The Automotive Industry Action Group (AIAG), a consortium of auto manufacturers and their suppliers, has developed a new way of handling automotive supply chain information that it believes could reduce transportation costs by $1.7 billion dollars over the next five years and support national security objectives as well.

AIAG’s Material Off-Shore Sourcing (MOSS) project, designed to replace the complex mix of media currently in use with systems that will that enable strategic continuous improvement, is a user-led initiative involving all stakeholders in the supply chain: OEMs; suppliers; carriers, logistics service providers, applications providers, freight forwarders and customs brokers.

Auto analysts estimate that trade collaboration systems, operating in a “cloud platform,” could generate up to $1 billion in immediate savings to the ailing industry, according to J. Scot Sharland, executive director of AIAG. A newly-released cost/benefit analysis will assist individuals in identifying and assessing opportunities to improve supply chain logistics involving ocean shipments incoming to the U.S. and can improve the overall timing, consistency and costs of offshore sourcing in a just-in-time environment through transportation lanes.

An AIAG survey conducted by AMR Research found that 79% of the information is entered into systems repeatedly by the various partners—owing largely to the fact that they are using various and differing communication media: paper, phone, fax, spreadsheets and e-mail. This mix of communication media tends to be created out of the necessity of the moment; its use can have adverse consequences in operation.

The survey also found that 15% of all inbound ocean containers are delayed enroute due to missing or incorrect data caused by the use of multiple, error-prone entry systems. Because of these supply chain inefficiencies, many companies maintain expensive, higher-than-needed inventories to protect against material shortages and prevent work stoppage.

Conventional approaches to integrating information systems aren’t always cost-effective where there are so many participants and so much “churn” in the mix of partners. Cloud computing and its “software-as-a-service” has emerged as an alternative solution to the auto industry’s supply-chain problems.