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10 Steps to Your Online Trading Community

Thinking about starting up an e-exchange? If you are, here are a few tips for companies wishing to do so.

The linear supply chain is coming full circle. Every day you read about how another company has turned its traditional supply chain into an online trading community. These exchanges can be public or private, and the potential benefits of operating one are clear: lower inventories, faster payment cycles, better tools for employees and enhanced customer service.

Forrester Research predicts that companies who sign on with e-marketplaces expect to more than double the dollar value of business they transact through these marketplaces in 2001. A trading community sounds like a non-issue -- why wouldn't you start one?

Some might balk at the complexity of starting an exchange -- the integration of each trading partner's different system, platforms and communications formats can be challenging without the right technology. Only a robust and neutral e-business solution will allow you to connect with all of your trading partners and integrate your systems with theirs, no matter how different the systems. So what might it take for you to get started? Here are a few bits of advice.

Step 1: Educate yourself.
Begin by reading everything possible about trading exchanges in business and trade publications. Find examples of companies within your industry that have taken first steps at creating an exchange, and start researching solutions providers that can provide you with the expertise to integrate your company with your trading partners, no matter what systems or platforms they bring to the picture.

Step 2: Formulate a vision.
Unlike other major undertakings, your vision of a trading community is critical to its long-term success -- ensure it complements your long-term e-business strategy. Because setting up a trading community is not a big bang implementation, but rather a journey, your design and implementation teams will need a firm vision to guide them toward milestones and allow for adjustments along the way. Begin communicating with your trading partners to determine what it will take to get them connected with your company.

Step 3: Investigate solution partners.
Narrow the field to a short list of potential partners that have the right technology, experience and solution that can be customized to your particular operation. Whether your planned exchange is public or private, you'll need to find a company that is an expert in integrating different trading partners and their many systems, communication formulas and applications. It's not feasible to install one solution at your end and then make all your trading partners adhere to that solution. Wouldn't it be better if you could use one solution that enabled you (and your trading partners) to leverage your existing IT investments? Complex integration becomes much more simple with the right partner providing an open exchange infrastructure.

Step 4: Partner with those who can help you achieve your vision.
A good partner will understand your unique needs, help you build your vision and will bring many years of supply chain and integration expertise to the table. This partner won't turn away from complex integration issues, instead will tackle them head-on and overcome each obstacle.

Step 5: Begin strategic and tactical planning.
While you are choosing a partner, you can determine your internal team members who will plan and manage the trading community. Involve them from the beginning. This group will learn how to operate the online trading community, help you manage the rollout, and ultimately own the day-to-day operations, growth and maintenance of your exchange.

Step 6: Perform an e-business assessment.
Performing an assessment at this stage can help you ensure rapid, meaningful returns in setting up the infrastructure of your trading community. An assessment will help you prioritise your rollout steps by defining effort, payback and risk. By conducting this assessment, you'll see that implementation time can be measured in days and weeks, not months and years.

Step 7: Don't hesitate. Get started.
After the assessment is complete, take these first steps:

  • Conduct internal functional area interviews and external interviews with trading partners. From information you receive, prioritise actions based on risk, payback, vision and strategy.
  • Construct high-level information flows.
  • Identify short and long-term system, software and network requirements.

Step 8: Establish metrics, set up feedback loops and monitor operations.
Once you have established the appropriate metrics, construct feedback loops. Feedback loops are gauges that help you monitor the performance of you and your trading partners within the new exchange.

Step 9: Measure results, formulate next steps and continue the rollout.
At an established milestone, stop and reassess. Doing so helps you adjust to changing priorities, new partners and the unforeseen.

Step 10: Plan strategically so you can adjust tactically.
You need the ability to adjust your exchange based upon changes in the market and in technology. Start by having team members track market trends and brainstorm contingency plans. Make your plan as flexible as possible from the start, and take pains to ensure it remains flexible.

Timing is everything, and the timing couldn't be better to start your own online trading community. The excitement in the marketplace is palpable, and the tangible benefits of an online exchange are within your reach. Connect, communicate and collaborate with your trading partners and bring your linear supply chain full circle today.