schedules in tandem with shipping schedules.

And it gets more complicated.

“Once parts are made and they are ready to be shipped,” Belmonte said, “there are other measures to be taken and one is called an 856, which is what they call an advanced shipping notice.”

He said the 856 is critical because, in just-in-time manufacturing, the OEMs need to know exactly what they are getting and just when they are getting it.

“So when the supplier ships out the parts,” Belmonte added, “they will then send this 856 to let the OEM know what is coming, where it is going and when it will arrive.”

He said EDICOM handles all back-and-forth communication along with the rest of the panoply of industry logistics: process, bar codes, invoicing, transaction history and labeling. Meanwhile, he said, the software also integrates all information with the various companies’ accounting processes.

Because this type of software is essential to suppliers, he said, there was a time that some software firms could charge anything to get it. And, Belmonte added, they often did.

“Our biggest competitor out there in the IBM-compatible world is Future Three,” he said.

“They currently have about 90 to 95 percent of the market, but they charge a very high price to have their software and that is one way we can differentiate ourselves.”

Belmonte asserted that where Future Three would charge $30,000 to $50,000 just to have and maintain the software, HLY Inc. is able to charge only $12,000 to $20,000.

One reason for this, he said, is that the firm has little overhead because it operates mostly out of a home office and in the field with clients, and only has five employees.

Too, he said, HLY is focused on taking advantage of technology and therefore making its software more flexible and easier to implement.

As of late, Belmonte said the marketing plan is to approach some of Future Three’s 300 to 400 customers and enlighten them about the benefits of EDICOM.

“Our plan is to add five to 10 new customers a year. And if we can secure 20 to 25 percent of Future Three’s customers, we will be in a great growing place,” Belmonte said.

“As our name gets out there and customers begin to see the value of EDICOM and how it works for their company, we are confident that we will grow across the country.”

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