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Goods and Services At The Speed Of The Web

By Mark S. Merkow (

Boeing 747 customers can lose up to $40,000 per minute while their planes wait on the ground for spare parts. Typical American businesses will expend 80% of their purchasing efforts on Maintenance, Repair, and Operations (MRO) items that don't directly contribute to company profits, even though they only comprise 20% or less of their total purchasing expenses.

Modern purchasing systems have turned into nightmare operations with the complexities of business re-engineering and supply-chain management. A general lack of technology to support these efforts contribute to the agony. To help in simplifying matters, many large purchasing departments have reduced their supplier base by establishing sets of "preferred suppliers" with the goal of achieving a tighter integration of the supply chain. As a select group, these goods' providers are expected to be highly responsive to customer demand or face losing their "preferred status". Some examples of the types of demands being placed on selling organizations include:

In response to these demands, companies have developed a slew of highly customized, "one-off," electronic catalogs and purchasing systems, creating more technology-based maintenance nightmares. New products and services, like corporate purchasing cards can help in achieving MRO cost and quality goals, but they alone do not go far enough. Many of the services that use these products are based on proprietary systems and mechanisms that lack standardized processing and systems support. Interoperability among these systems is rare, thus leading buying and selling organizations to seek easy-to-use, open, standards-based solutions to common business problems.

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Created: Dec. 17, 1997
Revised: Dec. 17, 1997