The Ford Motor Company and Oracle Corp are to set up a new joint venture company to establish what the two claim will be the world’s largest internet supply chain. AutoXchange is the second major venture into information technology for Ford in the past three months. In September, it announced CarPoint, a joint venture with Microsoft Corp to establish a web based build-to-order system for car purchasers.
The Oracle deal is on a giant scale. Ford spends $80bn annually with its 30,000 suppliers, and has an extended supply chain with an estimated value of $300bn. It expects to make major savings in purchasing costs and increase operating efficiencies, as well as extending its core business by extending direct connections from the supply chain to the consumer.
AutoXchange will be set up as a separate business with Ford as the majority shareholder. Revenue from procurement and purchasing operations will be shared with Oracle. According to Ray Lane, Oracle president and COO, the company will become operational early in the new year, and quickly grow into a $1bn company. Once the infrastructure is up and running, the intention would be to take AutoXchange public, he said.
Technology for the venture will be based on Oracle Exchange, the e-business initiative Oracle launched earlier this year (CI No 3,714). Exchange consists of Oracle technologies hosted by its Business Online outsourced application service, announced a year ago. There are now 250 Exchange customers,
Oracle says. AutoXchange will be responsible for getting suppliers signed up for the service and adding content. Components will include Oracle internet procurement suite, bid management, transaction messaging services and advanced planning. Underlying the applications will be the Oracle 8i database. Ford already standardizes on the Oracle database company-wide, but hasn’t to date been a customer for Oracle Applications.
Oracle described the technology as fundamentally an open platform and said that AutoXchange will invite other car manufacturers to use its service in the future. The CarPoint venture with Microsoft is similarly open to other suppliers.
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