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Find this article at: http://www.business2.com/content/magazine/indepth/2000/10/16/21261

Dangerous Liaisons

Old Economy firms are joining hands with longtime bitter rivals to compete against the biggest online marketplaces. Can they finally learn to get along?
From the October 24, 2000 issue

Julia Acer
Mohanbir Sawhney

Illustrations: Enrico Varrasso

View the "Mapping the Evolution" Xplanation

When General Motors, Ford Motor, and DaimlerChrysler announced in February that they were launching a mammoth online exchange for automotive parts and supplies, the news conveyed between the lines of the press release was clear: The empire had finally struck back. The juggernauts of industrial power that had ignored the Internet for so long–business-to-business giants in markets ranging from steel to medical supplies–were finally banding together to form their own juggernauts.com. They might be coming to the ecommerce party mighty late, but they were dressed to kill. X GM-led Covisint (see "Four Wheel Drive ," August 22, 2000, p150) cast the first blow. And dozens of industry-sponsored exchanges–consortia, in Net-conference parlance–have since sprung up to do battle with the pioneers of B-to-B ecommerce. As startups such as Ventro and VerticalNet gained multibillion-dollar valuations in 1999, traditional firms caught on to the fact that it was their liquidity that these startups were using to build their valuations, and suddenly the idea of working with their erstwhile enemies made great sense.

Why? By bringing suppliers and buyers together in industrywide marketplaces, these alliances will allow the incumbents to slash procurement costs, speed new products to market, and streamline their supply-and-demand chains. Industry players also welcome the opportunity to spread the costs of building ecommerce infrastructure and to connect directly to their customers and suppliers, instead of allowing intermediaries such as VerticalNet to wedge themselves into the process. The icing on the cake is the possibility to spin off these joint ventures through public offerings that could make money for shareholders of the parent companies.

That's the sales pitch, anyway. The truth is, most of these new B-to-B consortia won't make it much past that first press release. The challenges of structuring, governing, and operating joint ventures involving multiple sponsors with conflicting interests will take their toll as the honeymoon ends and the blocking-and-tackling begins. If the history of industrial partnerships is anything to go by, their road to riches may be long, winding, and full of potholes.

A troubled past
While these new B-to-B alliances are a recent phenomenon, similar industry co-ops have been around for years. Research and development consortia, for example, share the costs and the risks of developing breakthrough technologies, while standards-setting alliances such as the W3C consortium for the World Wide Web and the WAP Forum for wireless applications (see "The Fight for Lingua Franca ," p202) help promote uniform standards and ensure interoperability among technologies. And product development groups, such as the New Century Network consortium in newspapers and the Spectrum EBPP consortium in online billing, collaborate to create and market new products and services. Unfortunately, the latter category–under which new Internet-based alliances such as Covisint fall–has the most checkered past. Nine of the largest U.S. newspaper companies launched New Century Network in April 1995 to create a national network of local online newspaper services and to "signal the evolution of the newspaper industry into a new era of cooperation." Two years later, NCN folded because its founders squabbled endlessly about what business the venture should be in and could not agree on a common strategy that could accommodate the differing needs of the 140 newspapers represented by the owners and affiliates. The group tried to serve companies that were private and public, risk-averse and risk-tolerant, big-city papers and small chains. Like a group of parents and ste-parents squabbling over a newborn, the organization couldn't even choose a name. Meanwhile, Microsoft had already launched its Sidewalk.com online city guides. Game over.

Another high-profile flameout: the Integrion Financial Network, formed in 1996 by IBM and 18 large U.S. banks to help them build their online banking initiatives. Integrion represented a defensive move, growing out of the paranoia that Intuit and Microsoft would use their personal financial management software to poach banks' customer bases. An alliance with IBM, a technology vendor trusted to have banks' interests squarely in mind, seemed to be ideal. But the rollout of Integrion took longer than planned, the service didn't live up to billing, banks were slow to migrate to the new platform, and an 18-member board of managers made decisionmaking unwieldy. In some cases, banks bought membership in Integrion just to be able to keep close watch on competitors. The venture folded last March.

The rise of B-to-B ecommerce, however, offers renewed market opportunities for three types of industry alliances. First, buyer-led groups–in automobiles, aerospace, and retailing–are forming in industries that are concentrated on the buyer side and fragmented on the supplier side. They make sense in industries in which the supply chain consists of multiple layers and is poorly coordinated. These networks of powerful buyers can force suppliers to move transactions to their exchanges.

