Online exchanges offer competitive advantage

Companies can still gain competitive advantage by using public business-to-business exchanges, according to an AMR Research...

Companies can still gain competitive advantage by using public business-to-business exchanges, according to an AMR Research report last week.

The analyst firm advised companies that have not yet participated in such an exchange to set up pilot programmes.

It added that current participants should consider deepening the integration between their supply chain systems and processes with key industry exchanges.

When public exchanges first emerged in 2000, companies were promised vast cost savings and efficiency gains. But, as was the case with many Internet-related projects, the promises were overly optimistic and many e-marketplaces subsequently failed or have had to limit their operations.

However, AMR said the results of its research showed that companies in Europe still see the value in public exchanges, with some notable successes, such as Covisint and the World Wide Retail Exchange.

"The idea that the popularity of public exchanges is waning is simply untrue," said Beth Barling, senior analyst at AMR and author of the report. "However, exchanges do need to evolve to be a supportive element of the supply chain, not a replacement of it," she added.

New exchange participants should study how their industry peers are using marketplaces and consider conducting a pilot programme with the key exchange in their industry to evaluate the possible benefits, Barling said.

Current participants, meanwhile, need to ensure that their chosen business-to-business exchange will continue to invest in new functionality and back standards to support increasing levels of best practice, she added.

"New adopters need to consider how they can use an exchange alongside other, more complex supply practices," said Barling.

"Existing participants need to pressure exchanges to drive more value," she added.

Key findings from AMR's study
  • The three most important capabilities for European companies are product searching; order status tracking; and supplier-buyer directories

  • About 60% of participants are using exchanges to support e-sourcing and negotiation and catalogue-based purchases. Nearly 30% are already realising an improvement to their operating costs, with 33% seeing a reduction in the cost of goods

  • Partner readiness is still the major drawback to participation.

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