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October 18, 1999

Industrial Procurement: Online Options Grow
Three Web buying portals are set to begin operating this month

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ompanies that want to buy industrial parts and supplies online are getting more options, with three new Web buying portals debuting by the end of this month. All three services are accessible via a browser and are aimed mainly at small and midsize companies.

This week, SupplierMarket.com will launch a service of the same name to match buyers and suppliers for build-to-order manufacturing contracts. Also this week, Datastream Systems Inc. will roll out iProcure, a Web-based system that will let its 50,000 maintenance-management software customers order maintenance supplies online. Next week, PurchasingCenter.com will enter the market with a buying portal aimed at companies or facilities with 100 to 1,000 employees.

"There's a big trend toward serving smaller businesses that weren't able to access the first wave of online procurement," says Tim Minahan, an E-commerce analyst at Aberdeen Group.

The market should be ripe for these new services. A National Association of Manufacturers survey of 2,500 small-company members last month found that 80% have Web sites, 72% have used the Web for research on other firms, and 63% use it for marketing. But actual online commerce has yet to take off. "These are companies with minimal IT and procurement staffs, so there's a drop-off in automated procurement capabilities compared with large firms," says Asif Satchu, president and co-founder of SupplierMarket.com.

SupplierMarket.com will move the request-for-quote process online for manufacturers with sales of $1 billion or less. Using an application called SmartMatch with an

Oracle8i database, the company will match suppliers and buyers for contracts to manufacture built-to-order, minimally engineered products with many different configurations, such as computer keyboards. The supplier that wins the bid pays SupplierMarket a transaction fee averaging 2% of the total bid.

Datastream's iProcure follows the launch six months ago of MRO.com, a similar service from PSDI Inc. The iProcure service already has 80 customers. It's sold by subscription at $1,000 per user; an unlimited-user site license is $10,000. Datastream also collects a 2% transaction fee from suppliers.

PurchasingCenter.com will focus on unscheduled "spot buying" of maintenance supplies in company departments, says PurchasingCenter CEO Paul Baier. The company also plans to form a buying group that will get lower prices from distributors because of guaranteed volumes.

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