| By
Richard Karpinski
July 20, 2001
E-Steel CEO Michael Levin has seen other metals industry
e-marketplaces closing up shop in droves the past few
months. In short order in June, MetalSite, MetalSpectrum
and Aluminum.com all died an untimely death.
Meanwhile, Levin, who has long tried to distance his
company not only from the e-marketplace phenomenon but
from those would-be competitors as well, has his company
on a roll.
E-Steel is entering the second phase of a major supply
chain implementation with Ford Motor Company--one of
the biggest private direct Web-based procurement deals
to date--and earlier this week inked a deal with auto
e-marketplace Covisint. It is also looking to expand
into handling direct procurement of non-steel products,
including resins, plastics, paint and paper.
Although public e-marketplaces have floundered, the
ideas behind them still resonate with large users, he
said.
"More and more, big companies are faced with managing
their assets better, getting new products to market
faster and generating higher ROIs," said Levin
this week. "Big companies are becoming dependent
on their extended enterprise. What we try to do is help
companies manage that extended enterprise as well as
to manage what's inside the enterprise."
The larger trend is that in the near future, if it's
not already happening in some industries, companies
will count on their "net channel," as Levin
calls it, to compete in the marketplace. "It will
be Ford and its supply chain competing against GM and
its supply chain," he said.
While the precise nature of this week's Covisint relationship
is still to be determined (for now it's a co-marketing
deal; deployment of E-Steel apps by Covisint or its
owners is still to come), it's an important foot in
the door for E-Steel. But for Covisint co-owners including
GM and DaimlerChrysler, E-Steel's success with Ford
offers a model for supply chain success.
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Ford has already converted 100 percent of its North
American tier 1 suppliers onto the procurement network
and is now working on expanding into Europe, said Levin.
Ford is targeting $1 billion in steel procurement via
E-Steel apps this year, and more than $1.2 billion next
year.
While E-Steel still runs a metals exchange, the Ford
deal is a straight software deal, with E-Steel software
handling the strategic sourcing and workflow involved
in Ford's steel procurement.
The Ford implementation is an interesting one, and shows
the creative ways companies can bend supply chain technologies
to meet business goals.
Ford uses the procurement platform not only to buy steel
for itself but to "re-market" to its top suppliers
as well. In that way, its entire supply chain can benefit
from volume discounts. And Ford wins because all the
components of the cars it manufacturers theoretically
benefit from the discounts as well.
The supply chain network includes more than 1,200 steel
"stampers" and producers and involves more
than 170 business processes, including product specification,
purchase orders, advance shipping notices and claims
and settlements. Ford previously ran the re-marketing
program via phone, fax, and, with its largest trading
partners, EDI--which severely limited the success of
the program.
Ford's success with E-Steel offers lessons for other
companies looking to fine-tune their supply chains.
Foremost, the Ford re-marketing program was long-established.
That meant Ford didn't have to change user behavior
and engineer business processes from scratch, and was
able to more quickly automate the program via the Web.
E-Steel's Levin contends--even after the death of many
of his would-be rivals--that the biggest thing holding
companies back from major supply chain overhauls isn't
technology or market problems, but overhauling corporate
sluggishness. "Our biggest competitor is inertia,"
Levin said.
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