WORLDWIDE EXCHANGE TO HOLD 1ST AUCTION

DAN ALAIMO

BOISE, Idaho -- Following its selection of technology partners this month, the WorldWide Retail Exchange is gearing up to hold its first auction within 30 days, said Pat Steele, executive vice president, information systems and technology, Albertson's, and head of technology and operations for the WWRE.

The WWRE has selected an alliance of IBM Corp., White Plains, N.Y., i2 Technologies, Dallas, and Ariba, Mountain View, Calif. Other technology suppliers involved in WWRE are Syncra Systems, Cambridge, Mass., viaLink, Dallas, QRS Corp., Richmond, Calif., and Retek, Minneapolis.

WWRE is one of two trading exchanges formed this year by groups of retailers, many from the supermarket trade. The other, GlobalNetXchange, Atlanta, has a technology partnership with Oracle Corp., Redwood Shores, Calif., which also has an ownership position in the exchange.

Retailers involved in the early spring startup of WWRE were Albertson's, Safeway, Royal Ahold, Target, Kmart, CVS, Tesco, Marks & Spencer, Kingfisher, Auchan and Casino Guichard Perrachon. Six more operators joined WWRE last month: Supervalu, Safeway plc, Rite Aid Corp., Dairy Farm International, Dansk Supermarket and El Corte Ingles. There are now a total of 17 retailers involved from all over the world. Members of GlobalNetXchange include Kroger, Sears, Carrefour, Metro and Sainsbury. Wal-Mart has its own exchange called RetailLink.

Steele said WWRE will begin auctions next month and that Albertson's will take part. "We will be involved with the very first auction in four weeks," he told SN. How the retailer will use the exchange after will be determined shortly, he said. "We are in the process of evaluating that right now, as are all the other member companies. Some are further ahead than others, but getting the exchange up and going is the beginning. Getting companies integrated into the exchange is where the real work needs to be done and where the real benefits are going to be," he said.

WWRE's capabilities will unfold in "waves," he noted, and the auctions are part of wave one. "We will also start putting together software tools for e-procurement and supply chain and category management applications," along with e-mail, calendar and other communications functions, Steele said.

Wave two will begin in about 90 days. "That will include capabilities that are going to be driven by members plans and the additional development of services and tools for CPFR (Collaborative Planning, Forecasting And Replenishment), VMI (vendor-managed inventory) and other leading edge functionality," he said.

In about 180 days, wave three will begin. "This will include capabilities related to participants' ability to use the exchange services and software tools. As supplier and retailer companies become more sophisticated and want more customization, we will be in a position to do that. Even if some companies decide to bring these services in-house for customization, they won't abandon the exchange, they will customize, for example, e-procurement, but then they will come back through the exchange to do all the transmission," he said.

These initiatives can move forward now that the technology provider partnerships are in place. "The Ariba-i2-IBM alliance won this multiyear, multimillion-dollar contract on the basis of the breadth, scope and depth of the capabilities it has shown it can bring to bear on our requirements, its proven ability to implement solutions quickly and by acting as a unified entity in responding to our issues and needs during the selection process," Steele said.

"The technology platform that the alliance will build and manage for us will enable current member retailers, others who choose to join us, and our vendors and suppliers to increase efficiencies and reduce costs through improved communication and streamlined processes," said Gerald Storch, the WWRE's head of marketing and president of financial services and new business, Target Corp., Minneapolis. "Through technology, the exchange will improve current relationships and build new ones between retailers and their suppliers and vendors, creating cost reductions throughout the supply chain that will ultimately translate into lower prices for consumers," he said.

"The exchange supports what is happening in our industry today. We're seeing an increased use of technology across all retail sectors to reduce waste and increase efficiency in the overall supply chain," Storch said.

The WWRE is part of an initiative at Target called "e-Target," he noted. "We believe that there will be virtually no system or business process in our company that not be impacted by the Internet. In fact, the quicker we can Internet enable what we do, the better off we are going to be," he said.

He characterized the WWRE as a "highway" for doing business with vendors and suppliers. "We are very excited to get together with other retailers and help build that highway. But we are still very competitive with each other. We are still in a race. So, we may have agreed to build a highway, but we are each going about building our cars to compete on that highway. That is at least as important a process for us as the exchange itself," he said.

