DETROIT - General Motors posted a surprise during its second Internet auction last week: It pulled in 38 percent more cash than expected.
GM auctioned seven massive old stamping presses during its online auction last week. It attracted dozens of bidders around North America and brought in $1.8 million, $500,000 more than GM thought it would get. Bigger still are GM's plans for its TradeXchange.
For Harold Kutner, GM's group vice president of worldwide purchasing, selling old equipment is just the first step in his plans. He wants TradeXchange to become a worldwide standard not only for Internet auctions but business-to-business transactions. He called for other automakers and their supply chains to use TradeXchange for buying and selling to reduce costs for all.
Kutner said worldwide volume and economies of scale provided by the Internet will drive out waste and cost while increasing business. He estimates GM could conduct $50 billion in Internet business this year.
Business-to-business electronic commerce worldwide will grow to $7.3 trillion by 2004, according to a study by the Gartner Group, a market research firm in Stamford, Conn.
'This is the evolution of the marketplace,' Kutner said. 'It will speed up ordering and delivery.'
`Virtual marketplace'
GM's TradeXchange - created in November with partner Commerce One of Walnut Creek, Calif., as a 'virtual marketplace' for GM and its 30,000 suppliers - conducted its second auction as part of the company's asset recovery effort.
GM qualified 145 suppliers and brokers. They had the option to make factory visits to inspect the presses.
GM tracked the electronic auction from its Tech Center in Warren, Mich. A computer screen projected details of each round of bidding on a wall, listing the lot numbers, minimum bids, opening bids and total bids.
The information was displayed in 'real time,' so the often rapid bidding could be observed. The bidding on one press began at $80,000; other bidders rapidly pushed the winning bid to $176,000.
To protect the process, bidders were given passwords and the program was encrypted. GM asked reporters to keep winning bids and bidders confidential.
Better than live
GM officials touted the effort for its efficiency. Bidders could bid from their office or even a taxicab if they had a wireless Internet access device. Each bidder had access to complete records for each press. Bidders could even download a digital image of each press.
The auction highlighted Kutner's drive to reduce waste and cost from the system. The auction was more profitable than a live auction, one official said. It eliminated the auctioneer's fee and generated higher bids for the automaker.
But Kutner said TradeXchange will benefit more than just GM. 'It's a good thing for suppliers without a lot of resources,' he said. 'This will help them with things that would otherwise be sold for scrap. It can create value.'
GM's efforts to remake itself as an Internet company will get an expanded test later this year. GM will begin letting bids to its parts makers for future contract by the third quarter of this year, the officials said.
The new system will allow the automaker to communicate with its entire supply chain at one time, saving time and money. GM last month said it would adopt i2 Technologies Inc.'s software to electronically manage that system.
