Internet Exchanges Start Smokin

The use of internet exchanges continues to march into the mainstream, with cigarette manufacturer Brown & Williamson Tobacco launching a project to exchange orders with thousands of its wholesalers.

The Louisville, Ky., company took the wraps off a project it began last fall to create a Web-based ordering system, so its wholesalers across the U.S. can place orders for tobacco products online. Until now, the company accepted orders primarily by phone, fax or mail; however, about 50 of its largest clients use electronic data interchange (EDI). Hector Cuadros, e-business program manager at Brown & Williamson, said that the company hopes eventually to move all its clients to the Internet system because of its lower costs and its ability to offer greater customer service.

“The real motivation behind the project was improving our customer service,” Cuadros said. “Right now, we couldnt justify it on a cost savings basis, but it is a strategic advantage for us.”

The improved service includes around-the-clock order entry and access to customer account information and order history.

While many companies have been developing private exchanges for their clients, the Brown & Williamson venture is significant because of the amount of business that could eventually be conducted using it: The nations third largest tobacco firm boasts annual revenue of about $5.5 billion.

Atlanta-based systems integrator Genex was contracted to build and host the exchange. Craig Ogle, Genexs lead engineer on the project, said the biggest challenge was building a Web interface to tap into Brown & Williamsons old, but reliable, mainframe systems.

Genex deployed WRQs Verastream application integration software to “Webify” access to the mainframe. Ogle said Genex will now concentrate on helping Brown & Williamson bring suppliers on board.

Progress is also being reported on other Internet exchange fronts. Exostar, a marketplace founded by four defense and aerospace companies — BAE Systems, Boeing, Lockheed Martin and Raytheon — has handled a relatively low volume of transactions so far, but is beginning to hook up its members in a far more ambitious way.

Until recently, Exostar served only a handful of procurement systems used by those companies. Within 18 to 24 months, it will connect about 200 different procurement systems that are used by 40,000 suppliers, said Exostar spokesman Ludo Van Vooren. The first of those new connections was set up only last week.

Exostar is also now using Commerce Ones marketplace technology to run its transactions, and volume has increased from a few hundred to about 3,000 transactions per day.

Chemical exchange Elemica is also expected to begin running transactions this month.