Second, supplier-led groups–in industries such as paper, chemicals, and meat products–are forming in fields weighted more toward the supply side and aim to improve efficiencies in their downstream interactions with resellers and buyers. They face greater challenges than their buyer-led counterparts in attracting non-equity-holding suppliers, especially those that compete with founding members. They also need to allay fears of collusion on pricing and exclusion of smaller suppliers from their exchanges.

Third, in industries fragmented on both the buy and sell sides, intermediaries–a distributor, association, or startup–are best positioned to launch an exchange to compete with upstart dot-com independents. The Grocery Manufacturers Association, for example, is sponsoring the Transora venture that allies 49 grocery manufacturers, while distributors are taking the lead in industries such as food service and electrical supplies, where the distribution channel is concentrated but the buyer and the seller ends are fragmented. Industries with such two-sided fragmentation are also proving to be the happy hunting grounds for B-to-B startups that aggregate buyers and suppliers and slash costs of buying and selling.

No matter the industry, all of these new multipartner ventures face great management challenges. From formation to transactions, each will have to navigate through a decisionmaker's minefield.
PHASE 1: Choose Your Model
Newco versus co-op
Confusion continues to prevail in many industries where multiple types of exchanges and consortia are competing for a piece of the action. Member companies must be clear early on about the endgame for their joint venture; they face a choice between two very different emerging business models–a public market model, a "newco," and a shared utility model, a "co-op." Each demands a different approach to governance, funding, and staffing.

The newco This entity behaves like a classic startup, creating value for founders and investors through capital appreciation and a public stock offering. Like any startup, it has to offer a broad set of revenue-generating services that go well beyond procurement and supply-chain management. And it needs to attract customers supplemental to the founding industry members. Why? If the revenue comes primarily from subscription and transaction fees collected from founding members, the consortium ends up in a zero-sum game: To feed the child, you need to starve the parent, and vice versa. A newco needs strong representation on the part of outside investors, including venture capital firms and non-founding industry participants. It also needs an outside CEO and an autonomous board with limited representation on the part of founding members. Finally, it needs the involvement of investment bankers who have experience in raising capital in the private and public markets.

The co-op This model is a service company that provides a shared infrastructure platform to improve the efficiency of the supply chain and cut procurement and transaction costs for the member firms. The co-op creates value for its founders by improving their bottom line through cost savings. Unlike the newco, which focuses on maximizing revenue for itself, the co-op focuses on maximizing savings for its founders. The co-op does not need to generate revenues from outsiders, so it can be focused narrowly on procurement and supply-chain management. The founding members tightly control the ownership and governance of a co-op, and also supply most of the management team and the funding for the joint venture.

Both models are viable ways to form consortia. Most consortia will strive for increased liquidity as well as decreased costs. The problem is that few consortia seem to be clear who they want to be when they grow up. As the NCN and Integrion experiences suggest, lack of clarity as to the consortium's ultimate goals can cause significant conflict.

PHASE 2: SETUP
Hire–and eventually fire–a transition team
Once the founders of a consortium have defined their mission, they need to make decisions on ownership, governance, and operations. Member companies need to set up a transition team to serve as a bridge for the founders, the consortium, and outside players. Transition teams should include experts in industry, technology, business strategy, startup governance and capital structure, legal and antitrust issues, and recruiting.

The transition team's charter is to maintain momentum toward the launch of the consortium and to recruit the senior management team. Its temporary status is important. There should be a clear handoff to the management team, usually coinciding with the hiring of a permanent CEO and the key management team members. The management team should be charged with the responsibility of selecting technology partners, outside investors, and filling out the team.

To address this conflict of interest, it may be advisable to pay professional services firms (management consultants, incubators, investment bankers) to represent the interests of the consortium and arbitrate negotiations among the founders, particularly in the early stages. The interests of the consortium cannot be credibly represented until the management team is in place or an outside partner is brought in.
STEP 3: GOVERNANCE
Loosen the ties that bind
The next contentious issue is governance and ownership. Independent boards are useful but most groups recognize they are not always feasible in the short run.

"Founding members will have control initially, but you have to build in a process that allows management to feel that it has control over building its business," says Theresia Gouw Ranzetta, partner at Accel Partners, a prominent VC firm that works with industrial firms to create new ventures. It is important to keep fewer than half of the founding board members, and to keep the board small and nimble so that it resembles a dot-com startup, Ranzetta adds. The board must be formed early, be able to meet without much notice, and have the power to make quick decisions. CEO-level sponsorship from the parent companies is mandatory to keep the startup on track.

