C u s t o m e r P r o fi l e

Ford Motor Company

F ORD

WANTED TO TRANSFORM FROM A VERY LINEAR , TOP DOWN

BUSINESS TO A

NET READY, NIMBLE ORGANIZATION THAT INVOLVES C ISCO

AND INTEGRATES CUSTOMERS , SUPPLIERS , AND EMPLOYEES .

HAD THE SOLUTION AN END - TO - END INFRASTRUCTURE ABLE TO OPTIMIZE EVERYTHING FROM THE SUPPLY CHAIN , TO THE CUSTOMER PURCHASING EXPERIENCE , TO THE WAY EMPLOYEES WORK .

Background Henry Ford built his rst car, the Quadricycle Runabout, over a hundred years ago in the summer of 1896. It had a four-horsepower engine and could reach speeds of up to 20 miles per hour, an astonishing feat for the late 19th century. He sold that car for $200 to nance his second car, which was completed in early 1898. On June 16, 1903, he incorporated Ford Motor Company, which was capitalized for $100,000 with twelve stockholders. The company produced 1,708 cars that rst year. Today, Ford Motor Company is a US$160 billion corporation with some 350,000 employees in 200 countries around the world. In 1999, just over one hundred years after Henry Ford built the Runabout, Ford Motor Company manufactured 7.2 million vehicles worldwide. The Challenge Fords roots are grounded in harnessing the latest technology and innovative production techniques. In fact, Fortune Magazine recently named Henry Ford the Businessman of the Century and Fords Model T Car of the Century. However, as a 100-year-old company, Ford had developed some of the unfortunate characteristics of large-scale growth. With customers becoming more demanding and cost pressures mounting, the company wanted to transform from a very linear, top-down, E X E C U T I V E

bureaucratic business model to a Net Ready, nimble organization that involves and integrates customers, suppliers, and employees. Fords overall vision is to become the leading consumer S U M M A R Y company for automotive products and services, says Jim Yost, Ford vice president and CIO. We believe one of the best ways to try and drive that is to connect everyone together in communities to best serve our customers worldwide. Ford needed to integrate more closely with their many and diverse suppliers, to make information available to the entire supply chain simultaneously. In the current cascade process, this can take days, weeks, and sometimes even months. Another key initiative close to the executive teams heart is Fords OTD (Order to delivery) process. OTD is the supply chain process that comprises product engineering through vehicle manufacturing and distribution. The goal of being more consumer oriented requires Ford to shorten the delivery cycle from the time a customer places an order to the time the vehicle is actually delivered to a dealer and the owner takes possession. Ford also wanted to improve communication to and among employees, to encourage a more open, collaborative working environment. From providing unltered top-down communication to providing low-cost

BACKGROUND Ford Motor Company is the worlds second largest manufacturer of cars and trucks with products sold in more than 200 markets. The company employs nearly 400,000 people worldwide, and has grown to offer consumers eight of the worlds most recognizable automotive brands. CHALLENGE With inherent large-scale growth issues, more demanding customers, and mounting cost pressures, Ford needed to transform from a linear, top-down bureaucratic business model to an Internet ready, nimble organization that engages and integrates customers, suppliers, and employees. SOLUTION Working with Cisco, Ford integrated and leveraged their supplier base by designing Covisint, an end-to-end infrastructure that enables an online, centralized marketplace connecting the automotive industry supply chain. Ford also enhanced the customer buying experience through redesigned and more user friendly Web sites. RESULTS Ford is enjoying an increase in customer satisfaction, sees huge revenue opportunities for developing and retaining loyal product advocates, and has taken both complexity and cost out of the supply chain.

access to the Internet, Ford wanted to expose employees to the eBusiness transformation every step of the way. In addition, online e-learning and other cost-saving employee benets would be far more effective with a well-connected workforce. This year, the company will provide most of Fords 350,000 employees worldwide with an Internet-ready PC, printer as well as Internet access at a low cost through an innovative program with PeoplePC using a Cisco Powered Network. The Solution Ford had a myriad of time-consuming ways of communicating with suppliersfrom online to phone to fax. Because suppliers are such a core element in Fords business, a key priority was to integrate and leverage their supplier base. With Ciscos help, Ford is working with the other major automotive OEMs to design an end-to-end infrastructure that enables an online, centralized marketplace connecting the automotive industry supply chain. Called Covisint, this electronic forum enables a collaborative approach to procurement, information exchange and product development. Covisint may also connect Ford and its suppliers with dealers, a direct source of feedback that keeps the company on top of buying trends. With this customer intelligence, Ford can tailor their research and development budget to focus on emerging consumer needs. Other e-commerce initiatives, designed to enhance the purchasing experience, include Fords Web sites, such as www.ford.com and www.volvo.com, as well as a partnership with Microsoft on MS Carpoint. MS Carpoint allows consumers to shop online, custom congure a vehicle, view up-to-date manufacturer suggested prices, place an order, and arrange delivery to a nearby dealer. To meet employee needs, Ford is providing computers to most of its worldwide workforce. One of the keys for Ford succeeding in the consumer world is to get everybody in the company to focus on the consumer, says Yost. Were encouraging our employees to explore the Internet, to learn whats out there about Ford or that can affect Ford, and bring that experience and richness back to the company.

Weve really spent far too much time in the past on transactional workload, adds Alice Miles, President, Ford B2B. An Internet business model will break down that barrier and allow us to take transactional work, move it to the Internet, and free up people and strategic resources to inuence Fords future. Exchanging purchase orders and RFQs is not what adds value to the consumer. A strategic discussion about future product and service offerings does. Results In the automotive industry, attracting and keeping customers is the name of the game. Ford believes they can enhance owner loyalty through Internet initiatives with strategic partnerships like Yahoo!, which allows any Ford owner to create personalized auto data pages to manage vehicle maintenance records online. Fords www.ownerconnection.com provides 24/7 connectivity between the company and its customers, and the Ford Online Store allows customers to order selected parts and accessories from a home PC. Highly satised customers become advocates, says Yost. We see huge revenue opportunities for us in developing and retaining very loyal advocates for our products and services. We also see the opportunity to drive tremendous cost out of the supply chain. With a single marketplace, there is the opportunity to take complexity out of the entire automotive industry, adds Miles. Technology can be applied in a way that provides an industry standard that streamlines some of the complicated relationships and processes. It takes waste out of the system so we all benet, but we still remain competitors. Future plans include introducing Internet connectivity into Fords vehicles, providing a variety of safety features to protect owners from breakdowns, accelerate accident response times, and tune performance and handling of the vehicles. The technology will also provide a variety of information and entertainment services, such as audio e-mail, news and event information, and music and video right in the car or truck. We believe having a connected and Internet savvy workforce will enable Ford to lead the Information Age, just as we did the Industrial Revolution, says Chairman Bill Ford.

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