Ford saves $10m on its first Auto-Xchange run


Ford saves $10m on its first Auto-Xchange run

Mike Simons
Ford has saved more than $10m on a $75m parts purchase in its first full use of Auto-Xchange, the Internet supply chain network it has developed with Oracle.

Mike Simons

Brian Kelley, president of Ford's e-business unit, said $300m worth of business would be conducted on the exchange this month.

The Auto-Xchange network was launched last November alongside the rival TradeXchange system being developed by General Motors and Commerce One.

Ford and Honda are competing to add other car manufacturers, including Nissan, Toyota and Honda to their respective networks.

Initially, Ford took a 65% stake in Auto-Xchange and Oracle claimed the remainder. Last week they were joined by Cisco Systems, which has taken an equity stake in the project and will supply network start-up packs to Ford's 40,000 suppliers and dealers.

Neither Ford, Oracle nor Cisco itself would this week disclose the network giant's stake, although the exchange is set for a stockmarket floatation within 18 months.

Larry Ellison, chief executive officer of Oracle, claimed that Auto-Xchange had stolen a march on the rival TradeXchange system being developed by General Motors and Commerce One, because it can conduct auctions initiated by both buyers and sellers, for both production parts and other services.

"All Commerce One can do is seller-orientated, indirect, non-production parts procurement," said Ellison.

GM said its site had so far held auctions for $2.2m worth of goods and would host buyer and seller initiated auctions in the second quarter.

Oracle's Ray Lane said, "We expect exchanges to become the business model of the future across all industries."

However, Ford's Brian Kelley hinted at potential problems for other business-to-business exchanges.

He said the "massive scale" of the car giant's purchasing was essential to the exchange's success. Ford currently has a $300bn supply chain from supplier to dealers and consumers.

David Bicknell

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