Limiting board membership means that only the biggest founders will have a seat. One way to be more inclusive without making decisionmaking unwieldy is to set up an advisory board that accommodates representatives from all founders, one that gives all members a say in setting the direction.

The board has to be independent enough to grapple with disputes and arbitration, especially among industry equity holders. The board also has to set guidelines for ownership and use of market information. Who owns the information and what will happen to it if the consortium goes belly-up? What information will be available to whom? This becomes more important after the consortium has been operating and built a database of transactions. Company information must be safeguarded so that board members from competing founder firms do not have access to it.

Other tough decisions founders must make center on the equity stakes of participating companies. To guarantee liquidity, founders must determine meaningful minimum transaction volumes, which should be proportionate to the equity stakes or the investment of the founding members. Transaction commitments are most effective when punishments are in place for failing to transact the committed amount. Equity incentives to non-founding members also will become commonplace to further boost liquidity. Additional incentives include marketing support and a discount or refund of transaction fees.

PHASE 4: ANTITRUST
How to keep the Feds at bay
The flurry of announcements of competitors cozying up with one another inside major alliances such as Covisint has set off antitrust alarms at the Federal Trade Commission, which sponsored a workshop on such issues in June (see "Exchange Trust Busters ," August 22, 2000, p60). Among its biggest concerns are the exclusion of outside companies from participating in these exchanges, limitations on a participant's use of competing exchanges, facilitation of collusion through information exchanges, and joint buying leading to monopsony power.

Tipped off by cries of foul play, the U.S. Department of Justice is eyeing Orbitz, the airline initiative, among others. Covisint, meanwhile, has been under FTC scrutiny for several months. "There is the possibility of private litigation against these exchanges," says Hillard Sterling, an antitrust lawyer with Gordon & Glickson in Chicago. "Each of the deals will face antitrust civil action challenging their competitiveness from a variety of industry players, even disgruntled competitors. Antitrust lawyers are licking their chops as they consider civil actions against the participating companies."

The FTC's preliminary inquiry into Covisint has already delayed the site's launch, and smaller, nascent consortia are watching every move. Lawyers have become regular attendees in joint-venture meetings involving even reportedly benign competitor collaboration.

What does this mean for consortia trying to observe every letter of the law? Early best practices are emerging. Founders must allow open access to non-founding members and competing independent exchanges to their platform, even if this creates a free-rider problem by allowing non-founding members to leverage off the investments made by founding members. To guard the flow of proprietary content and mitigate any form of collusion, consortia must raise firewalls to limit the accessibility of information to exchange users. And consortia should never engage in aggregated purchasing that leaves suppliers with no other choice than to slash prices to below marginal cost or have no business at all.
PHASE 5: BUILD THE TEAM
And act like a startup
Once governance, ownership, and structural issues are dealt with, the alliance can turn to recruiting a strong and independent management team. To recruit a top-notch team for a newco business model, the group must offer equity incentives that resemble a startup firm, with up to 20 percent of the new company's equity being set aside as an options pool for management.

Top management and CEO candidates are well aware that positions with consortia are as risky as positions with startup firms, and without adequate equity compensation they may be unwilling to take the leap. Insiders who join the consortium should ideally be asked to resign from their corporate positions and to forego the comfortable perks and benefits that come with their corporate careers. The risk and the rewards in the consortium have to mirror a startup company. You can't have your cake and eat it too.

PHASE 6: MAP THE STRATEGY
Back to the future
Once the team is in place, strategy and implementation begin. Defining the scope of the consortium's business is key. Think big in the long run, but act small in the short run. The scope of the offering, the scope of the organization, and the scope of partnerships for any consortium will naturally grow broader and more diverse.

Every venture should create a staged business road map that clearly lays out the scope of the offering over time (see "Mapping the Evolution," pp145-146). This plan must be constructed backward not forward to the future. Consistent with the notion of "putting the future first," partner companies should first decide on the desired long-term vision, then work backward from this desired future to construct a staged map that pictures the consortium at different phases of its existence.

