Oracle is Word One at Ford

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Event Summary

Ford Motor Company (NYSE: F) and Oracle Corporation (Nasdaq: ORCL) have joined to create an automotive online supply chain. The new venture, dubbed AutoXchange, is expected to handle Ford's $80 billion in annual purchasing transactions with more than 30,000 suppliers, as well as its total $300 billion extended supply chain.

The immediate goals of the venture are to allow Ford and its suppliers to capture savings through strategic sourcing. Later phases of development will extend the capabilities to warranty, performance and design collaboration. Although it is primarily a business-to-business venture, there are future plans to extend AutoXchange directly to Ford's consumers.

Market Impact

This will be a significant achievement for Oracle and, as the actual implementation begins to take shape, will give them a great deal of credibility as a procurement and supply chain vendor. However, despite the size of Ford's extended supply chain, this looks like a much less important announcement for the E-procurement market at large than the similar one from GM and Commerce One (See TEC News Analysis article: "Commerce One Meets GM: Web Now Has A Really Big Parts Department", November 10th, 1999). That is because the latter is a more open arrangement that is likely to attract vendors and buyers outside of GM's direct relationships. Since this arrangement is designed at empowering the extended supply chain (See TEC Technology Research Note: "The Essential Supply Chain", November 10th, 1999), it implies a tighter integration between the different members than a global network, making it less attractive for uninvolved companies to join.

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