Seeing Opportunity in B2B Politics

SAN MATEO (07/24/2000) - Reality has a way of putting the brakes on the wheels of progress when it comes to visions of the great frictionless economy. These days, the hype meter is highest in the business-to-business e-commerce world, an area that continues to see more funding and more start-ups than the fallen business-to-consumer crowd. And with the euphoria comes difficult decisions and risks.

Rather than hopping on the latest industry exchange, IT and business executives should concentrate on making their existing supply chain Internet-and XML-ready, and pressuring their industry giants to get their collective act together.

There's no denying the potential of cutting costs by doing business electronically. The problem is figuring out how to get on board. Our story by Eugene Grygo illustrates how suppliers are in a quandary, trying to figure out what type of trading network makes the most sense. Independent trading exchanges, reliant on participation for survival before investors pull the plug, will bend over backward for liquidity. Meanwhile, the titans of most industries have put together consortia -- at least on paper -- that will act as industry trading hubs. Various other business models for supply nets are being hammered out as suppliers, buyers, distributors, and vendors look for their piece of the action.

In other words, each industry will undergo a power struggle in the coming months that will largely determine what transactions will be done by which players.

Until now, suppliers have basically been seen as the victims in trading networks, as large buyers squeeze every penny out of their procurement costs.

But suppliers do have an opportunity at this phase of development to demand value-added services from exchanges. And industrial consortia have to do more than promise tighter margins for their partners; suppliers need technical direction on standards and platforms and a framework for Internet-enabling specific business transactions.

Confused about where to place your b-to-b bets?

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