SupplyOn is one of the few survivors of the online B2B exchange hysteria that swept the automotive industry five years ago.


Once in the shadow of Covisint, SupplyOn continues to grow after the ill-fated e-marketplace has been sold off and seen its services sharply reduced.


SupplyOn has doubled its number of customers since the beginning of 2003. Sales in 2003 totalled €16 million and the operation has traded profitably at the EBIT level since the end of 2003.


Launched by several German Tier 1 suppliers, the exchange has succeeded by scaling the cost of its services to customers. It has also focused less on auctions and more on product life cycle services in the supplier-to-supplier segment of the supply chain.


Colin Whitbread recently interviewed Markus Quicken, head of sales and services at SupplyOn.


Has SupplyOn’s basic strategy changed since the company’s founding?


We have never changed our strategy regarding our basic concept of where we are in the marketplace. We now offer an integrated portfolio around the whole life cycle of a product in the auto industry – from development, through procurement, supply chain management and quality management.


Most of this integrated solution is now up and running. We have realized 80-90% so far.


The advantages to customers of using one connection to a marketplace and one user-manager are clear.


As an example, one of our shareholders, ZF, faces using 30 different customer portals, each averaging around 30 applications and necessitating employing five people just for user management, training and technical management purposes. This is not driving productivity.


Is the range of services continuing to evolve?


We have built up the range of services in different areas and will continue to do so. We added new products in the supply chain management area in 2003, most notably Vendor Managed Inventory (VMI).


But our latest product stream is in the quality area, where we have established a Performance Monitor and pilots for Advanced Product Quality Planning (APQP).


The Problem Solver solution, which adds a standard resolution model to the package, will be rolled out during 2005.


We could offer it now but customers need implementation time for the existing products. All functionalities are developed in working groups that we do with our customers.


We bring requirements together with our technology provider SAP.


What are your customer numbers?


We have more than doubled the number of customers since the beginning of 2003 –from 2,000 participants to over 5,000 now.


We wouldn’t expect this rate of growth to continue, however, because we assume we now already have 70-80% of European automotive suppliers on board.


The majority of these users are still using us for just one or two functionalities, so we hope to increase this number and drive up the number of transactions.


We also have potential to increase user numbers in North America and Asia.


What proportion of users are German suppliers?


Sixty percent German, 20% rest of Europe and 20% rest of world. Our base covers 30 different countries.


How is growth in North America shaping up?


We already do some significant business with our European customers who have branches in North America. Recently we have started to address North American-headquartered Tier 1 suppliers, together with SAP in a sales partnership.


We have established a formal sales operation with them and from 2004 have had a complementary business model.


The majority of our products are based on SAP standard products and we do the automotive customising and have the auto-specific portfolio.


We will also expand in Asia — our presence there is where we were in North America two years ago.


Following Covisint’s demise, what is the competition?


Actually, we always saw Covisint as a complementary approach. We do have competition in individual areas but nobody else can offer such a comprehensive or integrated portfolio or has our traction and volume.


We estimate that purchasing a range of application licenses from individual software vendors and running it on an individual portal, in order to cover the range of SupplyOn functionalities, would cost €9 million, against our package cost of €2 million.


In addition, the implementation time for doing it that way would be at least 12 months, against almost instantaneously using us.


Have you made any recent changes to the pricing model?


We are happy with our model, but are always looking for improvements. For example, we have just begun to offer SupplyOn Complete to users of our sourcing functionality for no additional charge.


This means users can now use the complete range of functionalities if they subscribe to the sourcing products – a value-for-money improvement for multi-function users.


SupplierBusiness.com