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need for change in their internal operations and responded with a variety of tools and processes designed to move toward the customer, add products and serv- ices, build global capabilities, and make their employees and processes more productive. Now they are incorporating the natural advantages of the Internet in that pursuit.

For example, GE — one of the largest lessors of commercial equipment from copiers to jumbo jets to electrical power plants — has developed a Web site that will track all leased equipment and automatically auction any coming off a lease, saving itself and its clients significant book- keeping and warehousing expense.

Enron has incorporated the Internet into its value chain in a whole new way, leveraging its existing physical assets — its gas pipeline network — to deliver broadband services globally via its new Enron Broadband Services unit. In addition, it is marketing a whole series of information-driven hedging instruments, many Web-enabled, that help its customers avoid unwanted risk in commodity energy prices.

Meanwhile, Ford, under the leadership of Jacques Nasser, is leveraging e-enabled technolo- gies to maintain and improve its control of the end-consumer interface in its value chain. Having gone about as far as it

can go in taking cost out of man- ufacturing mass-produced vehi- cles, Ford is turning to those components of its value chain that offer greater long-term promise — consumer under- standing, product development, distribution, marketing, sales, and post-sales support. Confronted with fragmenting customer demand and new com- petition from the likes of Carpoint and Auto-by-Tel, Nasser is shifting from a prod- uct-centric, vertically integrated, asset-intensive manufacturing model to a more customer-cen- tric, networked, sales and distri- bution-oriented value chain (see Exhibit 1). Manufacturing opera- tions will be spun off to a much

Exhibit 1. Ford During the Nasser Era: Surprising and Delighting the Consumer

PRE-NASSER FORD

Consumer

Product

Understanding

Development

Sourcing

Manufacturing

Distribution

Marketing

Sales

standardization

pressure on

integrated in

for parts

segmenting

channel

World cars

suppliers

some areas

Push and pull

according to

Direct sales

Vehicle centers

Leverage global

Quality emphasis

through dealers

platform

only for

scale

Reduced labor

Push sales

corporate clients

  • Dealers main

through dealers

  • Share-focused

  • Heavy use

of rebates

  • Support JIT effort Rudimentary

NASSER FORD

  • Vertically

  • Multiple suppliers

  • Pricing-driven

content per vehicle

  • Relentless

  • Part of product development process

  • Platform

Post-Sales Support

  • Warranty repair dealer-handled

  • Limited post- warranty participation

  • Independent post-warranty service and parts

Consumer Understanding

  • Satisfy consumer tastes

  • Company-wide involvement with primary research

  • Direct customer contact

  • Heavy pre-launch customer contact

Product Development

  • Mass- customized consumer touchpoints

  • Market segmentation

  • Platform engineering

Sourcing

Manufacturing

Distribution

Marketing

price pressure

de-integration

on suppliers

(e.g., Visteon

Reduced number

spin-off)

Continued

Vertical

of suppliers

Focus on core

systems

through closer

brand

customer ties

management

  • Pull distribution

  • Emphasis on

  • Push distribution through partnerships with dealers

    • (e.

      g., planned superstores)

  • Global best practices in marketing

  • Needs-based segmentation

  • Reduced rebating

=

Areas of Emphasis

  • Profit-focused

Sales

  • Consolidated dealer base

  • Planned direct Internet sales

  • Rapid custom- order delivery

  • Bundling of financing and services

  • Leverage Internet as sales tool

Post-Sales Support

  • Capture greater portion of lifecycle spending

Source: Booz Allen & Hamilton

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