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Lean Manufacturing Articles

Independent Trading Exchange:

(also known as transactive content intermediaries or online trading communities). An online marketplace maintained by a third-party technology vendor, where multiple buyers and multiple suppliers in a vertical market can conduct business.

•    Pros: Does not require buyers to invest in costly buy-
side procurement software.

Does not require suppliers to invest in e-commerce-enabled self-hosted Web sites.

Provides e-commerce opportunities to small, me­dium, and large companies. Preserves quality of buyer-supplier relationships.

•    Cons: Community must have critical mass and verti­
cal experience to be effective.

Note: Buy-side auctions are much less common than sell-side. Buy-side auctions provide buyers with a new way of handling RFQ responses, and allow multiple sup­pliers to bid on new business, with downward price pres­sure. It is important to know who administers the auction—buying organization, selling organization, or neutral third party.

 Internet auction: Mostly a sell-side application, where companies can move excess and obsolete (E&O) inven­tory. Multiple buyers place bids for goods, normally against upward price pressure. There are commodity auctions (oil, natural gas, electricity), independent auc­tions (first-run and surplus manufacturing goods), and private auctions (geared toward resellers and dealers, rather than end users).

      Pros: Buyers may realize marginal savings in trans­
action costs.

      Cons: Benefits accrue mostly to sellers, who can make
revenue on inventory normally written off as zero at
the bottom line.

Like any sell-side model, buyers cannot track and control spending patterns.

How do you evaluate the current landscape of inde­pendent trading exchanges? How do you determine which exchange is the best fit for your e-commerce strategy? AMR has proposed a structure based on the strength of the business model and functionality.

      Liquidity

      Functionality

      Supply chain integration capability

      Domain expertise.

Liquidity Is a Measure of Scale

•    Size of the marketplace: Number of registered and
active buyers and suppliers.

     Transactional capability: Volume of transactions.

     Diversified revenue base: Measure the breadth of the
market. The ITE should be focused, but broad
enough so that they can scale quickly.

     Functionality represents the completeness of the
solution.

     Information: Relevant information, such as industry
directories, product databases and catalogs, discus­
sion forums and bulletin boards, and professional
development resources.

     Facilitation: Offline interaction (fax, phone, etc.) re­
quired to complete the transaction after the trading
partners engage.

     Transaction: Trading partners can consummate the
transaction online.

     Integration: ITEs that can be integrated into enter­
prise level software systems.

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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