E-Business Standardization in the Automotive Sector: Role and Situation of SMEs

E-Business Standardization in the Automotive Sector: Role and Situation of SMEs

Martina Gerst (The University of Edinburgh, UK) and Kai Jakobs (RWTH Aachen University, Germany)
DOI: 10.4018/978-1-60566-320-3.ch017
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Successful cooperation between large manufacturers and their suppliers is a crucial aspect, especially in the automotive industry. Such mutually beneficial cooperation requires at least a certain level of integration and interoperation of the partners’ IT and e-business systems. This chapter looks at two approaches in order to achieve this goal: sector-specific harmonization (in the form of electronic marketplaces) and international, committee-based standardization. This chapter shows that SMEs are facing a severe disadvantage in both cases. This is, however, less pronounced in a formal standards setting, in which capabilities of the individual representatives are more important, at least at the working level.
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The automotive industry is facing a number of challenges to the established relations among its players. Issues to be addressed include, for instance, shorter product life cycles, increasing cost pressure in stagnant markets, and higher complexity of the embedded electronic systems. In order to meet the associated production requirements, standardization of processes, systems, and data is inevitable. This industry is characterized by vertical integration in terms of the business relationship structures between OEMs1 and suppliers (Adolphs, 1996; Lamming, 1993). A current trend in manufacturing is that OEMs attempt to cooperate with fewer suppliers but on a worldwide scale. As a result, small and medium-sized suppliers become suppliers to tier 1 or tier 2 suppliers rather than directly to the OEMs.

The use of ICT-related technologies, particularly e-business systems, facilitates the creation of a network of relationships within a supply chain. Yet such interorganizational integration requires interoperability that cannot be achieved without widely agreed upon standards. But who has a say in the standardization process? This already has led to a range of transformations in the structure of the automotive supply chain. Large OEMs have been forced to create networks to replace the existing one-to-one relations with their suppliers, which are typically SMEs2. According to a study of Nexolab in 2001, standards were a major headache for SMEs, and 75% of the suppliers saw the lack of standardization as a major obstacle for closer collaboration. Therefore, it might be useful for companies to rethink their standardization strategies.

In many cases, an SME supplier does business with more than one OEM. In this situation, bilateral standardization to improve cooperation between OEMs and suppliers and between different suppliers, respectively, is inefficient. Still, this has been the approach of choice in many cases. However, possible alternatives are available, including sector-specific harmonization (e.g., in the form of an electronic marketplace) and, particularly, international committee-based standardization.

However, the challenges and the pressure for collaboration have led organizations in the automotive sector to become involved in a range of projects by means of interorganizational systems (IOS). Examples include electronic collaboration projects, the integration of engineering processes, and electronic catalogue projects to present product and service data. Such IOSs are adopted not only to achieve operational effectiveness by reducing coordination costs and transaction risks (Kumar & van Dissel, 1996) but also to improve communication and information presentation. Collaboration and integration shift the emphasis from stand-alone initiatives to the development of standardized and integrated solutions (Koch & Gerst, 2003). In this context, one form of IOS that fulfills the criteria of collaboration and integration is business-to-business/supplier portals that incorporate standardized business processes. Covisint, an e-marketplace founded in 2000 by large OEMs, is a very good example to analyze the standardization process in an industry, which is characterized by a large number of SMEs.

The remainder of the chapter is structured as follows: using the automotive industry as an example, this chapter looks at two approaches toward standardization, both of which involve large companies and SMEs. One approach is based on the use of international standards, and proactive participation in the open standards-setting process by all relevant stakeholders. The alternative comprises a standardized, albeit sector-specific, electronic marketplace. The design and development was pushed by a group of large car manufacturers. It turned out that the situation of SMEs was not very favorable in either case—both processes were largely dominated by the big guys. Nonetheless, the chapter makes some recommendations how this situation may be changed for open standards setting.

