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From neutral to private B2B exchanges

So, these new online trading arrangements have not developed as open, neutral market‑

places as predicted by many analysts. This seems to be due to the complexity of business pur‑

chase decisions and negotiations and their destabilising nature on markets. The Computer 

World (2001b) article gives these reasons why what it terms ‘private exchanges’ are proving 

successful:

First, owners of private exchanges regulate supplier and customer access – and exclude 

competitors – making the sharing of sensitive information more likely.

Second, owners can direct suppliers and customers to use the exchange through price 

incentives or by mandating changes in the way to conduct business.

Third, private exchanges can be secured and tailored to serve specific projects and cus‑

tomers, unlike public exchanges, which must be generic so as to accommodate everyone.

The article gives the example of IBM which has  well‑  established private marketplaces. IBM 

has saved about $1.7 billion since 1993 by being able to divulge sensitive price and inventory 

information over a private exchange built for 25,000 suppliers and customers. As host of the 

exchange, the company helped defray the cost of connecting suppliers. As a result, on‑time 

delivery of systems to customers increased from around 50% to 90%.