Hyundai Hones Its B2B Operation

The financial potential of the electronic business-to-business marketplace is staggering. In a recent survey Gartner Group predicted that B2B--a $145 billion market in 1999--will reach $7.29 trillion worldwide by 2004; that's 7 percent of the forecasted $105 trillion in total global sales transactions.

To benefit most from this boom, companies must not only design and implement B2B technology but also integrate it with their existing processes and systems. Early adopters of B2B initiatives provide evidence that organic evolution of systems is likely to include customers, partners and suppliers and the internal enterprise itself.

Hyundai Motor America, the U.S. division of the tenth largest automaker in the world, followed such a course. Three years ago Hyundai received some good news. According to automotive industry analysts who tracked repairs performed on cars under warranty, Hyundai had greatly improved the quality and reliability of its automobiles. The number of repairs had fallen dramatically, and customer satisfaction was at an all-time high.

The accompanying bad news was that Hyundai parts sales had dropped off. After-warranty repairs were often performed by independent body shops or mechanics, which didn't always obtain parts from Hyundai. In response, the company decided to develop a way of marketing parts and services directly to independent repair shops and consumers.

At the same time, Hyundai wanted a system improve communication better with its dealers. According to Bernard Reyes, chief Web developer for the Hyundai parts technical department in Jamesburg, N.J., 60 percent of Hyundai's dealers still used dog-eared paper catalogs or antiquated microfiche systems to access parts information. Furthermore, Hyundai sought an electronic means for its dealers to place orders; one that eliminated the inefficient reliance on phone calls, faxes and a third-party satellite system.

The company decided the best way to address its challenges was an e-commerce solution that could function as an enterprise intranet and also be used as an extranet by customers, independent shops and Hyundai dealers.

Rolling it out
Hyundai's parts department detailed the features it deemed essential in an e-business solution, then solicited bids. After reviewing a dozen offerings, Hyundai settled on Click Commerce, an extranet software suite from Click Commerce Inc. of Chicago.

Reyes says that Click Commerce addressed both Hyundai's e-commerce and e-business needs. "They understood our industry," he says. "A lot of solutions providers understand the Internet but don't understand the specific business of their potential customers, including the legal issues. As an example, we can only suggest to dealers what prices they should charge, so we need to be able to tailor pricing information. Click fit their suggestions and their product to what we needed."

The system was implemented in February 1999. Within six months of the rollout, Reyes says, nearly half of Hyundai's dealers had signed on to use it. About 1,000 independent repair shops also enrolled and were matched with the appropriate Hyundai dealer.

The company's 470 dealers overwhelmingly favor the new system, claims Reyes. After they log onto the system with their user number and password, they can view customized pricing, electronic catalogs, ordering information, inventory and promotions aimed at dealers only.

Reyes says one of the strong points of the system is that the information it presents is always current. The company updates the electronic catalog once a week, which would be impossible in a paper-based format. The system also allows Hyundai to introduce new products and get them to the dealers faster than before.

The extranet offers an advantage to parties on the other end as well. "They can place orders and check inventory at their convenience," says Reyes. "That sure beats calling and being put on hold."

Third parties access the parts catalog through Hyundai's corporate Web site. Through a browser the user can view the catalog, access detailed information about parts and place orders. Independent repair shops can create an account with a local dealer and use the catalog to order factory parts directly from Hyundai. Customers can obtain parts from a nearby dealer. According to Reyes, the new system has spurred an increase in sales.

In house, the extranet is integrated with an enterprise-wide business-to-employee (B2E) system. To the more than 400 Hyundai employees, Click Commerce functions as an intranet. They log directly into the system and have full access to parts and pricing data, along with other information targeted to enterprise users.

Down the road
Hyundai plans to add support in Spanish and Portuguese to the extranet in order to communicate more efficiently with distributors in South America. Plans are also in the works to streamline the customer interface; one addition will be a quick-reference system for parts searches.

The company also will add a shipment tracking system so users can see delivery status information for themselves. This should reduce the volume of incoming inquiries at the Hyundai call center, freeing operators to assist customers who have more complicated queries.

The most important thing Hyundai will be doing, says Reyes, is integrating appropriate new technology as it becomes available. He insists that a B2B e-commerce system cannot be put into place and benignly ignored; it has to develop and grow, as do complementary organizational processes.