Volkswagen has begun using its new web-based trade exchange and plans to conduct up to 100 online auctions with its suppliers this year.
VW, using an alliance with i2 Technologies, Ariba and IBM, took under six months to build and begin operating the exchange, called Electronic Supplier Network.
Although it is a private exchange - designed for purchasing and collaboration between VW and its suppliers - VW could allow other automakers to use the site, said Sven Huster, corporate vice president of information technology at Volkswagen AG.
Transactions represent business that could have been handled
by Covisint, the exchange developed by Ford, General Motors, DaimlerChrysler, Nissan and Renault. Covisint wanted VW as a founding partner.
IBM, i2 and Ariba formed their alliance in March, making them a player in building trade exchanges.
'I would call it the bringing together of the best that they have,' Huster said of the alliance. 'In this partnership there are clear, defined roles.'
In September, VW quietly began online transactions with an undisclosed number of its suppliers. VW has been reluctant to talk about the initiative until it is functional next year.
Huster declined to say how many suppliers are eligible to post catalogs and participate in auctions. But VW wants its 10,000 suppliers to use the exchange.
Although 100 auctions will occur this year, they are not high-volume transactions.
'I think the larger transactions - the real significant volumes - will begin to take place next year,' Huster said.
In April, VW announced its intentions to use the alliance to build an e-marketplace. Francisco Javier Garcia Sanz, Volkswagen board member responsible for purchasing, said then that VW could save up to 50 percent in supply chain costs in certain cases.
Like Covisint, which went live October 3, the VW exchange is testing a product-development tool that will allow the automaker, suppliers and others to work simultaneously online with engineering drawings. VW's tool should be available early next year, Huster said.
The alliance with i2 Technologies, Ariba and IBM is working, Huster said.
But Kevin Prouty, a group research director at AMR Research in Boston, Massa-chusetts, USA, is skeptical.
'We're a little leery of large partnerships, especially the Ariba-i2 part,' he said. 'That's kind of a tango with a knife. They are dancing around with each other, but they are both holding a knife behind their back waiting for an opportunity to bury them. They both are potential competitors.'