Ford and Oracle to Create Multi-Billion-Dollar Business-to-Business Internet Venture
LAS VEGAS, NV, SEMA SHOW COVERAGE / ORACLE PRESS RELEASE
November 2, 1999 - 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( 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 effecient 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 corporations 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/