Ford and Oracle to Create Business-to-Business Venture
3 November 1999
Ford and Oracle to Create Multi-Billion-Dollar Internet Venture
New Company to Web-Enable and Link $300 Billion Automotive Supply Chain To
Dealers and Consumers
NEW YORK, Nov. 2 -- Ford Motor Company CEO
Jac Nasser and Oracle Corporation President and COO Ray Lane
today announced the formation of the AutoXchange, an automotive e-business
integrated supply chain to be created and run by a newly formed joint venture
between Ford Motor Company and Oracle Corporation. Ford and Oracle will
immediately begin negotiations of a definitive agreement. The venture will
initially facilitate Ford's
$80 billion in annual purchasing transactions with its more than
30,000 suppliers and $300 billion extended supply chain. The two companies
will create the world's first automotive online supply chain network, and the
world's largest business-to-business electronic network. This new online
automotive marketplace is expected to dramatically reduce Ford's purchasing
costs and increase its operating efficiencies through an integrated Internet
supply chain system. Further, it will extend Ford's core business into a
virtual e-business enterprise allowing direct connections of the supply chain
to the consumer to reduce Ford's time to market.
Under the terms of the business agreement, which is subject to the
negotiation of a definitive agreement between the parties, Ford will own a
majority of the new joint venture which is expected to become operational in
the first calendar quarter of 2000.
The AutoXchange will allow Ford and its suppliers to capture savings
through more strategic sourcing of vehicle components, and eventually automate
the entire purchase process. Taking advantage of the inherent cost savings
associated with Internet-based transactions, the new model initially will
promote procurement efficiencies and allow Ford's purchasing professionals to
focus on product quality, supplier competitiveness and performance, and time
to market.
For its part, Oracle will provide the software, implementation and
support, as well as host and manage the AutoXchange. Powered by Oracle(R)
Exchange, Oracle's on-line e-business marketplace, it is anticipated that the
AutoXchange's supply chain capabilities will ultimately extend to other
initiatives such as warranty, performance and design collaboration and will
become the e-business backbone that will ultimately connect Ford's customers
with their suppliers.
"For Ford, Oracle is the clear leader in business-to-business e-commerce.
Oracle was the only company with the resources and capabilities to handle the
scale and scope of our requirements. With this agreement, Ford will redefine
the limits of e-business enterprises," said Nasser. "This new Internet supply
chain gives Ford tremendous competitive advantage. Better, faster, more
efficient supply chains and efficient acquisition of component parts,
commodities, supplies and services for Ford means we can provide our customers
with better products and services. This is a bonus for Ford suppliers; we're
inviting our supply chain partners to participate in the rewards of the
e-enterprise."
"This venture will create the world's largest Internet supply chain," said
Brian Kelley, president of Ford's Global E-Commerce unit. "It will deliver
major productivity to Ford, real savings to our suppliers and reduced
inventories to our dealers."
Lane commented that, "Ford is the partner we wanted to have in this joint
venture. Ford is the most progressive in its understanding of the magnitude
and speed of change that e-business will have on the entire automotive
industry. Ford is furthest along in developing a strategy that creates new
capabilities throughout the automotive supply chain from procurement to
collaborative product development and from customer to supplier. This venture
is on an unprecedented scale and will be a model for a vertical supply chain."
"Companies can spend more than 50 percent of their revenues purchasing
goods and services. A reduction in total purchase costs has a direct,
positive impact on increased profitability," Lane continued. Lane cited the
example of a major US manufacturer who, through the application of Oracle
procurement software, expects to save $500 million annually. "Becoming an
e-business allows companies to communicate in real time across the supply
chain for better utilization of resources. The goal is to end the era of
disconnected suppliers with big buffers of inventory."
Oracle Internet Procurement software is currently being used by over
300 global coproations including Boeing, Compaq, General Electric, Honeywell,
and UPS. Additionally BT, the company formerly known as British Telecom, runs
25,000 users online today.
About Ford Motor Co.
Ford Motor Co. is the world's largest producer of trucks and the
second-largest producer of cars and trucks combined, marketing and selling
approximately 7 million vehicles globally through its seven brands last year.
Ford Motor Co. employs approximately 354,000 people in plants, offices and
laboratories to serve consumers in more than 200 countries and territories.
Ford Motor Co. is also one of the largest providers of financial services
worldwide through 2,400 branches in 33 countries.
About Oracle Corp.
Oracle Corporation is the world's leading supplier of software for
information management, and the world's second largest software company. With
annual revenues of more than $9.1 billion, the company offers its database,
application server, tools and application products, along with related
consulting, education and support services, in more than 145 countries around
the world.
For more information about Oracle, please call 650-506-7000. Oracle's
World Wide Web address is http://www.oracle.com/ .
Trademarks
Oracle is a registered trademark and Oracle Exchange is a trademark of
Oracle Corporation.