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Aviation History
2000
2000 - 1546.PDF
C-COMMfTRCC Web wars As aerospace Internet exchanges proliferate, manufacturers and suppliers are positioning to ensure market survival EMMA KELLY/LONDON THE E-COMMERCE revolution has arrived and few aerospace and defence companies can afford to spurn its promis es of cost reductions and improved effi ciency. But global aerospace and defence was not the first industry to embrace business to business (B2B) e-commcrcc solutions: die auto motive, chemical and computer industries were quicker to recognise their benefits. The aerospace and defence industry is con sidered by many to be fertile ground for e-busi ness solutions. "There is perhaps no industry better suited for, or more in need of, the benefits of an on-line B2B hub than commercial avia tion," says aviationX, which aims to provide the industry with a neutral, global electronic mar ketplace. Now die aerospace/defence industry is aggressively adopting online solutions to resolve the inefficiencies associated with its fragmented supply chain, which is driven by manual processes, rigid pricing structure and high inventory requirements. Investment banker and financial advisor Goldman Sachs believes aerospace/defence is one of the "more inclined" B2B industries - with computing, electronics, energy, agricul ture, chemicals and construction - and it expects that aerospace/defence will win a 5% share of the total Internet B2B economy by 2004. Around 8%, or $15 billion, of the industry's Si87 billion sales will be Internet-based this year, Goldman Sachs says, rising to 15% ($29.2 billion) next year and 3 5 %, or $76.6 billion, out of $218,8 billion total sales, by 2004. On the promise of 5-35% cost savings for an industry diat embraces B2B, it is no surprise that new aerospace e-commerce initiatives are emerging weekly. These ventures make great claims for B2B, with aviationX, for example, saying that its service will save the industry at least $300 million a year, based on an average 10% saving per transaction. "The advent of the B2B e-marketplace stands to reshape the global aviation industry on the cost and operations sides the same way the hub-and-spoke system revolutionised the industry's network and rev enue models - by creating unprecedented oper ational efficiencies," it says. Other exchange providers are less willing to talk about cost savings, but point to the overall benefits that Internet-based processes are like ly to provide. The largest venture announced to date, die unnamed initiative combining Boeing, Lockheed Martin, BAE Systems and Raytheon, believes that e-commerce will "transform the way we do business". The "global e-market place is essential to drive new levels of efficien cy", says Phil Condit, Boeing chairman and FLIGHT INTERNATIONAL 16 - 22 May 2000 31
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