Exchange Services. Procurement/ Sourcing Services

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1 Trade Exchanges A number of Internet-based companies now offer B2B Trade Exchange (or electronic marketplaces ). A Trade Exchange allows companies to do business online with multiple trading partners by connecting to a single web site. There are a number of Exchanges serving direct and indirect materials and services. Different Exchanges which offer different services typically covering a combination of: Procurement selected trading partners can offer and bid for goods and services online via E-RfQ (request for quotation) and reverse auction processes. Supply Chain Management companies can share supply chain data online with chosen trading partners. Collaborative Engineering companies can share and exchange design data online with chosen design, engineering, and manufacturing partners. Quality companies can share quality planning and performance tracking data online with chosen partners. Minimum connection requires a PC with browser, modem and Internet link, and registration with the Exchange. Users can pick and choose from the Exchange services on offer. Fees vary and may depend on the volume or value of business done through the Exchange. Up to now, the complexity and cost of traditional EDI has inhibited many smaller companies from exploring B2B e-business opportunities. The concept of a Trade Exchange offers many potential benefits over the older multiple 'point-to-point' connections between each buying and selling company: one link and sign-on procedure connects a company to many trading partners uses simple and affordable Internet technology offers the potential of standard common business processes for use between many trading partners Trade Exchanges should bring a range of modern B2B e-business methods within the reach of smaller companies. It should be possible for a buying or selling company to exploit the benefits of higher profile, time savings, and lower cost, offered by e-business, even with only one or two of its key trading partners using the same Exchange.

2 Exchange Different Exchanges offer different services (refer to individual Exchange materials for details) covered by the list below. There are a number of active Exchanges serving direct and indirect materials and services with Covisint and SupplyOn specialising in the automotive industry. Procurement/ Sourcing Supply Chain/ Logistics Collaborative Engineering Quality Connects one buying company online to many suppliers (and vice versa) in order to place business. This may include an online directory of companies with products and services, an E-RfQ process (request for quotation issue and response), a Reverse Auction (online bidding) process, and support for online catalogues of products and services. It also offers facilities to help buyers manage their procurement work-stream. Participation in RfQ and Auction processes is by invitation of the buyer. Enables companies to share supply chain information online with chosen Trading Partners. It offers some type of 'web EDI' application to show call-in, forecast and requirements data online, with shipping status. Interfaces to participants' in-house production, material planning, and logistics systems may also be offered. Enables companies to share and exchange engineering or design data online with their design partners. It may include facilities to help during teleconferences (shared viewing and changing of documents online during a conference call). It also offers support for shared libraries of documentation that can be accessed and modified at any time by authorised members of work groups. It includes CAD conversion services to support exchange of CAD models between different types of CAD systems. Enables companies to share quality information online. It may include an AQP (Advanced Quality Planning) process to help the agreement and tracking of quality objectives during a component or module programme.

3 List of some Exchanges of interest to the automotive industry Automotive industry specialists Covisint Founded in 2000 by a group of OEM Manufacturers (DaimlerChrysler, Ford, GM, Nissan, and Renault, since joined by PSA Peugeot Citroën) working with Commerce One and Oracle. Covisint claims over 2,600 user companies worldwide. It has around 300 employees with headquarters in Amsterdam, Tokyo, and Southfield MI, US, and offices in Frankfurt, Paris, and Brazil. SupplyOn Founded in 2000 by a group of Suppliers (Robert Bosch, Continental, INA, and ZF Friedrichshafen, since joined by Siemens VDO) working with SAP. SupplyOn claims over 700 user companies, mostly in Europe. It has around 65 employees with offices in Munich, Paris, and Michigan, US. SupplyOn is a member of CLEPA. Partstrade.com TecCom tbd aftermarket still exists tbd still under construction. General e-business Exchange Freemarkets tbd. Still alive and kicking Mfgconnect Sourcenet Ufulfil.com tbd reference appears defunct tbd Site still exists, but crashes when you try to enter tbd -- Unipart Logistics Fulfilment Service

4 Selecting a Trade Exchange In deciding whether or not to work with an Exchange, and comparing the Exchanges available, companies will need to consider several factors. Some companies may benefit by joining more than one Exchange. Factors to be considered include Customer Preferences Business applications in use Range of services available Ease of use, availability, performance, and security Your business readiness Business integration As a selling company, do your existing or targeted key customer companies already prefer any particular Exchange? The concept works at the highest potential when multiple partners are connected on the same exchange. Some major buying companies may have selected one Exchange and membership would be important if you expect to participate in that customer's E-RfQ or auction events. Ask what services are being used or planned by your specific customer companies. Your key customers may not be using all the services offered via their chosen Exchange(s). Use of Procurement is most widespread with Supply Chain Management and Collaborative Engineering less fully deployed. In the long term, most potential benefit will come from the integration of services across business. It will be harder to exploit all the benefits if you are using different services from different exchanges. You should be satisfied that the Exchange services are easy for your people to use, and that training and support is available when needed. Buying companies planning to hold reverse auctions or run E-RfQ processes need to be satisfied that the services cover their specific needs. You should also review the Exchange's availability and performance record and operating plans. Will the services be there when you need them? Ask about the Exchange's security procedures and technical approach to be certain that they are adequate for your uses. Review whether your present business processes can work properly with the Exchange services. For example, if you plan to participate as a seller in reverse auctions, make sure your bidder has good internal costing and overhead data enabling them to judge the limits of appropriate bidding. A bid made in a reverse auction event is binding. Review the facilities available to integrate or interface exchange services with your own systems. The maximum potential from exchange services will come from good integration with your own in-house procedures and systems. Poor interfaces, for example, the manual re-keying of data between systems, will add cost and may be a source of serious errors.

5 Cost/Benefit Estimate Prepare an estimate of the total cost of using each Exchange. If fees vary with volume, take this into account. Some benefits may be hard to quantify financially, but a good cost estimate at the start will give you a sound basis for a valued judgement.