DoveBid officials say the trick to staying afloat is to constantly rework the company's business model. It just started organizing auctions as live Web events so that participants can view the goods up for bid. Thirty percent have owners that are both buyers and sellers. Hsupply's financial backers didn't have the patience to sustain it, particularly when they saw how costly supplier integration was. You're dealing with such a diversity of products, it killed us.
Every supplier has a different back-end system.
Even companies that don't wield so much power want to keep supply-chain integration efforts close to home. Eastman Chemical Co. has embarked on Web-based integration with trading partners by using software from WebMethods. The FTC is still keeping an eye out to make sure the auto exchange doesn't raise competitive concerns. Even with government approval, industry-backed exchanges blessed with the deep pockets and commitment of founding members will have to prove their value over time, says Ian Toll, an analyst at Credit Suisse First Boston. Only some, he says, will get it right.