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According to Forrester Research, business-to-business (b2b) auction sales will jump from $8.7 billion in 1998 to $52 billion in 2002. To date, these b2b marketplaces have spring up in the chemical, life sciences, food pro­cessing, metals, electronic components, automotive af-termarket, plastics, energy, and telecommunications industries, with more emerging almost daily in these and other sectors. Gartner Group research projects the growth of exchanges will pick up speed to as many as nine new sites a day—perhaps totaling 10,000 exchanges in another three years.


Industry b2b marketplaces, such as trading exchanges and collaborative hubs, have emerged with astonishing speed. As a result, they may be confusing to many com­panies. Let's try to place a perspective around this space on how these marketplaces will evolve.

      How do these b2b marketplaces provide value?

      Are separate exchanges or platforms needed for di­
rect and indirect materials?

      How do auction tools, e-procurement software, and
catalogs support b2b marketplaces?

      Who will run and operate the successful market­

      Should your company participate in a b2b market­


There is more than one way to conduct business over the Net. Here's a brief rundown of major e-commerce models, along with advantages and limitations of each. Sell-side system: a commerce-enabled Web site admin­istered by the selling organization. Examples: Digikey ( <>), Grainger ( <>), Newark Electronics ( <http://www.newark. com>), McMaster-Carr ( <http://>), Global Computer Supplies (<http://www.globalcomputer. com>).

      Pros: Usually free to buyers.

      Cons: Difficult to locate on the Web.

No way for buyers to track or control spending.

Electronic marketplace: an aggregate of electronic catalogs from suppliers in a vertical market, adminis­tered by a third-party firm. Examples: e-Chemicals ( <>), The Plastics Network ( <http://>).

      Pros: One-stop sourcing solution for buyers.

      Cons: No way for buyers to track or control spend­
ing patterns.

Buy-side system: a Net-based procurement application hosted and administered by the buying organization. Requisitioners source from preferred suppliers on their company intranet, within the limits of automatically en­forced buying rules set by purchasing management.

•    Pros: Buying organization can reduce off-catalog
buying and build leverage with fewer suppliers.
Reduced cycle times.

System integrates with back-office systems, automat­ing administrative tasks and freeing buyers to add value.


•    Cons: Very expensive ($250,000 to $5 million) to

Costly and cumbersome catalog management. Can wash out distinctions of supplier-buyer relation­ships.

To Be Continued

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 14

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