Toward a hybrid future
It is difficult to make reliable predictions about the future of these mammoth industry partnerships, especially at this early stage, and especially with the FTC looming large. Still, several themes stand out:

First, as incumbents move their upstream buying and downstream selling business to B-to-B exchanges, they will still want assurances that their preferred suppliers and customers will be able to deal only with them in some instances. Some buyers will only want to deal with their traditional suppliers with whom they have long-term relationships. Industry alliances as well as independent B-to-B exchanges likely will be required to create a proprietary area on the exchange where buyers and sellers can transact and collaborate in "virtual private marketplaces"–a private exchange within the public exchange. In this hybrid approach, buyers and suppliers can maintain their proprietary relationships, yet leverage the exchange's infrastructure.

Second, who better to serve an industry consortium than another consortium? In lockstep with industry consortia formation, firms that provide private equity, investment banking, and management consulting also are teaming up to form full-service consortia. In February, Accel Partners and Kohlberg Kravis and Roberts & Company (KKR) were the first to link up. KKR rival Texas Pacific Group then announced eVolution Global Partners, a coalition with Kleiner, Perkins, Caufield & Byers, and Bain & Company. The logic behind the formation of such service alliances is simple. Each category of service firm brings an essential element of expertise to build a consortium, but none has the complete range of expertise needed. Expect to see a continued convergence between the world of consultants and the world of financiers.

Third, expect to see increased acquisitions and alliances between B-to-B dot-coms such as VerticalNet that face a liquidity crisis and B-to-B consortia that soon will face an execution crisis. Independent B-to-B exchanges starving for an industry-run exchange's market share will get that "urge to merge" with their Old Economy foes who are unable to execute on their business plans. Perhaps B-to-B dot coms and B-to-B consortia will combine forces to resolve both crises.

The pendulum that swung wildly in favor of the dot-coms is now swinging wildly to the lumbering giants who finally got it. Eventually, it will settle in the middle, revealing a hybrid world where ebusiness becomes simply business and the titans of the industrial economy will finally realize the Net's great promise.
THE NEWCO: LEVELSEAS.COM
Name: LevelSeas.com
Headquarters: London
Equity holders: Cargill, Royal Dutch/Shell Group, BP Amoco, Clarksons, eVolution
Total equity: Not disclosed
Founders: Cargill, Royal Dutch/Shell Group, BP Amoco, Clarksons
Planned launch date: Fall 2000
Employees: 20

HISTORY:
For some consortia, size matters. But according to Monica Morse, managing director of Cargill eVentures, a plan of attack matters most. Morse recently filled the interim COO role at LevelSeas, a consortium formed in April to launch Web-based chartering of bulk ocean freight.

"It became clear that what the marketplace needed was not a bunch of companies doing stuff on their extranets. It needed a single, global marketplace to manage the information," Morse says. The conglomerate started looking at companies with sizable shipping volume and scale and a proven interest in e-business.

Shell and BP Amoco fit the profile, and the LevelSeas founders quickly agreed that the company would focus on revenue and cash flows, instead of cutting costs for participants. LevelSeas also aids in price discovery, as well as providing tools and services.

It takes a three-pronged approach: hire a strong independent management team, get venture backing, and bring in more industry partners. The founders immediately staffed an interim management team and started a CEO search. They also brought eVolution–the service arm of Kleiner, Perkins, Caufield & Byers, Texas Pacific Group, and Bain & Co.–on board.

Revenue model:
LevelSeas will collect transaction fees and subscription fees from members using its service–a viable model in an industry that is used to paying brokerage fees. Morse foresees that brokers will use the service and offer it to their customers. LevelSeas also has earmarked equity as an incentive for companies to drive revenue and transactions through the site, but won't reveal precise allocations.

Management:
LevelSeas' board of directors was set up with representatives from each participant. eVolution's representative became the chairman of the board after the firm invested. The board has six members, including the CEO. Morse forecasts that number will increase to nine people.

The founders didn't set up other committees so it could minimize bureaucracy. "We didn't have committees sitting on top of committees," says Morse. Launch activities were kept streamlined by the interim management team. The team had a specific point person who had the authority to spend, hire, and make key decisions around technology and strategy.

Services:
Soon, producers will be able to place cargoes online and suppliers will be able to post vessel positions. Through LevelSeas, they can link up and arrange the service online. The first release will offer some tools, such as calculators and planning frameworks. The next release will incorporate management tools for collaborative communications.–JA
The co-op: UCCCnet
Name: UCCnet, http://www.uccnet.org/
Headquarters: Princeton, N.J.
Equity holder: Uniform Code Council (UCC)
Total equity: $30 million
Founders: Grocery Manufacturers of America, Uniform Code Council, Electronic Data Systems, Wegmans Food Markets, Frito-Lay, The Kroger Company, Procter & Gamble, Ralston Purina, SUPERVALU
Participants: 180 (approx.)
Launched: July 25, 2000 Employees: 12

HISTORY:
Six senior executives from key pilot companies–Wegmans Food Markets, Frito-Lay, The Kroger Company, Procter & Gamble, Ralston Purina and SUPERVALU–"were able to check their egos and past dealings at the door and come in and create something that would better an industry," says Thomas Duffy, vice president of marketing for UCCnet.

