FRAMINGHAM (04/07/2000) - Business-to-business digital marketplaces promise to be a great avenue for buying and selling commodity items. But few give manufacturers a way to negotiate on or buy and sell products that need to be custom-engineered or that involve multiple supply-chain partners.
Now, startup Trade Access Inc. in Cambridge, Massachusetts, claims that it can help, with new software that it is pitching to digital marketplaces and corporations with existing supplier extranets.
TradeAccess claims that its software will help online exchanges offer services that let buyers and sellers of manufactured goods negotiate on factors other than price.
For instance, buyers looking for suppliers to produce a custom-engineered product would be able to post their entire bill of materials -- including engineering blueprints -- on such exchanges, draw up master purchase agreements and negotiate delivery and payment terms. They would be able to consider bids based on several factors, such as the ability of the supplier to build to the right specifications, the ability to deliver to a rigid schedule or the suppliers' support and service offerings.
Capabilities such as these are crucial at a time when most business-to-business e-commerce marketplaces are focused mainly on auction and shopping-cart purchase models, said Tim Manahan, an analyst at Aberdeen Group Inc. in Boston.
Such exchanges are aimed only at delivering commodity products to buyers at the lowest possible prices. However, many businesses need capabilities that often go "beyond dynamic pricing to include factors such as quality and delivery" when making a purchase decision, Manahan said.
"We feel strongly that a real-time structured negotiation [capability] is of utmost importance"in helping companies conduct business-to-business transactions over digital exchanges, said Robert Kramich, a vice president at NECX Inc., an electronics components exchange in Peabody, Massachusetts, that uses TradeAccess technology.
This is especially true in certain industries such as metals, where the sheer range of business-to-business purchase options and needs makes it necessary for digital exchanges to support negotiations between buyers and sellers, said Tom Balderston, a vice president at SGI Capital LLC, a venture firm in Radnor, Pennsyvania, that owns an online metals exchange.
Among the claimed capabilities supported by TradeAccess' ComRM technology are the following:
The ability for buyers and sellers to define and set up business rules.
The ability to specify both domestic and international commercial rules, like how currency payments can be made.
A way to maintain an audit trail relating to all transactions between buyers and sellers.
The ability to do real-time pricing, availability and tracking of orders.
Payment processing, transaction reporting and delivering scheduling capabilities.
Comergent Technologies Inc. in Belmont, Caliornia, is another company that is trying to use the concept of Web-based business-to-business exchanges to help manufacturers cut costs for customers while at the same time allowing them to differentiate on issues other than price.
Comergent claims that its Distributed E-Business System suite allows manufacturers to build Web-based marketplaces linking their suppliers, resellers and distributors. Buyers visiting such sites will be able to custom-configure products from a variety of options and choose from a list of bidding partners on issues relating to integration, delivery schedules, service and support.
Unlike typical digital marketplaces that are focused on delivering the widest array of products at the lowest possible prices, such partner exchanges will allow manufactures a way to reduce costs while giving buyers a way to negotiate services and other value-added costs, said Jean Kovacs, CEO of Comergent.
"Companies that are selling complex products don't want to just toss their products into a mass [digital] market" and be forced to compete on prices alone, Kovacs said.
"We are focusing on the sell' side, trying to give companies some control over their branding, how their products are ordered and what services are bundled with it," Kovacs said.
Pricing for the TradeAccess software will be announced when the products are released next month. Pricing for the Comergent suite, now available, varies according to the size of the installation, a company official said.