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VW to Run US$1 bln B-to-B Operations in Brazil, Argentina

Volkswagen in July plans to launch a business-to-business e-commerce system based on the Internet to process general purchases from 3,000 Brazilian and 500 Argentine vendors.

According to Elias de Macedo, technology manager at Volkswagen, the goal of the e-commerce system deployment is cut costs in materials acquisition processes and diversify purchase methods.

"When we use paperwork, the purchase process involves more bureaucracy and takes longer. We want to make our business processes simpler," says Macedo.

General purchases involve presently seven Volkswagen factories in two countries with 3,000 Brazilian and 500 Argentine employees. Among vendors there are 4,230 companies employing 21,000 people.

"Each vendor uses a different process and solution that must be integrated with our e-commerce system," says Macedo.

For executives working in this area, the biggest challenge is cultural and not difficulty with technology.

To Volkswagen technology managers, the Internet is being used here because it offers great flexibility and solves the problems of international communication costs, added Macedo.

Volkswagen by July will migrate the business-to-business e-commerce system for efficient purchases on the Internet.

Net 2000, the system used now, runs on a private network and has already saved the company US$ 400 million, according to Carlos Boschetti, IT director at Volkswagen.

Macedo explained that the deployment of Net 2000 Volkswagen reduced the parts acquisition lead time from 56 to 7 days, and increase the number of vendors for each item from 3 to 10 companies.

According to Macedo, the company buys 7 million parts each day through Net 2000 from 550 Brazilian and 180 Argentine vendors. In 1998, this e-commerce system was responsible for US$ 3 billion in transactions.



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