UCCnet–a functioning co-op originally spearheaded by the Grocery Manufacturers of America (GMA)–has already implemented services that many of the recently announced consortia still have on their drawing boards. The service boasts that beverage manufacturers can use it to track a can of soda from the manufacturing plant through the supply chain and know the moment it ends up in a particular vending machine.

Similar to many B-to-B hubs, UCCnet allows users to set up trading partner profiles so only chosen partners can see their data. Here the similarities end. UCCnet has no plans to go public, and never did. It is not for profit and operates on a cost-recovery basis. Taking it public "would have shut down a lot of the collaborative effort that's going on here," says Duffy.

Revenue Model:
UCCnet's revenue comes from an annual subscription fee–based on a company's total revenue–collected from members. "You might have a small-medium enterprise paying more for the PC and browser than they pay for the annual subscription," says Duffy. Fees range from $1,500 to $400,000 per year.

By the end of October 1999, UCCnet had signed up 43 companies, and by May of this year it moved into a second industry–general retail. Trading partners' revenues, which would be affected by UCCnet, now tally over $1.3 trillion. "We now have over 250 companies involved," boasts Duffy, 70 of which are third-party solution providers. The grocery sector makes up 70 percent of the trading partners.

Management:
A board of governors oversees UCCnet and its parent. The board is made up of UCC's CEO and 34 senior executives from the 23 industries affiliated with it. Board members are nominated by trade associations such as the GMA.

Services:
Member firms can integrate their legacy systems with the UCCnet service, called "Release 1.0." With the next version, members will be able to negotiate price and promote their products, including all the capabilities for direct store delivery. Eventually, UCCnet will be to allow more technology solutions partners, as they are certified, to plug and play within the network.
–JA
WHO'S WHO?
FOUNDERS OF AN INDUSTRY ALLIANCE FACE SOME DIFFICULT QUESTIONS BEFORE THEY GO TO MARKET:
• Will the alliance focus on activities you would have undertaken anyway, or will it focus on activities you never would have undertaken because they potentially threaten your existing business?

• Are you prepared to bring outside investors into the group and to eventually dilute your equity ownership in the consortium to a minority stake?

• Are you prepared to let independent management run operations and make decisions that may benefit the group while conflicting with the interests you or other founding companies?

• Will the new venture offer value-added services such as supplier prequalification, inspection, financing, settlement, clearing, and logistics management, or is it primarily focused on reducing product and process costs in the supply chain?

• Are you prepared to offer open access to all non-founding members in the industry as well as to competing exchanges, even if this means leveling the competitive playing field, or do you consider the consortium's services to be proprietary because they give you a competitive edge?
–MS and JA

HomebuildersXchange http://www.homebuildersxchange.com/
HomebuildersXchange made its mid-year play by setting up an online network where suppliers, wholesalers, and manufacturers could make their deals online–and ideally, more efficiently. It was founded by Oracle and Encore Venture Partners, along with five homebuilding companies scattered across the country (Centex, D.R. Horton, Kaufman and Broad Home, Lennar, and Pulte). The exchange will, its founders hope, allow for the buying and selling of building materials, establishing a single place where members of the industry can set up and maintain a chain of supply, from lumber suppliers to wholesalers to builders–all while taking a transaction cut.

Global Aerospace and Defense Trading Exchange
This Commerce One-powered alliance is looking to create a Web market for the tens of thousands of suppliers, hundreds of airlines, and international governments the companies do business with across the aerospace, airplane, and defense industries. The Global Aerospace and Defense Trading Exchange's four founders–Boeing, Lockheed Martin, Raytheon, and BAE Systems–account for $71 billion annually in procurements.

The industry exchange, which had planned to launch in mid-2000, is equally owned among the four founders. But ownership share will adjust over the next three years based on the amount of business each founders does over the exchange. Twenty percent of the equity has been set aside for other industry participants.

Orbitz http://www.orbitz.com/
Orbitz and Star Alliance are primarily consumer plays looking to leapfrog over third-party outfits such as Travelocity and Expedia to provide airline passenger online booking.

