DETROIT, Nov 5 (Reuters) - General Motors Corp. <GM.N> said
on Friday it would move all of its $87 billion in annual
purchases to its new e-commerce Web site within about two years
and would pressure its suppliers to follow suit.
"I would say by the end of 2001, we're going to expect all
of General Motors' purchases to go through this site, and we
would also expect our suppliers to be as actively engaged,"
said Harold Kutner, GM group vice president of worldwide
purchasing.
"Let me clarify something when I say actively engaged. If
we have an indirect supplier of goods and services on this
site, and they're not transacting other business on this site,
we may be looking for a replacement supplier," he told
reporters at a press conference at GM's Detroit headquarters.
GM is already moving at Internet speed in one facet: In the
three days since the new venture was announced on Tuesday, it
changed the name to GM TradeXchange from GM MarketSite after
testing the two names with suppliers.
Alan Turfe, executive director of GM TradeXchange, said GM
is considering charging 0.25 to 0.5 of one percent on each
transaction conducted over the Web site.
"It should be reasonable to generate revenues in the
neighborhood of $3 to $5 billion" within the next five years
from GM TradeXchange, Turfe said.
GM has invested less than $10 million in the site, which
will go into operation in the first quarter next year, Kutner
said.
GM TradeXchange, created with Internet software provider
Commerce One Inc. <CMRC.O>, is expected to create substantial
cost savings by cutting by 90 percent the approximately $90 to
$150 in costs GM incurs with each of hundreds of thousands of
purchases annually, Kutner said.
As part of those cost savings, many of the 3,800 people in
GM's purchasing organization will become redundant.
"I would say that many of the people might be realigned to
other functions within the organization," Kutner said.
GM sent letters on Friday to its approximately 30,000 top
suppliers informing them about GM TradeXchange, accessed
through the GM SupplyPower Web site (www.gmsupplypower.com),
GM's current portal to connect to its suppliers.
As more suppliers come on board, GM envisions GM
TradeXchange becoming the world's largest "virtual marketplace"
for a wide array of products, raw materials, parts and service,
and not just for the automotive industry. Participants will be
able to also cut their own purchase costs by eliminating the
paper trail, to gain access to an expanded sales channel and to
speed up the entire purchase process, GM said.
Already, Delphi Automotive Systems Corp. <DPH.N>, which was
spun off from GM in May; fellow auto parts supplier Magna
International Inc.<MGA.N>; Bethlehem Steel Corp. <BS.N>; and
Compaq Computer Corp. <CPQ.N> are among the major companies
that have agreed to sell and buy over GM TradeXchange.
Kutner and Turfe even envision a day when other automakers
would transact business over GM TradeXchange. However, Ford
Motor Co. <F.N> also announced on Tuesday its plans to set up a
rival Web site. |
