Michael Klemen
As more and more people start to use their home PCs to buy online, they are discovering that it entails nothing more complex than going to a website, browsing for the desired product, and then keying in credit card and address details to complete the transaction. The B2C (business-to-consumer) revolution is well and truly established.
But what if it was this easy to do substantial commercial and industrial B2B (business-to-business) trading? What if corporate buyers could search for and buy products from suppliers they had never traded with before? Or if new suppliers could sell products to corporate buyers around the globe? With the advent of a new online model of trading called an Exchange, it can be that simple.
An Exchange is an online marketplace in which companies from around the world come together to buy and sell goods and services or share information. Exchanges may be horizontal, selling generic goods that are applicable to any industry - such as computer equipment or stationery. They can also be vertical, for specific sectors such as the automotive industry, or the retailing industry. These 'vortals' (as vertical exchanges are increasingly referred to) are normally established by a lead player or players in a specific industry, and the entire supply chain of that industry is invited to join.
The beauty of it is that once you have signed up you can start trading with any other company in the exchange, wherever they are in the world, with little or no start-up cost. Look no further than the Korean component manufacturer that joined the auto industry exchange created by Ford and Oracle. In a matter of weeks, it had negotiated a $78 million contract with the car giant, even though it had never supplied Ford before.
Ford itself made a double-digit percentage saving on the price it would normally have paid for the goods. Just think of how your company could expand its markets far beyond its current scope with just an internet connection and a web browser - the only technology required. Even the smallest, least technologically-advanced businesses can benefit!
In addition to opening up new markets and opportunities, Exchanges also encourage new, efficient ways of doing business. These include auctions and reverse auctions, electronically-posted RFPs, purchase orders, invoices and shared logistics, all of which bring huge savings. The cost of processing an order, for example, can typically be reduced by up to 90%. It is much, much simpler than traditional EDI, and there are no barriers to entry. Large and small suppliers can get on board easily and at very low cost.
Michael Klemen is Senior Vice President, Applications Marketing, Oracle EMEA. Questions and comments may be sent to mfischer@oracle.com
