Ford and Caterpillar strike SAP mega deal to develop supply chain systems

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Ford and Caterpillar strike SAP mega deal to develop supply chain systems

Antony Adshead
Ford and Caterpillar have struck a deal with SAP to jointly develop supply chain software in a deal estimated by analysts to be worth tens of millions of dollars.

The software will be used internally by Ford and heavy vehicle manufacturer Caterpillar. It will also be sold as a software package to other automotive companies.

The collaboration will see SAP supply chain and customer relationship management applications enhanced by Ford and Caterpillar based on their experience in the vehicle parts market.

Such joint ventures are becoming increasingly popular across all industries, according to analysts.

"It is part of a trend for pioneers in industry sectors to work with vendors who will listen to their expertise," said Derek Prior, an analyst with Gartner.

"The user company gets software that suits its needs and there may be financial benefits in licence costs and future sales of the application."

However, Prior questioned whether the SAP software would be robust enough to handle the size and complexity of new supply chain areas.

After-sales processes such as parts logistics in the automotive industry are complex, involving many millions of parts and thousands of dealers worldwide - Ford alone has 600,000 parts and processes 120 million dealer orders per year.

Prior said, "SAP has a good reputation for producing software scalable to large applications, but any new software has the potential for performance problems."

An SAP spokesperson said, "SAP's software is extremely scalable, making it an ideal platform for a project of this magnitude."

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