Ford ramps up aggregated steel purchasing through web exchange technology

Ford is demonstrating one of the ways in which a private web exchange can work best. The giant has injected new blood into its ‘steel re-marketing programme’ started five years ago, by moving to the technology behind the e-Steel web exchange – and is now driving for 100% steel buying and management through this route. The programme, which negotiated large aggregated steel purchases on behalf of its suppliers based on Ford’s forecast demand, had run into difficulties in that it was difficult to manage any but main suppliers having a large proportion of their business with Ford. But it’s all now coming together again. According to analyst AMR’s senior consultant Kevin Prouty, Ford is now using e-Steel’s internally developed steel procurement management engine as a private exchange to help Ford and suppliers co-ordinate 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,” he says. “Ford’s goal is to take the re-marketing program from 60% of eligible supplier contracts to 100% by the end of 2001.” Prouty comments: “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 programme a competitive advantage and is reluctant to share [it] with its direct competitors.” Ford is, however, willing to share the process and technology with other companies that purchase large amounts of steel or other strategic materials, like aluminium, resin magnesium, etc. “Good candidates would be the heavy equipment manufacturers, aerospace companies, and large appliance manufacturers,” says Prouty.