Ford and IBM Form Strategic Alliance to Boost E-Commerce Efforts in Europe

Strategic Insights -

Ford, the world's second largest carmaker, has announced a strategic alliance with IBM to extend its electronic commerce activities in Europe. The alliance will cover areas such as supply chain management, purchasing, and vehicle design, and is expected to result in significant cost savings for the company. This move is part of Ford's broader strategy to harness e-commerce and internet applications for its traditional automotive operations. The alliance also forms part of a cost-cutting drive by Ford in Europe, where the company is drawing up restructuring plans to bolster profits from the region.

Key Takeaways:

  • Ford has agreed to a multi-million-dollar strategic services agreement with IBM to cover areas such as supply chain management, purchasing, and vehicle design in Europe.
  • The deal will result in the establishment of two "accelerated solutions centres" (ASCs) in Cologne and Essex, which will develop new e-commerce applications and employ around 120 staff from Ford and IBM each.
  • The ASCs are expected to develop 100 new applications every year, with the aim of achieving similar cost savings as a pilot project in the US this year, which achieved a 30 per cent cost savings for Ford.
  • The new software applications will link with existing ventures with Oracle and Microsoft, and could be developed into a network of ASCs in the future.
  • Ford spent $17.5bn on external purchasing in Europe last year, out of a global total of around $80bn.
  • Nick Scheele, chairman of Ford of Europe, has been charged with reducing overheads and improving operating earnings.
  • The deal is part of a broader cost-cutting drive by Ford in Europe, where the company is drawing up restructuring plans to bolster profits from the region.

Statistics:

  • Ford spent $17.5bn on external purchasing in Europe last year, out of a global total of approximately $80bn.
  • The two ASCs established under the agreement with IBM will employ around 240 staff in total.
  • The ASCs are expected to develop 100 new applications every year.
  • A pilot project conducted by Ford and IBM in the US this year achieved cost savings of 30 per cent for Ford.
  • The deal with IBM is a multi-million-dollar strategic services agreement.

Sources:

  • "Ford to announce deal with IBM", Financial Times (no date).
  • "Ford to create online supplier exchange", Automotive News Europe (15 Jan 2001).
  • "Ford develops Internet-based buying service", Automotive News Europe (17 Jan 2001).
  • "Ford, IBM sign $17.5B supply chain agreement", Automotive News (22 Jan 2001).
  • "Ford of Europe to reduce overheads and improve operating earnings", Ford press release (no date).