It seems more and more that companies just want to do things for themselves.
Mighty business-to-business auction site FreeMarkets Inc. has just created its own portfolio of products, called QuickSource, to allow companies to set up their own reverse auctions for parts and services.
What's significant is that Pittsburgh-based FreeMarkets is among the earliest and largest of the b-to-b sites, trading more than $14 billion in transactions since its 1995 inception.
FreeMarket's reverse auctions have been greeted both warmly by customers — who increase their pools of suppliers — and less enthusiastically by some processors who see parts prices drop dramatically during online bidding events.
Now, FreeMarkets will supply its proprietary technology to end users. For a subscription fee, OEM's build their own auctions from the basic software, using their home-grown supplier lists.
"Some companies want to maintain buyer control for certain products, and that's appreciated by us," said Ken Ramoutar, FreeMarkets' vice president of product management.
After forging the mold for reverse auctions, FreeMarkets doesn't want to lose the business to its customers, said equity analyst Michael Hughes of Raymond James Financial Inc. FreeMarkets thinks it has the software and the name brand to succeed, he said. Companies will pay in a range of under $100,000 to more than $1 million a year to use the technology, based on the number of customers.
"They listened to customers demanding self-service," said Hughes, based in Atlanta. "It's a big change for them to become more of a software company."
The concept, launched Feb. 15, works best for less complex parts or those ordered frequently, Ramoutar said.
FreeMarkets also bought Los Angeles-based software company Adexa Inc. on Feb. 8. The deal gives the dot-com company a foundation to provide order demand forecasting and other supply-chain tools, Ramoutar said.
Still, FreeMarkets has some work ahead. Other, larger technology companies are providing similar collaborative and sourcing tools.
"We can use our know-how in auctions with their technology," Ramoutar said. "We predict exponential growth in the market for this."
Pryweller is an Akron, Ohio-based senior reporter for Plastics News.