Despite criticism that it would threaten consumer choice, Orbitz claims it will provide unbiased competitive fare information available from the nearly 30 carriers under its umbrella. Orbitz was founded by United, Northwest, Delta, Continental, and American, which are all equity partners.

MyAircraft.com http://www.myaircraft.com/
In addition to being a marketplace for aerospace supplies, MyAircraft.com promises to coordinate supply management for participating companies by creating automated replenishment systems based on factors such as criticality and financial goals. Equity holders in the alliance include BFGoodrich, Honeywell, United Technology Corporation, and i2 Technologies. The exchange recently received approval from the European Commission, which examined the exchange for possible antitrust violations. Star Alliance http://www.star-alliance.com/
The airlines that make up the already-established Star Alliance fly nearly 300 million passengers a year to more than 130 countries. It recently boasted the results of a University of Illinois report, which found that customers who flew on Star Alliance's allied carriers saved 27 percent, or $100 million, annually. Participating airlines include United, Lufthansa, Air Canada, and Singapore Airlines.

Transora http://www.transora.com/
Nearly 50 food, beverage, and other heavy-hitting consumer manufacturers threw down almost a quarter-billion dollars to form the Transora alliance that most closely resembles the varsity squad of your local supermarket. The exchange claims a collective muscle of more than $500 billion in annual sales (40 percent of the global consumer product industry). It has plans to dominate the entire supply chain, from suppliers to manufacturers to retailers, with such heavyweight participants as Best Foods, Coca-Cola, Colgate-Palmolive, General Mills, Kraft, and Procter & Gamble.

These companies invested anywhere from $500,000 to $15 million in Transora. Retailers and wholesalers that join the exchange are promised a single point of connection to obtain most of the products they stock on their shelves, plus a simplified way of managing their inventory.

Launch is scheduled for the fourth quarter of this year.

Covisint http://www.covisint.com/
This alliance of the Big Three (General Motors, Ford, DaimlerChrysler), plus Nissan and Renault, will allow part suppliers to put their catalogs online, buyers to receive bids for the products they seek, provide users with sourcing strategies, and hook them up to financial institutions when needed. Despite grumbling from some suppliers who fear it may drive down their prices, the alliance's planners claims that companies using Covisint will save money by reducing the cost of purchasing parts, allowing quicker product development, and improving communication between automakers and suppliers.

Twenty-three companies, including the founders and both Oracle and Commerce One, are signed on as partners. FTC approval is pending.

GlobalNetXchange http://www.globalnetxchange.com/
Also powered by Oracle, and similar in title and site design to HomebuildersXchange, GlobalNetXchange is an offering by Sears, Roebuck, Oracle, and French retail giant Carrefour. The exchange intends to become nothing less than the supply chain backbone for the entire retail industry. GlobalNetXchange launched in March, but is scheduled to be fully functional by the end of 2000. Like virtually every other exchange, GlobalNetXchange predicts that it will streamline the supply chain process, thus saving money.

Large international retailers have recently come on board, including retail grocery chain Kroger, German retailer Metro, U.K.-based J Sainsbury, and Australian retailer Coles Myer.

Industria http://www.industria.com/
Industria was launched in January 2000 by DuPont and Chemdex to serve the fluid processing market, which includes companies from the chemical, oil and gas, pulp and paper, power generation, and pharmaceutical industries. The exchange will deal primarily with parts and equipment such as valves, pipes, gaskets, pumps, turbines, and motors.

Using services and technology from IBM and Ariba, Industria claims to provide customers who buy through them will get broader access to supplies at better prices and through a more efficient process. Manufacturers are also being promised less selling costs, wider reach, and better inventory management. Distributors, according to Industria, will also benefit from those advantages and gain access to new customers.

Related: "Old Dogs Learn New Tricks "

View the "Mapping the Evolution" Xplanation

Julia Acer ([email-masked]) is a consultant with Net consultancy Lante.
Mohanbir Sawhney ([email-masked]) [http://www.business2.com/content/magazine/indepth/2000/10/16/www.mohansawhney.com] is the McCormick Tribune Professor of Electronic Commerce & Technology at the Kellogg Graduate School of Management. He is a contributing editor and a member of the advisory board for Business 2.0.

Content copyright © 2000 Imagine Media Inc.

Find this article at: http://www.business2.com/content/magazine/indepth/2000/10/16/21261