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01/22/2001  

Dell singles out public e-hub for procurement; PartMiner will aid computer giant's sourcing


B to B, Jan 22, 2001
(Copyright (c) 2001, Crain Communications, Inc.)

Dell Computer Corp., legendary for its internet-based supply chain, has for the first time tapped a public e-marketplace to further fine-tune its b-to-b buying.

The computer maker last week signed a three-year deal with New York-based e-market PartMiner Inc. to help it source hard-to-find parts. Dell also made an undisclosed equity investment in PartMiner, estimated by analysts at more than $10 million.

For PartMiner CEO Dan Nissanoff, the deal is yet another feather in his cap.

Last year, his company was involved in one of the first high-profile deals between an independent Net market-maker and a large industry consortia, signing on to help e2open.com's members with their procurement efforts. E2open is backed by IBM Corp., Hitachi Ltd., Nortel Networks Corp., Toshiba Corp. and others.

Nissanoff called the Dell deal a ``major endorsement'' of his company's changed business strategy, implemented over the past year, that moved it away from transaction fees and toward value-added services.

For Austin-based Dell, the partnership could also yield great benefits, observers said.

``It makes a lot of sense for Dell to do this,'' said William Brandel, Aberdeen Group Inc. analyst. ``Dell, while they have a vaunted

e-commerce system, is still working out a lot of internal kinks. If you let your customers configure their own products, you're going to create a lot of unplanned demand. You need to be able to source components if you want to get the products out the door in a reasonable time frame.''

Dell will take advantage of PartMiner's 12 million catalog listings, turning to PartMiner's market-making services for parts when its primary suppliers are unable to provide components essential for production, Dell said.

Growing exchange

Not only will Dell buy products through PartMiner, it will also place its own excess inventory into the PartMiner Free Trade Zone e-marketplace, said Bill Barron, PartMiner's chief marketing officer.

``The exchange gets bigger ever day,'' Barron said. ``It allows us to even out those imbalances across lots of [buyers and suppliers].''

Given its sophisticated supply chain, Dell probably does less spot sourcing than most PC makers, Barron figured, about 5% versus 10% to 15% for many companies. But given Dell's size, ``the opportunity to quote on that business is just huge, not to mention the cachet and buzz factor'' the deal affords the upstart PartMiner, he said.

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