Caterpillar, Ford link up for spare-parts management system

Major manufacturers Ford Motor Co. and Caterpillar Inc. are joining up to develop a set of logistics applications that will speed up the delivery of spare parts while cutting costs and delivery cycle times.

In an announcement, SAP AG said the application will be built around its mySAP supply chain management and customer relationship management modules. The applications are expected to benefit both Ford and Peoria, Ill.-based Caterpillar and will be resold by SAP when completed.

The two manufacturers originally agreed to work together last year to develop a next-generation spare-parts application, and after performing an evaluation decided that the software would provide the requisite platform on which to build, SAP said.

"Customer satisfaction is Ford Motor Co.'s No. 1 priority, and this software alliance with Caterpillar and the logistics services Cat will provide will be key enablers in achieving our best-in-class customer service satisfaction objectives," Don Johnson, director of global parts supply and logistics at Ford, said in a statement on the Caterpillar Web site. Ford has said in the past that it wants to work closer with its dealers to deliver inventory.

The companies claim that the new system will cut costs, turnaround time and inefficiencies in fulfilling parts requests. In addition, the applications will share data and allow end users to have real-time visibility throughout the supply chain, from supplier warehouses to a dealer's parts department.

The alliance plans to create an operating blueprint and will phase in the system and processes during the next several years, according to Caterpillar's statement.

According to Boston-based AMR Research Inc. analyst Kevin Prouty, this sort of deal between two massive firms is rare. More striking is the fact that this is a case where a large provider of logistics services, Caterpillar, teamed up with a customer, Ford--and they both went out shopping for the right set of enteprise applications together.

The deal may also help demonstrate SAP's scalability, as Caterpillar needed to support a supply chain system that delivers heavy equipment to both industrialized areas and to some of the most remote places in the world. The only other companies that could deliver such a robust application would be IBM Corp. or EDS, and SAP can offer more of a packaged application than either of those two service providers, he said.

Copyright © 2002 IDG Communications, Inc.

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