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The Cutting Edge

Online Purchases Save Ford $10 Million

February 10, 2000|From Bloomberg News

REDWOOD SHORES, Calif. — Ford Motor Co., the world's No. 2 auto maker, said it bought $78 million worth of auto parts in the company's first online auction using Internet-based software created with Oracle Corp.

Ford's auction generated bids from as many as five suppliers and saved the auto maker more than $10 million, the company said. Ford plans to spend $300 million more in auctions this month alone as the company moves more of its parts purchases to the Internet.

The auction was the first for AutoXchange, a joint venture unveiled in November between Ford and No. 1 database-software maker Oracle. AutoXchange lets Ford use the Internet to streamline the way it buys parts and materials worldwide.

"We went up live one week ago with the AutoXchange," said Brian Kelley, Ford's vice president of electronic commerce. "We had double-digit savings in this production buy, and this is not a one-time event."

AutoXchange, which Ford and Oracle plan to spin off into an independent company, lets Ford put out requests for parts, then get competing bids from suppliers. The exchange could save Ford "billions and billions" of dollars, Oracle President Ray Lane said. It also could help Oracle generate new customers, analysts said.

"If Ford and Oracle can continue this successful implementation, we look for this exchange to be a major source of revenue for both parties," said William Epifanio, a J.P. Morgan Securities Inc. analyst with a "buy" rating on Oracle.

Oracle and Ford said Cisco Systems Inc., the No. 1 maker of computer networking equipment, will take an equity stake in the venture and supply the technology to let more parts suppliers join the exchange. Terms weren't disclosed.

Oracle shares rose 38 cents to $59.94. Ford fell 94 cents to $47.19.

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