Ford's online solution: despite a poor car market, Ford dealers in Venezuela saved millions by using the Internet to streamline operations - Technology: IT Solutions

WHEN GUSTAVO MATA took over as chief information officer at Ford Andina in January 1997, the company had a problem with paper--there was too much of it. With 10,000 back-logged cases, dealers regularly waited more than three months for warranty claims to be processed.

Even before Mata came on board, the Andean regional division of the international carmaker--which operates in Colombia, Ecuador and Venezuela --had been looking for a better way to handle the thousands of orders placed every month by its dealer network. A private network had been considered, but the initial investment would be costly Then, Mata recalls, "We sat down, thought about it and said, 'Well, we can do a B2B [business to business] application for free."' So, in January 1998, the company scrapped the private network idea in favor of Internet e-commerce solution.

Working closely with dealers, Mata led the effort to set up an Internet-based business-to-business system hosted at Ford's corporate headquarters in Dearborn, Michigan. The server in the US communicates with Ford Andina's Oracle database in Valencia, Venezuela, where local software developers wrote the necessary programs for online access. By May 1998, dealers could order vehicles online. Soon after, they could send in warranty claims and parts orders online. E-Conford, Ford Andina's online business solution, had been born.

The benefits were clear: less paper and faster cash flow Orders once pursued by phone and fax were carried out automatically, freeing up workers for more meaningful tasks--one reason that overall expenses fell by about 1.5 percent, or US$5 million, last year. "We achieved substantial savings in telephone bills alone," says Orlando Torres, a system engineer who worked with Ford. "Now that we've eliminated manual procedures, processes are more agile for both Ford and the dealers." Warranty claims, he says, now clear in a less than a week.

Mata's colleagues give him credit for making the project a reality, including the task of convincing skeptical dealers and company executives who had previously seen few concrete results from information technology breakthroughs. Once they started seeing benefits, they became believers and even participants, helping Mata and his team make E-Conford the most advanced online solution in the region. Today, two years after Ford Andina launched its online solution, other major car companies in Venezuela, Colombia and Ecuador still have virtually no presence on the Internet. "Ford Motors is definitely one of the pioneers of e-commerce development in the region, offering both B2C [business to consumer] and B2B online applications," says Erica Eppinger, Latin America project manager at the Yankee Group, a Boston research firm that tracks Internet business applications worldwide. The savings realized were especially important in the face of shrinking regional auto sales in 1999. In Venezuela, for example, the industry sold just 104,339 units last year, down from 1998's total of 175,860.

Ford Andina has recently taken steps to increase its electronic contact with customers. For example, potential buyers can now choose the car they want to buy and apply for financing online. The system gives them a response in 48 hours and directs them to the nearest dealer. "The challenge is how to develop all of these facilities in an environment where everybody wins," he says. "The consumer wins, Ford wins, and the channels of distribution win. It's not easy, but it is possible."

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