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.