'Gated Communities' Yield B2B Trust

One way to make sure you're dealing with trustworthy customers and suppliers is to rely on online industry trading exchanges -- similar to a gated residential community.

Phillips Petroleum Co. in Bartlesville, Okla., is one of the 15 founding members of Trade-Ranger Inc., an Internet hub that connects buyers and sellers in the energy and petrochemical industries. The oil company uses the exchange to procure goods and services in part because it's confident the transactions are safe, says Del Clark, manager of IT exploitation at Phillips.

"When we and the other companies started Trade-Ranger, we made sure it would be a secure environment," Clark says. Andrew Nicolaou, vice president of operations at the Houston-based exchange, says the trading hub uses technology such as public-key infrastructure and authentication on both ends of transactions.

Although Trade-Ranger doesn't guarantee the financial viability of all participants, the membership agreement that all participants must sign includes provisions to ensure quality products and delivery, a spokesman says. Any industry supplier can join, but most come recommended or are nominated by oil company buyers.

Air Products and Chemicals Inc. in Allentown, Pa., uses Elemica Inc., an industry exchange serving buyers and sellers of chemicals around the world. Stefanie Wexler, e-business venture manager at Air Products, says Wayne, Pa.-based Elemica provides a secure network that Air Products uses in addition to its own trading portal.

Elemica's security safeguards include multitiered firewalls, data encryption and digital signatures, authentication controls, application access control, remote system monitoring and intrusion-detection systems. It also has confidentiality policies to control access to any information on its systems. The exchange says it conducts routine compliance reviews and uses independent auditing of its security policies and procedures.

Carol Rozwell, an analyst at Gartner Inc. in Stamford, Conn., says companies that use industry online marketplaces should take advantage of any services the exchanges offer to ensure their trading partners are trustworthy.

For their part, she says, marketplaces should do even more to help member companies ensure trust in trading. "A lot of these marketplaces that were serving as matchmakers early on need to provide more value-added services," Rozwell says. "They need to give buyers and sellers more information" about partners.

Violino is a freelance writer in Massapequa Park, N.Y.

Copyright © 2002 IDG Communications, Inc.

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