"The exchange is an enabler," Storch said. "In and of itself, it won't do anything until we do what we have to do inside our companies. So I am confident that similar processes are going on in each of our member companies. As in the days before the Internet, the companies that succeed the best in that competitive world will be those that get ahead of the curve and work hard, and adopt the latest technology the quickest."

To date, supermarket retailers have been slow to embrace Internet business-to-business applications, but Steele sees this changing, particularly with respect to the WWRE. "You have a lot of supermarkets represented with WWRE. As the member companies start using the exchange to do business and move into the Internet world, and suppliers may also participate because that is the way we are going to do business, I think just the force of gravity will get other retailers in the supermarket industry to say, 'this is an advantage in the way to do business. It is affordable and it's a nice way to get involved in the Internet world. So we'll move forward with it also,"' he said.

The WWRE's relationship to the UCCnet, Lawrenceville, N.J., which will have its official launch this week, is yet to be determined, Steele said. But that is not out of a lack of interest, rather the two on-line entities have been focused to date on their initial development.

"We are looking to UCCnet as one of the guiding directions in standards. We are still in the process of resolving how WWRE will interface with some of their capabilities and cataloging and such. We do have member companies that are on the WWRE that are also a part of what is going on at UCCnet, and there has been a lot of discussion," he said.

How WWRE will co-exist with GlobalNetXchange and the Wal-Mart exchange is something else that will work out over time, he noted. "Marketing people can pound their chest, but I think we will just see what happens. There is enough retail power behind both these exchanges so they should certainly both survive. If you get standards established, it makes it easier for the suppliers because they don't have to deal with two or three giants," he said.

"As standards get established, it will make it easier for everybody to use the processes, and I think each exchange will probably have a lot of similarity, and then there will be some niche things that each ones creates, just as you have different companies that do business today. So I think they will co-exist very well," he said. WWRE has not yet begun discussions with the consumer packaged goods industry's Transora exchange because Federal Trade Commission regulations, he said.

The development of WWRE came about at "amazing" speed, he noted. "If you had asked me six months ago, I would have said this never, ever would have happened," he said.

"It is a testimony to the speed of change that we all have to adhere to and it is a testimony to the fact that the world is global and business is not that much different as you go around the world. There are differences, but the core businesses are the same. And I think it is recognition of the retailers saying that to do this alone is unaffordable, to do it as a group provides a framework and a platform, and how we execute off that platform is how we continue to have our point of differentiation," he said.

While WWRE envisions long-term relationships with its technology partners, those companies not become equity-holding participants, Steele said.

"It's important to clarify that by design, the exchange chose first to establish its structure, define key governing principles and articulate its goals for improving overall supply chain efficiency. Building upon this work, we then defined the requirements for the technical solution we would need and requested proposals from technology partners. In other words, the WorldWide Retail Exchange is being built to accommodate and anticipate real world needs of all participants in the retail supply chain -- with our technology partner as an enabler of the necessary capabilities -- rather than being built by a technology company to sell to participating enterprises," Steele said.

"This approach distinguishes the exchange from other B2B e-marketplaces. We are building the Exchange, from the ground up, to generate benefits for the member retailers, participating suppliers and vendors and ultimately, consumers. While the Exchange will become an independently managed company, the benefits we generate will flow to the members, the participating suppliers and vendors and consumers and not primarily to the exchange as an independent company," he said

In terms of the roles to be played by the various technology partners, IBM will be the lead point of contact and will be responsible for system integration issues and hosting the exchange, noted Steele. The exchange will be powered by the Ariba B2B Commerce Platform and i2's TradeMatrix solutions. Ariba will provide its Ariba Marketplace, Ariba Dynamic Trade and Ariba Buyer Solutions together with access to commerce services ranging from logistics services such as total landed cost calculation to financial services such as e-payments. i2 will also provide components to manage retail collaboration, design collaboration, supply chain visibility and catalog management services.

Syncra Systems will provide CPFR capabilities, Steele said. The viaLink Company's syncLink service will provide the electronic pricebook for synchronized product, price and promotion data. QRS will provide access to its Keystone catalog, as well as network services. Retek will provide access to its design collaboration solution.