Ford, Caterpillar team with SAP on spares project

Ford Motor Company and construction and mining equipment manufacturer, Caterpillar have selected SAP AG to develop a supply-chain management system for spare parts.

Ford and Caterpillar are jointly creating a blueprint for a customised supply chain application that will be built around SAP's software and ultimately made available to manufacturers outside of the auto industry.

The software alliance, announced last week by the three companies overseas, will develop a set of logistics applications designed to speed up the frequency and accuracy of spare parts deliveries while cutting inventory costs. Last year, Ford and Caterpillar agreed to an alliance to jointly develop a logistics information system. "This is the next major step in a logistics alliance to develop a next-generation system," Dave Hoffman, president of Caterpillar Logistics Services, a subsidiary of Caterpillar, said.

A spokeswoman for Ford Motor Company Australia was unable to comment on how the deal will affect Ford's local operations saying it "has no record about Ford making announcements about using SAP".

"We (Ford's head of IT and the spokeswoman) have done a hunt through IT and have found no record of Ford making an announcement about SAP. So we can't make any comment. If the US is doing this, then our computers and IT programs are aligned globally, but we still can't make any comment on this particular contract locally," she said.

The IT manager at Caterpillar Australia declined to comment and was unable to confirm or deny when or if the deal will affect local operations of the company.

Jennifer Roach, spokeswoman for SAP Australia, said the deal with Ford was a global deal, but was also unsure as to where the Australian operations would fit in.

Roach said that as Ford's presence locally is mainly sales distribution, the IT rollout might not be as big as in the overseas manufacturing departments.

The affect of the project locally will probably not be felt for 18 months, Roach said, as it will take a "few years to get this where they want it".

When implemented, the software will let Ford dealers see parts inventories and the status of customer orders via the Internet. That kind of real-time view is impossible now, according to Kristin Odeh, director of global consumer services at Ford in the US.

The applications will be based on SAP's supply chain and customer relationship management modules and will initially be used by only Ford and Caterpillar's US-based logistics subsidiary, Peoria.

All three companies will be involved in the development process, which will integrate SAP's existing mySAP.com SCM and CRM software products with specific features designed for complex global parts networks.

According to reports in the US, Caterpillar Logistics Services handles warehousing services for some of Ford's operations, and the companies last year agreed to create a spare parts management system.

As part of that deal, Odeh said, Ford and Caterpillar plan to update their legacy mainframe and client/server systems-- some of which are 25 years old -- with Web based technology.

Reports from the US showed none of the three companies had disclosed any information about the project's expected cost or potential return on investment. The development work is slated to take several years to complete, but Odeh said Ford hopes to start going live with pieces of the software within 18 months.

When the applications are available, Ford will be able to use Web portal technology to more tightly connect its network of 15,000 dealers and 6000 suppliers, Odeh said.

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