Is Ford’s auto-xchange the “Real Deal?”

In an excerpt from my March 18, 2008 post titled Optimization Modeling and the Modern Supply Chain I made the following statement:

“The key starting point is to recognize that the term supply chain is a misnomer in that it implies a sequential order of events (in the spirit of your question, a non-deterministic set of algorithms which aligns with the equation-based modeling used by most software vendors).

In reality however we operate in a world in which synchronization between diverse (and now global) stakeholders have to exchange and quantify disparate data on a real-time basis, and therefore the term supply practice would be a more appropriate description.

Once again, when you recognize this elemental difference you will then take the first steps towards building an effective optimization model.”

What I am talking about of course is the Metaprise platform or centralized private hub, where there is a real-time synchronization of key stakeholder interactions both within and external to the main or central enterprise.

Using an agent-based model, in which the unique operating attributes of individual stakeholders are first identified and then understood, the emphasis of my research in 1998 focused on bringing together the seemingly disparate streams of unique stakeholder attributes to produce a “collective” best result or best value outcome.  This formed the basis for my development of the theory I call strand commonality.

Referring once again to another of my more recent posts titled Similarity Heuristics, Iterative Methodologies and the Emergence of the Modern Supply Chain I also indicated that “The subject or attributes in a supply (chain) practice are in a state of constant motion and change.”

 I went on to say that to “effectively capture the dynamic elements within this kind of environment, a different methodology such as strand commonality . . . must be employed to ensure that an accurate picture is captured on an ongoing basis, thereby bridging or synchronizing the chasms between multiple transactional (stakeholder) streams.”

The video that you are about to review was released by The Ford Motor Company.  As you pay close attention, your will hear statements made by Ford’s Vice President and Chief Information Officer, Jim Yost indicating that the company has to “share information in real-time” and therefore can no longer use “the sequential processes” in which there were many “handoffs” and “transfers of information.”

 

You will also note Yost’s emphasis on the fact that Ford needs to “integrate much more closely with their customers, supply base and even internally,”  as well as stressing the importance of making information available to multiple levels of their supply base “simultaneously,” thereby eschewing the current “cascade processes that might take days, weeks and even months” to disseminate.

When Alice Miles (Ford’s President, B2B Consumer Connect) talks about auto-xchange in the context of Ford’s creation of “a hub, or “central marketplace” where everyone could “come to that marketplace for these solutions,” she is also talking about a Metaprise platform.

These are all really good signs of the paradigm shift that began with the strand commonality theory in 1998 and was later introduced into the general market through a variety of white papers and reports starting with the release of my paper Acres of Diamonds in 2005. 

In the Acres paper I made the following observation that “a true centralization of procurement objectives requires a decentralized architecture that is based on the real-world operating attributes of all transactional stakeholders . . . in other words, your organization gains control of it’s spend environment by relinquishing centralized functional control in favor of operational efficiencies originating on the front lines.  This is the cornerstone of agent-based modeling.”  (Note: The Metaprise or centralized private hub is the intelligent conduit that manages and connects the seemingly disparate attributes associated with individual stakeholder interaction on a real-time, real-world basis to achieve the desired collective “best value” outcome at that particular point in time.)

While the Acres paper focused on Indirect MRO Materials, which are the most dynamic and therefore can be the most demanding commodities to purchase (refer to my research on commodity characteristics and the differences between dynamic flux and historic flat line products), the same principles can be applied, to varying degrees, to all areas of organizational spend.

Using the above as a point of reference, I would encourage you to view the following video from Ford and begin to formulate your own opinions on whether the foundation for their “transformation from a manufacturing company to a consumer company,” have been properly laid.  In the meantime, I am going to drill down further into the specifics of the Ford strategy and provide you with an update on my findings within the next week to ten days. 

Ford Video (auto-xchange)

Reference Posts:

Optimization Modeling and the Modern Supply Chain (A PI Q and A) – https://procureinsights.wordpress.com/2008/03/18/optimization-modeling-and-the-modern-supply-chain-a-pi-q-and-a/