KUALA LUMPUR--When the Asean Free Trade Agreement (AFTA) comes into effect in 2005, forcing Malaysia to open its markets to foreign competitors, the local automative industry will need to adopt e-business aggressively to survive the onslaught.
The e-way is the only avenue for Malaysian car makers to make the grade, according to Oracle Asia Pacific senior director of strategic programs Brad Perkins.
He said superior supply chain management (SCM) via B2B exchange marketplaces and supply chain exchanges would feature prominently in the automative industry as demonstrated in the US.
Perkins was speaking at Oracle's CEO Roundable Forum on 'Turbocharging Your Automative Supply Chains'.
By drawing on Oracle's experience in powering COVISINT, a automotive exchange powered by DaimlerChrysler, Ford Motor, General Motors, Nissan and Renault, the software giant hopes to educate key players in the industry on the benefits of online exchanges and marketplaces.
Perkins told the media that local players have been highly receptive to Oracle's suggestions on SCM and B2B but admitted that the end result would probably be a mixed-bag.
"Some will adopt e-business and SCM because they want to play in the regional or global market but others may not because they don't think AFTA will happen."
He also said that most of the local players, including downline car assemblers and component suppliers and manufacturers, would probably adopt a wait-and-see attitude: "smaller component manufacturers want a big-boy to take the lead."
The key advantage that SCM in particular provides to the automotive industry is improved inventory turns, optimized inventory and a bigger inventory capacity.
Perkins said the challenge facing B2B exchanges and supply chain exchanges is convincing all the parties involved that there will be no compromise of intellectual property or trade secrets, a problem that COVISINT encountered early on.
Another challenge is to convince parties that are accustomed to lower levels of competitiveness to change their business attitude, particularly since the arrival of AFTA will herald significant competition not only to automobile producers, but assemblers and component providers.
The third challenge is encouraging parties who have traditionally conducted business on a one-to-one basis, either with each other or parties higher up in the production line, to collaborate and work together to bring about a reduced time to market for new products and more efficient production.