Six conglomerates form a joint procurement Web site

MANILA, 19 June 2000 (Manila Bulletin) - The six conglomerates are the Aboitiz Group, Ayala Group, Gokongwei Group, Lopez Group, Philippine Long Distance Telephone Co. and United Laboratories.

A memorandum of understanding that will govern the formation of the proposed electronic procurement company with an initial capitalization of P1 billion will be signed today by the conglomerates to be witnessed by President Estrada.

"This is a major event of what IT, e-commerce means and I hope this will be replicated by other business firms," Trade and Industry Secretary Manuel A. Roxas II said.

To ensure that the procurement Web site is a working one, each one of the participating conglomerates is committing to a "significant amount of procurement".

Roxas did not reveal the amount the conglomerates will source from the Web site but said that the conglomerates require the "supplies of paper clips to cables ... you just can imagine what these conglomerates purchase that run to billions."

"This Internet-based procurement system has narrowed down the supply gap in the supply chain, eliminate the middlemen and reduce the paper works," Roxas said.

Roxas said the establishment of a procurement Web site has provided every supplier both local and foreign equal chance to bid via the Internet.

As buyers, SMEs will have greater discounts created by the volume of all buyers, and by using the Internet, they will lower the costs associated with the purchasing process itself.

"This is also a major break after the passage of the E-Commerce Act," he said.

The still unnamed firm will be managed by an independent professional group. The shareholders agreement is still in the process of final formulation for approval by the respective boards of the founding companies.

Based on the MOU, the group is looking at a start-up operation by November this year.

The local procurement Web site of the six conglomerates is the local version of the procurement Web site put by the three US car giants for the supplies of parts and components. GM, Ford, Daimler-Chrysler have formed the Covisint consortium.

In aerospace, Boeing, Lockheed, Raytheon and British Aerospace have organized their own consortium.

In electronics, Hitachi, IBM, LG Electronics, Matsushita Electric, Nortel Networks, Seagate Technology, Solectron and Toshiba have recently launched a similar procurement Web site.

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