| by
Kevin Prouty
AMR Research Alert on Manufacturing E-Business for
June 15, 2001
Five years ago Ford began operating a program it termed
a "steel re-marketing program." The program negotiated
large aggregated steel purchases based on Ford's model
year demand. The steel was then sold to suppliers based
on contract commitments for components to be supplied
to Ford. While the suppliers lost some control of steel
purchasing, it allowed Ford to aggregate the demand
for steel and keep negotiation leverage with steel suppliers.
The program is continuing to ramp up, but had hit a
roadblock in that the program was difficult for suppliers
and Ford to manage for any but critical suppliers that
had a large portion of their business with Ford.
Ford is now revving the program back up based upon a
technology platform from e-Steel. Ford uses e-Steel's
internally developed steel procurement management engine
as a private exchange to help Ford and suppliers coordinate
the multitude of component contracts that require suppliers
to purchase steel through the re-marketing program.
Ford claims the e-Steel platform lets it scale the re-marketing
program down to smaller suppliers and out to suppliers
where Ford is a smaller portion of the suppliers business.
Ford's goal is to take the re-marketing program from
60% of eligible supplier contracts to 100% by the end
of 2001.
While some suppliers and steel companies grouse at the
loss of control in material procurement, the end result
is saving money on the entire material procurement on
vehicles. Ford also considers the re-marketing program
a competitive advantage and is reluctant to share the
program with its direct competitors. Ford is willing
to share the process and technology with other companies
that purchase large amounts of steel or other strategic
materials, like aluminum, resin magnesium, etc. Good
candidates would be the heavy equipment manufacturers,
aerospace companies, and large appliance manufacturers.
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