Assume you are a procurement officer for an office furniture manufacturer of steel office equipment. You have a single factory located in the Midwest with 2,000 employees. You sell about 40% of your office furniture to retail-oriented catalog outlets such as Quill in response to specific customer orders, and the remainder of your output is sold to retailers under long-term contracts. You have a choice of purchasing raw steel inputs—mostly cold-rolled sheet steel—from an exchange and/or from an industry consortium. Which alternative would you choose and why? Prepare a presentation for management supporting your position.
An e-procurement officer’s goal is to find the best product at the best prices. Exchanges and consortia offer both of these qualities. The benefits of exchanges are reduced search costs for parts, spare capacity, and lower prices due to a global marketplace fueled by competition among suppliers. Suppliers are often reluctant to join exchanges due to the fierce competition and price wars that can make profit margins miniscule, so the exchange might not have all the suppliers that a company might wish to do business with. Exchanges also usually don’t provide value-added services.
Choose an industry and a B2B vertical market maker that interests you. Investigate the site and prepare a report that describes the size of the industry served, the type of Net marketplace provided, the benefits promised by the site for both the suppliers and purchasers, and the history of the company. You might also investigate the bias (buyer versus seller), ownership (suppliers, buyers, independents), pricing mechanism(s), scope, focus, and access (public versus private) of the Net marketplace.
Students should go to eMarketservices.com, choose an industry and then choose a Net marketplace company within that industry. To perform the analysis required by the project, students should visit the Web site of the company chosen, and also use google.com or other search engines to find relevant information in trade, industry, popular journals, and newspapers.