Ford, Oracle Form Supply Chain Alliance

Ford today announced a sweeping change in the way it does business with suppliers, saying it will use the Internet to reduce operating expenses, inventories and delivery time to consumers.

Ford will partner with Oracle to form a separate, jointly owned and operated company, called WebXchange, which will provide the technology to suppliers. The supply-chain back-end will integrate with Ford's consumer-facing Web sites to transform Ford's supply chain from one based on forecasts and building for inventory to a real-time build-to-order model.

Speaking at a press conference today, Ford CEO Jack Nasser and Oracle president and COO Ray Lane called the venture the biggest business-to-business e-commerce network yet. They said that connecting Ford's customers to the supply chain is the key to the system, and will yield dramatic cost savings for Ford and its suppliers. They said the benefits of faster and more efficient production cycles will be felt by dealers and customers.

Nasser said that suppliers won't be forced to use the system, but that the benefits will be so great that nearly all suppliers will participate. "They'll see it as the only way to do business," he said.