Ford's e-Business Strategy

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Case Details:

Case Code : ITSY002
Case Length : 09 Pages
Period : 1999-2002
Pub Date : 2002
Teaching Note : Available
Organization : Ford
Industry : Automobiles
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Improving Supply Chain Efficiency

Ford believed that using the Internet improved the efficiency of its supply chain. In mid 1999, the company created AutoXchange, a joint venture with Oracle that allowed online business-to-business (B2B) transactions with its suppliers. AutoXchange helped Ford and its suppliers swap information and bids on an estimated $300 billion worth of goods and services. Ford was able to reduce suppliers' inventories and eliminate billions of dollars in excess stock by getting accurate information to suppliers about short-term demand, with the help of the real-time orders entering its system. According to Kelley2, Ford expected to reduce its $80 billion purchasing bill by 10% within the next few years, through AutoXchange. However, cost savings on purchases was just one of the benefits...

Focussing on the Demand Chain

In 1999, Ford started its online initiatives for managing the demand chain by entering into a partnership with Microsoft for developing CarPoint, an auto buying website. Retail customers could order Ford cars through CarPoint...

The Future

According to Kelley, the major objectives of Ford's e-business strategy were to bring speed, convenience, and information to customers rather than just focusing on cost cutting. The Internet played a crucial role in helping Ford boost the satisfaction levels of its consumers. Kelley said: "The consumer is king.

And the Internet is accelerating the speed at which they get what they want. Using the Net to zap customer orders directly to factories and parts suppliers will eventually allow Ford to deliver cars to consumers within days of ordering"...


Exhibit I: Chronology of E-Business Initiatives at Ford
Exhibit II: Ford Before and after Transformation
Annexure I: Ford's Income Statements

2]  Vice-President, Global Consumer Services, Ford.

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