Ford To Move Supplier Network Onto Covisint

Ford Motor Co. will become the first automaker to move its core collaborative business-to-business operations onto Covisint, the auto exchange that Ford announced with DaimlerChrysler AG and General Motors Corp. more than 18 months ago.

Ford unveiled the news Thursday. Its Supplier Network, a private extranet on which it does business with more than 4,200 suppliers, is responsible for more than $90 billion in procurement annually. Covisint will handle nearly all collaborative efforts between Ford and its largest suppliers, including online meetings, exchange of engineering information, exchange of real-time demand and inventory information, and collaboration on other issues critical to procurement of highly-engineered parts and raw materials.

Sue Kobet, Ford director of value chain B-to-B, says Covisint will enable suppliers to access procurement managers for all Ford models and all Ford brands worldwide. Ford manufactures U.S. brands such as Lincoln and global brands such as Jaguar. The supplier portal will offer multilingual capabilities, which Kobet says will contribute to Ford's efforts to improve supply-chain collaboration globally between Ford and its suppliers. Kobet did not provide information on expected savings from using the exchange.

Among B-to-B gurus, Covisint has long been considered a potential model for industry-specific exchanges, but slow adoption of the exchange by automakers for critical business processes such as supplier collaboration and supply-chain management has hampered its success. Most large suppliers have been reluctant to adopt Covisint themselves until automakers made clear their intentions to use the exchange for core business processes, such as supplier collaboration.

AMR Research analyst Kevin Prouty says the Ford deal is the first step in filling this hole in Covisint's strategy. Industry sources say GM and DaimlerChrysler are close to signing similar agreements with Covisint. Another remaining hole is automakers' adoption of Covisint's supply-chain management offering, provided by SupplySolution Inc. Prouty says wide adoption of Covisint's supply-chain offerings by suppliers is unlikely until an automaker agrees to use the offering. Insiders say Ford, DaimlerChrysler, and GM are nearing agreements with Covisint to use the SupplySolution offering.