08/05/96 E-SOURCING: 'A CHEAPER WAY OF DOING BUSINESS'

E-SOURCING: 'A CHEAPER WAY OF DOING BUSINESS'

At Anson Machine & Manufacturing in Louisville, computer-aided-manufacturing supervisor Dean Deakins believes in technology's power to change the nature of business. Each year, his metal-fabrication shop sells ``tens of millions'' worth of parts to General Electric Co.'s aircraft-engine unit. In early 1995, when GE's purchasing people invited him to use a new bulletin board system to bid for that business, Deakins signed on--and soon found other potential customers within GE. ``Before, I didn't know GE built locomotives,'' he says. Today, Deakins is doing between $1 million and $2 million a year with the locomotive group.
Now, he is signing up as one of the first to use a World Wide Web-based version of that setup. It's the Trading Process Network, and it's the first in a series of Internet-based services for electronic commerce that GE's Information Services Div. has in the works (table). In the past, GEIS has delivered services over its own private network.
The Trading Process Network lets suppliers electronically download GE's requests for proposals, view diagrams of parts specifications, and communicate with GE managers, who together plan to get the system rolling by purchasing $1 billion worth of items this way in 1996. Eventually, ``it will be our main line of communications with suppliers,'' says Robert Livingston, who as head of worldwide sourcing for the GE Lighting Div. oversees annual purchases of $2 billion worth of supplies. Enthuses Deakins: ``There'll be a whole lot less flying people places and less talking back and forth. It's going to be a cheaper way of doing business.''
GLOBAL MARKETPLACE. Cheaper, certainly, for GE, which buys $50 billion a year worth of components, materials, and services. Since experts reckon that it typically costs $50 to process a paper purchase order but only $5 in electronic form, GE stands to save millions. Plus, electronic purchasing fits with the edict by Chief Executive John F. Welch to improve the efficiency and accuracy of all internal processes, a quality-management effort dubbed Six Sigma. Going on the Web, says Livingston, will ``take our processing time down by one third.''
GEIS is taking the Trading Process Network global, signing up companies everywhere that might want to trade with one another. Eventually, GEIS officials say, the setup could evolve into a full-blown, global electronic market--perhaps with GE collecting a fee from every transaction. For now, it's just helping GE and other companies locate and solicit bids from a broader range of suppliers--some 10,000 by yearend, according to company executives.
Eventually, companies all over the world may discover what Deakins has learned: There are untold sales opportunities at the $70 billion giant--once you get an electronic foot in the door.