'Evolution' call for online exchanges

13 June 2002
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14 June 2002 | Robin Parker

A strong market still exists for public e-marketplaces, but they must evolve if they are to help companies collaborate fully online, a leading analyst has warned.

Beth Barling, senior European analyst at AMR Research, said support for public exchanges was stronger than she expected, although companies mainly use them for product searching and basic ordering.

Less than 15 per cent of firms' purchasing spend is put through public exchanges, according to Barling's report, Sourcing Competitive Advantage Through Procurement Exchanges.

Barling identified four levels of usage of procurement exchanges, from browsing supplier catalogues through to fully integrated supplier collaboration.

More than half of the companies she spoke to were at the second stage, using exchanges to make catalogue-based purchases and conducting reverse auctions.

Barling said exchanges needed to help companies have a chance of reaching the fourth stage, which could still take years.

"Exchanges need to evolve to be a supportive element of the supply chain, whether they take a more vertical focus or raise expectations of the level of value they bring to back-office integration," she said.

In her discussions with buyers however, Barling was surprised at the increased importance today on exchanges' auction capabilities, which have traditionally been at the bottom of the agenda.

"The increased usage of auctions is an issue of business sustainability as auction technology becomes more sophisticated," she said.

"Over the last year, there's been a real improvement in the software support of attributes other than price, and a lot more exchanges are building this as standard into their services."

SMjun2002

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