Cloud-Based Exchange Enhances Indian Auto Industry

After years of fits and starts and planning efforts, an ambitious cloud-based data exchange that launched in February promises to transform the Indian auto industry. The so-called AutoDX, or Automotive Data Exchange, brings together Indian automobile manufacturers and parts suppliers in an ambitious IT initiative.

“This will go a long way in improving the competitiveness of the Indian auto industry,” says Vijay Sethi, vice president and CIO of Hero MotoCorp and chairman of the IT committee for the Society of Indian Automobile Manufacturers (SIAM), in an email interview. “I am sure other industries will follow soon.”

For years, Indian automakers relied on Web portals and supplier relationship management (SRM) systems to exchange data with suppliers. But if a parts company was supplying 10 different manufacturers, it had to wrestle with 10 systems that didn’t speak the same language. That led to a lot of complexity, which resulted in inefficiencies and increased chances of errors.

Sethi says manufacturers and suppliers considered pursuing a solution similar to AutoDX 15 years ago, but the technology at that time could not support such an exchange. As a result, the effort was tabled, and the reliance on portals and SRM systems continued.

In late 2009, the membership of SIAM revisited the issue, and though it was still a pain point, it was one that technology was finally able to handle. Consequently, the group decided to approach the Automotive Component Manufacturers Association (ACMA) of India, and the two groups entered into their first joint IT initiative.

They started by working to establish industrywide data standards that would make AutoDX cost-effective. They brought in KPMG consultants to help identify possible standards, and then held a series of workshops with manufacturers and suppliers to ensure that the standards were comprehensive enough.

A set of standards was adopted in 2012, which Sethi says represented a “huge milestone.” At that point, they began evaluating vendors. Eventually, SIAM and ACMA zeroed in on IBM, which possessed the range of cloud technologies and skills needed to help the industry build the exchange.

For the next year, an industry team worked with IBM to develop AutoDX, and they launched a pilot of the exchange in the middle of 2013. Once testing was complete, AutoDX went live on Feb. 4, 2014, at the opening of India’s annual auto expo. Motorcycle and scooter manufacturer Hero MotoCorp and parts maker Sundaram Fasteners became the first companies to exchange data electronically on the platform.

Though only a few companies currently use the platform, Sethi and others in the industry expect the number of firms to grow. He points out that AutoDX delivers numerous payoffs ranging from improved processes to reductions in transaction costs.

“We have done some computations, and, in some cases, the cost of a transaction will go down by as much as 80 percent,” Sethi says. “As more manufacturers, OEMs and suppliers adopt it, and more transactions are added, the industry will start seeing the benefits.”

And other Indian industries will no doubt be watching closely.