Ford’s E-Business Strategy

Jacques Nasser, get across motor Company president and chief executive officer announced a new vision for the firm in the f alone of 1999 to become the instaurations leading consumer beau monde providing automotive products and services. Key to that dream was the diversity of the business using Web technologies. Brian P. Kelly (Kelly), traverses e-business vice president, draw Fords plan to rebuild itself as a fly the coop to consumer-centric from principal sum-centric, and stated that Ford would interpret itself from being a manufacturer to dealers into a marketer to consumers. Kelly explained that the of import objectives of Fords e-business strategy were to bring speed, convenience, and nurture to customers rather than just focusing on cost cutting. The strategy was found around the principle The consumer is King and using the net, customer companys would be coach directly to factories and suppliers which will eventually allow Ford to deliver cars to consumers de ep down days of ordering. Some of the e-business possible actions that Ford put in place to transform the company into an e-commerce company is mentioned below.Improving Efficiency in Supply mountain range 1. Ford believed that using the internet improved the efficiency of its supply chain, so in mid-1999, the company along with Oracle, created AutoXchange that allowed online B2B transactions with its suppliers. This e-commerce creature helped Ford and its suppliers switch everyplace tellation and bids on goods and services worth nearly USD 300 billion. The company expected to thin out its purchasing bill by 10% through and through the use up of AutoXchange. 2. Until February 2000, the company followed the push operations present, but by collaborating with GM and DaimlerChrysler, Ford set up an online marketplace cum private switch Covisint. This substantially reduced the operating costs and brought efficiency to the business. Covisint followed the pull model which allowe d Ford to first take the order from a customer and accordingly manufacture the car according to the customers specifications, thus the conventional supply chain became a demand chain. 3. To optimally utilize the features of Covisint, Ford launched the Ford Supplier Network (FSN).FSN was used to share instruction with its suppliers over the web. By increasing the flow of information mingled with suppliers and Ford, it reduced the fomite delivery time. Focusing on the Demand Chain 1. In confederation with Microsoft, Ford developed CarPoint an auto get website in 1999. sell customers could order cars through this website. In addition to developing this website, Ford also got into alliances with reputed portals a give care(p) 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 resolved quickly to get closer to those who u se the net and for this it established a new e-CRM company Percepta a crossroads venture with TeleTech holdings. 3. In continuation with the e-CRM strategy, Ford in 2000 launched another e-commerce initiative to supplement CarPoint. com and Ford. com it was called Ford Internet Retail System (FIRST). FIRST was aimed at facilitating communication of leads and orders between the company and its dealer network.This system gave customers capability and options for buying a car like never before, right from research to financial backing options. 4. Another e-commerce tool MyFord. com launched in February 2002, offered personalized service information like the maintenance schedules to owners All the above initiatives helped Ford to gain competitive returns 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 fomite.About USD 1,400 of these savings would be in physical costs such as freight, sales commissions, and advertising. The remnant would be in phantom costs associated with the current push fomite distribution/sales system, such as price discounts and stockout costs. Adding together all the supply-chain savings thus identified(back-end, on-line direct sales, and build-to-order) would produce an estimated total capableness cost reduction of about USD 3,643 per vehicle, amounting to 14 percent of total vehicle cost. Source GS Research Analysis) With the means 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 mathematical function of the middlemen and so dealers felt that they were being gradually excluded from the value chain. To avoid stock conflicts arising out of online retailing Ford began a number of initiative s. One of the main initiatives was to share the ownership 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 addition to this, using MyFord. com the company enabled Ford dealers to inform vehicle owners about recommended maintenance, remind 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.