The devil is in the details. Although carmakers need some vehicle to automate purchasing and collaborate on projects, companies and analysts in various industries question whether Covisint is the appropriate solution. Unfamiliar with the Internet, some suppliers worry that security holes will allow competitors to see their pricing structures and parts diagrams. Others view Covisint as a means of reversing the power automakers gave to suppliers in the 1980s, when the industry began outsourcing work to cut costs during Detroit's dark days at the height of competition with Japan. Most automakers today design and assemble the car and provide a few key components, such as the engine, transmission and sheet metal.
Suppliers make almost everything else.
Because the automakers don't make those commodities, they don't know exactly how much they cost. Shifting procurement to online auctions, where suppliers bid down contracts by offering prices as close as possible to cost, would allow the carmakers to better estimate the actual costs of parts and use this information against the suppliers, according to Covisint's detractors. Like numerous small suppliers, he didn't want his name used because he didn't want to incur the wrath of the larger suppliers and automakers that back Covisint and buy his products. The renegade effort died within a month when auto executives sent letters to top suppliers offering financial incentives for their participation in Covisint. But other obstacles were challenging Covisint on the technology side.