Commerce One enables cross-industry purchase orders

Last year, it was marketplace mania as seemingly every company on earth announced it would launch an online trading exchange.

Now the marketplaces that remain afloat are banding together and forming flotillas to concentrate their strength.

Last week, Commerce One Inc. in Pleasanton, Calif., announced that it has successfully linked seven marketplaces ranging from national telecommunications exchanges to the energy industry to an aerospace consortium, pushing through 40,000 separate market-to-market purchase orders to date.

The goal of such initiatives is to create an online mall where one company can shop in many exchanges without having to build multiple connections.

"We're never going to have a single marketplace that can encompass everything, so this is something they have to do," said Karen Peterson, an analyst at Gartner Inc. in Stamford, Conn. "I think we're going to see a lot more of this in the coming months."

Case in Point

In May, chemical exchange Elemica Inc. absorbed Horsham, Pa.-based rubber industry marketplace as a method of expanding its scope. The pair is still building exchange links.

And further linkage may be in store. James Kendrick, an independent chemicals and plastics industry analyst, noted that eight of the 13 investors in Philadelphia-based Elemica are also investors in Zurich-based plastics exchange Omnexus Corp.

"The challenge is to survive during the adoption phase, and it can't hurt to broaden your scope," he said.

The early marketplace-to-marketplace links are likely to enable procurement but not the mass moving of goods through the supply chain, said Commerce One engineer Bob Glushko.

"We're still looking to create standardized purchase orders industry to industry," Glushko said. "The connectivity issue is really dominated by the comprehension issue."

The Commerce One-linked marketplaces will allow for a certain amount of regional trading. T-Mart, an exchange that serves various industries, will allow The Boeing Co. in Seattle, which trades through the Exostar LLC marketplace in Herndon, Va., to buy goods and services in Germany.

"This gives them another value proposition to their customers, and, hopefully, that value will grow over time," Peterson said.

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