Author:Stinson, Douglass

WHAT IF YOU BUILD A sleek new communications system and force everyone to use it?

That's what happened when. Volkswagen do Brasil shifted its supply chain online--everything from the 738 companies in Argentina and Brazil that supply the 350,000 autoparts needed for assembly to the engineers and designers that create specs for new car models and retool the machines that make them. "We needed a low-cost, simple solution we could force on our suppliers," says information technology director Carlos Boschetti, on why the company chose the Internet over a dedicated system. Since making the system mandatory in 1996, Volkswagen has cut US$400 million each year from annual purchases of #3 billion.

In the old days, purchasing managers could only handle bids from five or six vendors. Now up to 42 can compete at once. And compete they do. "People fight to give the best prices," says Boschetti. The...

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