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THE CUTTING EDGE: Focus on Personal Technology

New Exchanges May Shift More Business Online

March 09, 2000|From Times Staff and Bloomberg News

Two sets of industry giants, helping to pull corporate America onto the Net, announced plans Wednesday to create business-to-business Web sites that promise to change the way companies shop.

Engineering and construction giant Fluor Corp. in Irvine and IBM Corp. in Armonk, N.Y., agreed to build a global online market for fast-growing industries such as telecommunications, pharmaceuticals, and oil and gas.

In addition, Chevron Corp., Oracle Corp. and Wal-Mart Stores Inc.'s McLane Co. unit said they will form an online supply exchange for the convenience store industry.

The Fluor-IBM online exchange would be a central marketplace for retailers and companies looking for goods and services at a lower cost than corporate buyers could get through conventional methods, officials said.

Financial details of the venture, which is expected to launch by summer, were not disclosed.

Fluor, known primarily as a global engineering and construction company, has reorganized and expanded its business into such areas as telecommunications, operations and maintenance, temporary staffing and equipment rental, as well as its traditional heavy construction capabilities.

IBM says its effort to Web-enable the company's procurement systems, which began in 1994, has resulted in overall savings of $6.5 billion.

Under the other online supply exchange, McLane will form an independent company with Chevron and Oracle to automate and centralize convenience store purchases online. McLane supplies more than 30,000 convenience stores in the U.S., Brazil and Taiwan.

The exchange, dubbed, is designed to cut costs for retailers and independent stores that spend more than $200 billion on supplies a year, the companies said.

"This is the world's first global exchange for the $200-billion convenience and small-store retailing market," Chevron Chief Executive Dave O'Reilly said.

Oracle, in Redwood City, could earn millions of dollars in fees from maintaining online exchanges and transaction fees, analysts said.

Chevron, in San Francisco, now sells goods through about 8,100 retail outlets nationwide, making it the sixth-largest convenience store chain, according to National Petroleum News, an industry journal. The company accounts for about 5% of the convenience store market, O'Reilly said.

The exchange will seek to lure other convenience store chains and suppliers to join, and will offer companies that join an ownership stake in the exchange, the companies said.

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