B2B Survivors

Creating your own private exchange, however, can easily cost $5 million or more. One alternative is the route taken by Diebold, a Canton, Ohio, maker of safes and ATMs, which has hired FreeMarkets to conduct online auctions for it. FreeMarkets acts as a corporate matchmaker, combining the services of a broker, an auctioneer and a software designer. FreeMarkets seeks out suppliers, ensures they can meet specifications, then invites them to either participate in a real-time auction online or submit sealed bids.

Some suppliers have balked, and in a few cases Diebold has decided not to hold an auction just to preserve those relationships. But it has also found new suppliers. Diebold has realized at least a 15% savings on commodities bought through FreeMarkets, more than enough to justify the flat fee that Diebold pays for the service.

Some companies are using B2B techniques to squeeze more efficiency from the supply chain. Consider mechanics who work on GE aircraft engines, who typically spend hours studying a paper repair manual, cross-referencing it with update notices, thumbing through a parts catalog and phoning to leave a message for someone at GE who might call back the next day. Software from Enigma of Burlington, Mass., offers a fast alternative: the mechanic has only to find the part he needs, then click on it, and it's on the way. It's a greasy business, not particularly sexy. But it's a good example of how money is being made in B2B today.

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