from wsj; Oracle, Boeing Discuss Aircraft-Parts Venture
By DON CLARK and ANNE MARIE SQUEO
Staff Reporters of THE WALL STREET JOURNAL
Oracle Corp. is in talks with Boeing Co. about creating a comprehensive electronic marketplace for aircraft parts.
The proposed venture, in early planning stages, is expected to link Boeing and possibly other aircraft manufacturers with thousands of companies that supply parts and services, people familiar with the talks said. The idea is to sharply reduce the huge amounts of time, money and paperwork associated with building jets.
A raft of similar ventures is sweeping old-line businesses, led by the auto industry. Oracle, Redwood Shores, Calif., is already working with Ford Motor Co. on a venture called AutoXchange, expected to automate purchasing functions for Ford. General Motors Co. is working on a similar effort with Commerce One Inc., a Walnut Creek, Calif., start-up. Other competitors in the field include German company SAP AG and Ariba Inc.Oracle, the largest supplier of database software, is eager to ensure its technology is used in the construction of the new electronic-commerce efforts. An Oracle spokeswoman declined to comment Tuesday on the talks with Boeing, which were reported by Bloomberg.com.
But Lawrence Ellison, Oracle's chairman, told reporters last week the company was determined to set up more ventures such as AutoXchange, which intends to work with other companies besides Ford and is expected ultimately to go public. "The idea is to create industry exchanges," Mr. Ellison said.
A Boeing spokesman declined to comment on Mr. Ellison's comments or any talks with Oracle.
Boeing, the world's largest maker of commercial jetliners, is in the process of reviewing ways to streamline its purchasing processes for supplies ranging from metals and wire used in airlines to paper clips and fax paper required for internal operations, company officials have said.
"Boeing is looking to move into e-business and e-commerce, and we see opportunities in terms of working with our suppliers and our customers," said Scott Griffin, the company's new chief information officer, in a recent interview. "We see this as a revenue-making tool."
When the Seattle-based Boeing needs to buy supplies, it releases a request for bids, collects and reviews each bid and then negotiates final pricing and delivery with individual suppliers. In theory, an electronic marketplace would speed up, and reduce the cost, of this process.
A Boeing spokesman stressed its consideration of conducting this process on the Internet is in its "embryonic stage" and would require agreement from Boeing's suppliers.
Mark Hoffman, chief executive officer of Commerce One, said that based on Commerce One's experience with General Motors and others, he estimates an online marketplace for the aircraft industry could save Boeing hundreds of millions of dollars.
-- Ann Grimes contributed to this article.
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