Ford said Thursday, Aug. 30, that Covisint will develop and sponsor the next generation of its Ford Supplier Network, to be operational in February.
The network was launched in 1998 and is used by 4,200 suppliers. It is an internal network that suppliers access with a password.
The development is a boost for the automotive industry exchange, which was founded by DaimlerChrysler, Ford and General Motors in February 2000. Ford is the first automaker to require suppliers to join Covisint, a signal that automakers are more committed to using the exchange.
"Suppliers have not seen that full-blown commitment to Covisint from the OEMs and that has confused them," said Kevin Prouty, senior research analyst at AMR Research in Boston. "So this is one step in that direction."
Prouty expects other automakers to follow.
The new portal means that Ford is outsourcing its supplier portal operation to Covisint. Ford and Covisint would not divulge how much Ford would pay for the service. Ford's annual purchasing totals $91 billion.
Suppliers will be able to use the new multilanguage portal to access both Ford internal applications as well as the software tools that Covisint offers for a fee. A Ford spokesman was unable to say how many of its suppliers use Covisint.
Suppliers will have to register to gain access to Covisint. But it will be up to them to determine whether they want to use any of Covisint's procurement, supply-chain management and product-development collaboration software.
Though there is no fee to join Covisint, suppliers will have to complete a user agreement.
Covisint has various methods of charging automakers and suppliers for its services. For example, Covisint charges a flat fee per auction and a fee based on a percentage of the volume of the transaction.
Covisint registered 2,000 companies through the end of July.
Suppliers use the Ford Supplier Network to access Ford information and use about 100 business applications, a Ford spokesman said.