Ford and Oracle to develop online procurement network

Motor giant, Ford, has signed a deal with Oracle to launch an automotive supply chain network designed to streamline the car manufacturer's procurement process.

The system will link 30,000 suppliers involved in the automotive giant's purchasing transactions.

Alice Miles, president of B2B at Ford, said: "The reason we decided to partner with Oracle and go down this route is that we have talked to many suppliers and looked at ourselves internally and realised we'd have to move quickly on using the Internet to do business faster, and more efficiently."

The AutoXchange system will handle all aspects of the company's $80bn procurement system. "We're looking at all elements of the supply chain including administrative information, manufacturing, our line site usage information and quality performance. It's all aspects of how we deal with our suppliers," Miles said.

AutoXchange will be based on Oracle's Xchange application suite for creating a virtual marketplace.

Thomas Power, independent analyst, said: "I cannot think of a company that will be here in five years time that doesn't do online procurement. There is no point in companies launching their seller side until the procurement is finished."

Ford will start to assemble a team to implement the system next week but Ford's Miles does not expect it to be operational until next year.

In a similar move, General Motors has signed a deal with CommerceOne to launch an electronic marketplace for trading parts, services and materials. GM Marketsite will handle GM's $86bn annual procurement spend from its suppliers. Users can buy from an online catalogue, a bid quote process or online auction.