General Motors, Ford and DaimlerChrysler band together to create shared online business-to-business exchange for suppliers

By Ellen Messmer
Network World, 02/25/00

General Motors and Ford Motor Company today abandoned their attempt to create separate, competing online business-to-business trade exchanges and instead announced they would work together on a shared auto-industry exchange.

GM and Ford say they are establishing a new joint venture company for the purposes of building and operating an upcoming online trading exchange that will be shared by the auto industry. DaimlerChrysler also indicated its intent to become involved in the joint venture, the name of which has not yet been announced.

It was only three months ago that Ford and GM had indicated they would compete against each other with separate online business-to-business exchanges in which auto parts suppliers would be charged a percentage on each transaction of their goods sold. Generating millions of dollars in revenue for GM and Ford was a driving force.

But auto-industry suppliers clearly were not happy at the prospect of having to join two separate exchanges that would use two separate technologies, the auto makers now admit.

GM and Ford said that their abrupt change in direction came about because their suppliers voiced their dissatisfaction with it all.

"Our suppliers were telling us all the same thing: we don't need a separate exchange," Ford Vice President Brian Kelley acknowledged.

Ford's trading portal, called AutoXchange, was being built by Oracle. GM's effort, called TradeXchange, is based on technology from Commerce One. TradeXchange just began processing its first few transactions in the last month.

Instead, plans are that Oracle and Commerce One will work together on a new exchange based on XML, which will let suppliers sell goods to the Big Three as well as each other.

Ford, GM and DaimlerChrysler didn't disclose what percentage of each transaction would be charged to the seller at the new exchange or when the exchange will be operational.

GM also backed away from its original hard-line view that all GM suppliers would have to use its online trading exchange or risk losing GM's business.

"I came out strong on this," admitted GM's group vice president of worldwide purchasing, Harold Kutner, saying GM was how dropping that demand.

By working together this time around, the Big Three auto makers think suppliers will find the voluntary-use online trade exchange to be a way to more efficient way to transact business that the alternatives in use today, which range from paper, telephone, faxing and electronic data interchange, with some Web-based ordering also in use.

"This venture will revolutionize every aspect of our industry," Kelley promises.