E-commerce is coming to Ford Motor Co.'s purchasing department.
By answering suppliers' questions and handling purchase orders quickly online, Ford figures it can coax suppliers into using electronic commerce for nearly all purchasing communications.
In effect, the automaker's newly retooled Ford Supplier Network Web site will be a portal into the heart of Ford's purchasing department.
The network is like an entry hall leading to many doorways. Depending on which keys a supplier receives through security clearances, it may open a number of those virtual doorways.
The stakes for Ford are potentially enormous. If the company eliminates cumbersome paper purchase orders, invoices and catalogs, it can pare its own staff costs.
Ford also can minimize telephone time, supplier hand-holding and paperwork bottlenecks. Its silver bullet is the Ford Supplier Network.
Already, 1,600 suppliers and about 16,000 individuals are enrolled in the network's user group. Ford expects the number of individuals using the network to balloon to 100,000, and a community of 200,000 users isn't out of the question.
Ford expects its network to be successful because suppliers have something to gain, too. Uncertainty is expensive, as any automotive supplier knows.
How many components must you produce next month? When will payment for the last order arrive? Did you win the bid for a key component?
Participants don't need special computer installations or proprietary Ford software. To make contact, they can use an ordinary personal computer equipped with standard Web browser software.
'The Ford Supplier Network is going to be the way to work with Ford and to access Ford, so that we don't have 15 different Web sites and 15 different security profiles out there,' said Robert Bykowicz, manager for purchasing process leadership in Ford's Global Production Purchasing Systems department.
This is Ford's second attempt to create an online network. The purchasing department launched the Ford Supplier Network in 1997. That first Web site consisted primarily of a point-and-click set of 44 links that let users quickly locate the Ford data they wanted to see, such as updates on component release deadlines.
Now Ford is making the Web site more interactive. For example, it will handle purchases of day-to-day office supplies, including everything from cleaning products to repair items. The initiative strips layers of bureaucratic tasks out of Ford's system.
'This is going to be a Web-based procurement system with select suppliers,' Bykowicz said. 'We basically take their catalog -Ford negotiates a discount - and our plant will order using their information.'
The Web procurement system eliminates the need to track the paperwork for requisitions. Simply trying to keep up with supplier catalog numbers requires hours of purchasing staff time.
Knowing which ordering codes are obsolete and which are current is a specialty field unto itself. Often, Ford purchasers might find themselves searching for a Ford-specific part number for a generic product such as lubricating oil or wiping rags.
'All the steps and getting the information out to the requisitioners took a long time and a lot of people,' Bykowicz said.
Alan Berry, the Ford Supplier Network's supervisor for quality and process leadership, said it was clearly time to refresh the original Web site.
Rather than dress up a tired Web link concept, Ford chose to emulate interactive Web sites such as Yahoo!
Ford adopted an 'extranet' model for its service: a loop of communication that exists outside the corporate security firewall yet is secure and controllable by Ford and its suppliers.
'One of our objectives was to improve communication between Ford and the suppliers and hopefully share more information,' Berry said. 'It's hard to put a collective face on Ford, but we're really trying hard to do that.'
Links to GM, D/C
Ford is not the only automaker with a supplier network site. In fact, Ford's Web site offers links to both General Motors' and DaimlerChrysler's supplier sites.
Bykowicz says Ford doesn't mind showing its competitors' sites because Ford gains from both the access and the comparison.
Among its offerings will be an interactive procedure showing how a supplier starts doing business with Ford.
The automaker also wants to upgrade its electronic payment system so that a vendor can find out exactly when payments will be made.
And Ford wants to offer precise production forecasts, helping suppliers to control their own inventory better.
In turn, Ford wants to avoid the burden of administering all facets of its supplier network.
'I don't have an army of administrative people to go around resetting passwords and answering e-mails,' Berry said.
The Ford Supplier Network requires suppliers to take an active role. The supplier is expected to appoint a security staffer to issue passwords and moderate the company's online interactions with Ford. Lost your password? The administrator within your own company can deal with it.
Among the most sought-after functions is one that allows suppliers to enter a commodity name or a description; Ford's Web site then lists its key buyers. Suppliers also can customize their own sign-on page to display vital Ford information at a glance.
Said Bykowicz: 'I have had access to 70 suppliers, and every single one of them is excited about it.'
Tim Moran is a free-lance writer in Grosse Pointe Park, Mich.