Ten years ago it seemed as if a purchasing professional couldn't turn around without hearing about another new electronic marketplace. Designed to facilitate buying and selling between purchasing and suppliers in a specific industry, many of the e-marketplaces have since faded away. But some are flourishing, and a new report from Gartner suggests that these electronic marketplaces may continue to grow at a rapid pace through 2010.

For example, Mary H. McDaniel, vice president of materiel and corporate sourcing at FedEx Express in Memphis, Tenn. and her team use Aeroxchange, an electronic marketplace for the aviation industry, to communicate requirements to suppliers, a process that lays the foundation for a powerful SRM program. And, at Rio Tinto, an international mining company with headquarters in London, John McGagh, head of procurement, and his team use the Quadrem Global eMarketplace, which is for the oil and gas, mining, minerals and metals and consumer packaged goods industries.

McGagh, who is also a member of the board of directors at Dallas-based Quadrem, began using Global eMarketplace in 2000. Today, Rio Tinto uses the tool to purchase about $2.7 billion annually—everything from heavy equipment to office supplies. By 2009, he expects nearly all the company's $5 billion annual spend to go through eMarketplace.

Benefits to Rio Tinto from using the tool include lower operating costs, increased efficiency, better service and reduce cycle time.

“We are in the inbound supply chain business, working to make that as efficient and effective as possible,” says John McGagh, head of procurement, Rio Tinto.

As an example of how he and his team use the tool, McGagh refers to the company's truck purchase. Rio Tinto owns 9% of the world's big trucks. Simply put, the company has a computerized maintenance management system that schedules truck maintenance at regular intervals. From the bill of materials, the system determines parts that are needed and whether they can be pulled from stock. When the stock needs to be replenished, the system communicates via XML with eMarketplace. Quadrem passes the order to the appropriate Rio Tinto supplier who fills it. Rio Tinto then pays the supplier electronically.

Today McGagh and his team use the tool to purchase goods and services from many of the company's larger suppliers, and they are in the process of bringing many of its mid-size and smaller suppliers on board.

"By having an agreed-upon communication standard for the industry rather than the one-to-one connections of an EDI system, the barriers to entry for small suppliers are going away," he says. "One of our competitors in Africa today has Quadrem alerting a local artisan that he has a PO in the system, and the bloke goes down to the local community web café and does the transaction there," he says. "That makes dealing with a big engine like Rio Tinto equally as easy for small suppliers."

As for sharing the electronic marketplace with competitors, McGagh says that was the original intent. "We sat down together and decided that the standards should be open to all of us. We are big enough to have our own proprietary system but that makes no sense. We don't want to be in the business of running a clearinghouse for suppliers or running a marketplace. We are in the inbound supply chain business, working to make that as efficient and effective as possible."