Ford's change of gear signals boost for B2B

Ford is to merge its private supplier network with Covisint, the auto industry exchange it helped found over a year ago.

The 4,200 suppliers and 42,000 end users on the private Ford Supplier Network (FSN) will now conduct business with the motor giant over the public exchange it co-founded with General Motors, Daimler Chrysler, Renault and Nissan in 1999.

Ford recently claimed it saved $70m last year through on-line procurement on Covisint. With FSN conducting over $90m worth of business annually, Ford says the move will provide suppliers with industry-wide customer contacts and increased cost savings.

It also gives the fledgling Covisint an important seal of approval at a time when industry exchanges are being slammed for missing the multi-billion dollar savings targets vendors and analysts had predicted.

While Mitsubishi and Peugeot have jumped on board in the past year, and Daimler Chrysler claims to have done £2.16bn worth of business in a few days, Volkswagen and BMW have snubbed Covisint in favour of private networks.

Laurence Stock, a research analyst with Datamonitor, said Ford had made a shrewd move and other exchange members would be keen to follow.

"Ford has given Covisint a chance to get established and now it's a natural move for them. It's always been a pioneering exchange and while the other members will probably adopt a wait and see attitude, I think we will eventually see them follow," he said.