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Editorial Advisory Board
Table of Contents
Kai Jakobs
Chapter 1
Martina Gerst, Eric Iversen, Kai Jakobs
The chapter argues that any distinction between “e-business” and “infrastructure” is artificial. It shows that the lower-level techncial standards... Sample PDF
An Integrated View of E-Business and the Underlying ICT Infrastructure
Chapter 2
Knut Blind, Stephan Gauch
The chapter provides an overview and subsequent analysis of the demand for e-government standards in the EU. It describes the requirements for... Sample PDF
The Demand for E-Government Standards
Chapter 3
Knut Blind
Against the background of theoretical typologies of service standards, a survey among European service companies addressed the question, in which... Sample PDF
A Taxonomy of Service Standards and a Modification for E-Business
Chapter 4
Richard Hawkins
With specific reference to information and communication technologies (ICT), this Chapter examines the structural relationship of various... Sample PDF
Business Models and the Dynamics of Supply and Demand for Standards
Chapter 5
Ian Graham, Raluca Bunduchi, Martina Gerst, Robin Williams
For RFID technology (radio frequency identification), the forms of the standardisation processes are co-evolving with the technology and are being... Sample PDF
Emergence of Standardisation Processes: Linkage with Users
Chapter 6
Kai Jakobs
This chapter briefly outlines a study that looked at potential links between ICT / e-business standards’ origins and their subsequent success in the... Sample PDF
Perceived Relation between ICT Standards' Sources and their Success in the Market
Chapter 7
Kai Jakobs, Jan Kritzner
The chapter tries to provide the information that potential standards-setters should consider when selecting a standards setting body (SSB). It... Sample PDF
How to Select the Best Platform for ICT Standards Development
Chapter 8
W. Lemstra, V. Hayes
In this chapter the authors explore and describe the role of the innovating firm in relation to the standards making process of Wireless-Local Area... Sample PDF
The Shaping of the IEEE 802.11 Standard: The Role of the Innovating Firm in the Case of Wi-Fi
Chapter 9
Tom McGuffog
In this chapter, the evolution of e.business is described. The ever-changing balance between demand and supply is outlined. The conclusion is... Sample PDF
The Evolution of e.Business: Can Technology Supply Meet the Full Business Demand?
Chapter 10
Mingzhi Li, Kai Reimers
This chapter analyses and evaluates the Chinese government’s 3G policy of supporting the creation and implementation of the country’s indigenous... Sample PDF
China's Practice of Implementing a 3G Mobile Telecommunications Standard: A Transaction Costs Perspective
Chapter 11
Akio Tokuda
To develop automobiles that fulfill the criteria of “environment-friendliness” “advanced safety”, and“riding comfort”, coordination between ECUs... Sample PDF
International Framework for Collaboration between European and Japanese Standard Consortia: The Case of the Automotive LAN Protocol
Chapter 12
Tineke M. Egyedi
There is a continuous pressure for improvement in e-business. Increasing technical possibilities, new forms of outsourcing, the ongoing integration... Sample PDF
Between Supply and Demand: Coping with the Impact of Standards Change
Chapter 13
Mogens Kühn Pedersen, Vladislav V. Fomin, Henk J. de Vries
The fast growth in globalization stimulates the trend of open standards and challenges governments in devising policies for the national information... Sample PDF
Open Standards and Government Policy
Chapter 14
Ioannis P. Chochliouros, Anastasia S. Spiliopoulou, Tilemachos D. Doukoglou, Elpida Chochliourou
The European Authorities have promoted a specific and innovative framework for the use of electronic signatures, allowing the free flow of... Sample PDF
Developing Measures and Standards for the European Electronic Signatures Market
Chapter 15
Esther Ruiz Ben
In recent years, the ICT branch has experienced new internationalization impulses through the improvement of offshore practices. Particularly the... Sample PDF
Quality Standardization Patterns in ICT Offshore
Chapter 16
Manuel Mora, Ovsei Gelman, Rory O’Connor, Francisco Alvarez, Jorge Macías-Luévano
This chapter develops a descriptive-conceptual overview of the main models and standards of processes formulated in the systems engineering (SE)... Sample PDF
An Overview of Models and Standards of Processes in the SE, SwE, and IS Disciplines
Chapter 17
Martina Gerst, Kai Jakobs
Successful cooperation between large manufacturers and their suppliers is a crucial aspect, especially in the automotive industry. Such mutually... Sample PDF
E-Business Standardization in the Automotive Sector: Role and Situation of SMEs
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