Analysis of an Electronic Marketplace: Spirit Aerosystems

ANALYSIS OF AN ELECTRONIC MARKETPLACE:

SPIRIT AERO SYSTEMS INC. SUPPLY CHAIN MANAGEMENT

INTRODUCTION

Information technology plays a vital role in today’s business world. In fact, companies are so dependent on technology that most could not function without it. A growing area of information technology is known as Electronic Marketplaces or E-Marketplaces. An E-Marketplace is a location on the internet where companies can obtain or disseminate information, engage in transactions, or work together in some other way. Most E-Marketplaces provide two basic functions: they allow companies to obtain new suppliers or buyers for company products, and they develop streamlined trading networks that make negotiating, settlement, and delivery more efficient. Companies buy and sell products and services using different trading and purchasing mechanisms, such as catalogs, bid-ask systems, auctions, reverse auctions, requests for quote, and requests for proposal.

E-Marketplaces can be structured in several different ways. One way is to structure a marketplace like eBay, where the market maker is neither a buyer nor a seller, but is instead a neutral third party. Other E-Marketplaces are set up to be a consortium of sellers that leverage their combined power to efficiently sell their products to buyers. E-Marketplaces can also fall into two or three major categories based on who can access them or who owns and controls them. Access to E-Markets is either public or private. In private markets, there is limited access to a specific set of business partners, and they are almost always owned and controlled by a single company. In public markets, on the other hand, any business that meets the criteria established by the market’s operators can participate. Public markets are divided into two groups of owners: consortia and independent. Consortia markets are owned and controlled by a collection of companies in an established industry, while independent markets are owned and operated by investors who don't have a significant preexisting presence in the industry served by their e-market.

Between 1999 and 2000, thousands of Electronic Marketplaces burst onto the scene in pursuit of the huge revenues that market analyst firms were forecasting at the time. Now, in 2010, Electronic Marketplaces are becoming more and more valuable to several different industries because they promise to greatly improve economic efficiency, reduce margins between price and cost, and speed up complicated business deals. The services E-Marketplaces provide expand many companies’ purchasing and selling abilities, and make prices more dynamic and responsive to economic conditions.

There are several Electronic Marketplaces geared towards the aerospace, or aviation industry. These marketplaces provide aerospace products and services