Ford’s E-Business Strategy

Jacques Nasser, cover Motor Company president and headspring executive officer announced a new vision for the loyal in the fall of 1999 to become the worlds leading consumer social club providing machinemotive products and work. Key to that dream was the substituteation of the business using tissue technologies. Brian P. Kelly (Kelly), carrefours e-business vice president, described cut throughs scheme to rebuild itself as a move to consumer-centric from dealer-centric, and stated that Ford would transform itself from organism a manufacturer to dealers into a marketer to consumers. Kelly explained that the main objectives of Fords e-business strategy were to bring speed, convenience, and information to customers rather than just focalisation on cost cutting. The strategy was based around the principle The consumer is queer and using the net, customer orders would be sent directly to factories and suppliers which will ultimately allow Ford to deliver cars to consumers w ithin days of ordering. Some of the e-business initiatives that Ford put in place to transform the partnership into an e-commerce company is mentioned below. up(p) Efficiency in Supply Chain 1. Ford believed that using the meshwork improved the efficiency of its supply chain, so in mid-1999, the company on with Oracle, created AutoXchange that allowed online B2B transactions with its suppliers. This e-commerce tool helped Ford and its suppliers swap information and bids on goods and services worth nearly USD 300 billion. The company expected to reduce its buy bill by 10% through the use of AutoXchange. 2. Until February 2000, the company followed the shake operations model, but by collaborating with GM and DaimlerChrysler, Ford set up an online marketplace cum private exchange Covisint. This substantially reduced the operating(a) cost and brought efficiency to the business. Covisint followed the pull model which allowed Ford to first scoop up the order from a customer and the n manufacture the car harmonise to the customers specifications, thus the traditional supply chain became a demand chain. 3. To optimally utilize the features of Covisint, Ford launched the Ford Supplier electronic net (FSN).FSN was used to share information with its suppliers over the web. By increasing the advert of information between suppliers and Ford, it reduced the vehicle delivery time. Focusing on the Demand Chain 1. In partnership with Microsoft, Ford developed CarPoint an auto get website in 1999. Retail customers could order cars through this website. In appendage to developing this website, Ford in like manner got into alliances with reputed portals analogous Yahoo. com, iVillage. com and bolt. com. These alliances gave Ford insight into the preferences and buying habits of various segments of the society. . In late 1999 Ford realized that customers queries should be obstinate quickly to get closer to those who use the net and for this it established a new e-CR M company Percepta a joint venture with TeleTech holdings. 3. In subsequence with the e-CRM strategy, Ford in 2000 launched another e-commerce initiative to supplement CarPoint. com and Ford. com it was called Ford mesh Retail System (FIRST). FIRST was aimed at facilitating communication of leads and orders between the company and its dealer network.This system gave customers cap readiness and options for buying a car like never in the beginning, right from research to financing options. 4. Another e-commerce tool MyFord. com launched in February 2002, offered personalized service information like the maintenance schedules to owners All the preceding(prenominal) initiatives helped Ford to gain competitive advantage and they achieved the vision of the Build-to-Order (BTO) system that was conceived before the launch of e-commerce initiatives. It was estimated that a Web-enabled, BTO system could reduce distribution costs by almost USD 2,600 per vehicle.About USD 1,400 of these sav ings would be in physical costs such as freight, sales commissions, and advertising. The balance would be in vestige costs associated with the current push vehicle distribution/sales system, such as price discounts and stockout costs. Adding together all the supply-chain savings thus identified(back-end, online direct sales, and build-to-order) would produce an estimated total potential cost reduction of about USD 3,643 per vehicle, amounting to 14 percent of total vehicle cost. Source GS Research Analysis) With the heart of e-business websites, Ford established a direct connection with its customers. Now when customers came to FordDirect. com they had the ability of choosing the features of the car they wanted to buy.This reduced the role of the middlemen and so dealers felt that they were being gradually excluded from the value chain. To avoid channel conflicts arising out of online retailing Ford began a number of initiatives. One of the main initiatives was to share the own ership of FordDirect. om with its 4200 dealers in the US. Ford also facilitated the communication of leads and orders between the company and its hugh dealer network through Ford Internet Retail System (FIRST). In sum to this, using MyFord. com the company enabled Ford dealers to inform vehicle owners about recommended maintenance, prompt them of oil change and provide information about tyre care, safety, insurance, loans and leases. It also provided dealers a vehicle locator tool to help them find a vehicle on another dealers stock.