Contenidos del proyecto Las actividades de este proyecto de desarrollo comunitario en el medio rural están,

Response

Exchange

Exchange

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Public exchanges initially gained popularity by promising to stream- line industries and cut billions of dollars in costs by creating a public mar- ketplace from which to buy and sell products, jointly design products, and collaborate in real time. By the end of 2000, venture capitalists had in- vested $5 billion in more than 360 business -to-business efforts, accord- ing to Venture One, a San Francisco-based venture capital market- research firm.1

But after investing heavily in public exchanges, businesses now real- ize that they benefit little from opening their bids to all companies be- cause many of these companies aren’t qualified as participants. Many of these companies cannot make the highly specialized products or supplies other businesses need, so in effect the pool of potential partners is not as large as anticipated.

In addition, public exchanges emphasize price, making it difficult to win bids based on other factors such as quality or speed of delivery. Be- cause of this, many companies are hesitant to participate in public ex- changes, and customers often f ind inconsistent quality, which leads to higher production costs and higher variability in their end products. Sell- ers also have concerns with being disintermediated from their customer and having their products become commodities.

In addition, security of information has been a concern for all par- ticipants, as well as the lack of value that public exchanges bring for the price of each transaction. As a result, although some still exist, public ex- changes have never taken off. Many marketplaces have entirely failed or have not met their business objectives, and nearly 120 of them have been shut down or acquired, according to Deloitte Consulting.2

Private Exchanges

Although public exchanges never quite delivered on their promise, a vari- ation of this medium has quickly emerged in its place: the private ex- change. Private exchanges offer companies greater control because they are owned and operated by one company, which then provides access to the exchange to selected suppliers and customers. Rather than attract new customers and suppliers, businesses use private exchanges as a way to work interactively with suppliers and customers that they select. In addition to the automation of buying and selling, private exchanges provide a way for participants to interactively manage inventory, production schedules, shipping schedules, forecasting, and sales.

Seeking Partners for Greater Competitive Advantage 29

Dozens of companies—including Hewlett-Packard, Dell Computer, IBM, and Wal-Mart—have formed private exchanges, and many com- panies have reaped benefits from doing so. For example, by linking about 60 parts suppliers through a private exchange, Dell trimmed inventory in its factories to the point where parts are held on average for just six hours before assembly, down from 15 hours the year before.3_{Manco, an Avon,} Ohio-based maker of specialty adhesive products, reported saving 28 per- cent in distribution costs and 18 percent in freight costs by participating in a private exchange headed by Ace Hardware.4_{IBM saved $400 million} in 2000 by moving its procurement processes with 20,000 suppliers to a private exchange.

However, the private exchange also has its limitations. It operates like a centralized hub through which all information must pass. Every mes- sage and every relationship is like a spoke that must be directed through this hub. This is not always the fastest way to do business. For example, if a maker of cell phones runs out of cell phone covers, is it really conve- nient to have to talk to the General Electric plastics exchange to get the message to suppliers? The answer is often no.

Quite often, companies have only a handful of qualified suppliers that can meet their specifications for any given product. The company usually ranks these suppliers, knowing exactly in which order and in which situ- ations it turns to each one. Rather than communicating indirectly with these suppliers by posting the information centrally on a private ex- change, it’s often quicker to pick up the phone or send these partners an e-mail or fax.

Private exchanges are based on data and messages. They do nothing to change the business processes that could eliminate the order and re-order

The Rise of the Private Exchange*

Private exchanges are quickly gaining in popularity. According to a 2001 study by market research firm Jupiter Media Metrix, corporate spending on the infrastructure to build private trading networks will increase to more than $37 billion by 2005 from $465 million in 2001. Similarly, by 2003, AMR, a market researcher, estimates that private and public exchanges will be used by nearly 30 percent of U.S. companies.

* Nicole Harris, “Can Business -to-Business Survive?” The Wall Street Journal Europe

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processes in the first place. In general, the private exchange is most use- ful for commodity products. The more engineered the component a com- pany needs, the less eff icient it is to advertise this need via an online exchange. Although not dramatic, private exchanges do increase eff i- ciency because they mechanize certain processes, but they do little to re- move human involvement.

Furthermore, a hub-and-spoke model works for large numbers of sim- ple transactions or a relatively low volume of very complex interactions. However, as traff ic through the central hub grows by orders of magni- tude, as it inevitably will, it will become increasingly diff icult for this centralized mechanism to handle the volume and complexity of the pro- jected transactions.

Finally, companies that participate in private exchanges view them primarily as bid-and-respond systems. They may become a collaborative tool in the future, but today, companies have simply transferred their buyer-seller relationship from one mechanism to another, failing to cap- italize on collaborative opportunities that could provide revenue and cost benefits to all companies involved.

Private exchanges will play a critical role in the twenty-first century economy. However, when all the hype dies down, businesses will find that as bid-and-respond systems, private exchanges can help them save the most money when it comes to purchasing commodity or standard items and in the near future highly customized configured to order items. Ad- ditionally, in the future, private exchanges will also play a critical role for financial transactions such as processing invoices, and for posting in- formation of importance to all suppliers and customers who work together within a business network. The role of the private exchange will be within the broader scope of a partnership model that gives companies greater f lexibility to respond to rapidly changing market conditions.

A Business Structure for Today’s Economy Historically, supply chain relationships have been restricted to buyer and seller roles. This fundamental relationship has limited companies’ thought processes and kept them from moving beyond linear models. Sup- ply chain relationships are primarily based on two functions—purchasing and sales—with employees from other divisions within both companies having no communication. Companies must change this mind-set to suc- ceed in today’s fast-moving economy.

TEAM

FLY

Seeking Partners for Greater Competitive Advantage 31

In addition, companies need a more efficient communication model. Both the point-to-point and one-to-many partnership models that exist today grew out of the need for companies to gain a competitive advan- tage by working with their suppliers and customers. Yet, neither model provides businesses with a truly efficient form of communication. With the linear supply chain, information is communicated sequentially one company at a time down the supply chain, creating delays in responding to customer demand. With the online exchange, all information is posted through a central hub, creating an indirect, human-to-machine commu- nication mechanism when it is often more efficient to communicate di- rectly with a supplier or customer.

To maintain a competitive edge, companies need a more efficient way of doing business that enables them to pass pertinent information swiftly and simultaneously to only those partners that need to receive it. They need the mechanisms that enable them to learn from and respond to un- expected events. Finally, they need a business structure that allows them to work efficiently with their partners to anticipate and adapt to changes in customer demand.

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