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HP, Compaq to team in business e-commerce firm

The companies, normally rivals, are teaming up as backers of a new company dedicated to supply chain management.

Tech Industry
Hewlett-Packard and Compaq Computer, normally rivals, are teaming up as backers of a new company dedicated to supply chain management.

A group of 12 companies led by HP and Compaq will announce the formation of a new company this afternoon in New York. Although details are scant, the company is expected to concentrate on supply and inventory management, a fast-growing segment inside the business-to-business e-commerce market.

"It will revolutionize supply chain management," HP chief executive Carleton "Carly" Fiorina told attendees at a Merrill Lynch conference earlier this morning. "We're sitting on a huge opportunity that we are well positioned to exploit."

Agilent, the test and measurement company that spun off from HP last year, also is likely to be a participant in the new venture.

Several major companies are moving their inventory and business-to-business functions online. Cisco Systems and Intel are two of the more aggressive technology companies to transfer ordering and inventory functions from fax machines to the Web. The process has allowed both companies to cut costs substantially.

Both HP and Compaq are members of Rosettanet, an industry consortium dedicated to developing standard procedures and processes for business-to-business Internet commerce and supply management.

Other industries have already moved to create electronic marketplaces, with mixed success.

Detroit's Big Three automakers announced plans in February to merge their Internet-based supply exchanges--a daunting effort to connect 30,000 indpendent suppliers, eliminate excess inventory and minimize paperwork.

General Motors, Ford and DaimlerChrysler spend a total of roughtly $250 billion per year in parts and services from suppliers.

The automakers plan to use the sites to hold product auctions, submit pricing bids and monitor the status of purchases from the supplier's factory to the automaker's assembly line and, eventually, to the dealership. The Federal Trade Commission is investigating the exchange on antitrust concerns, but the automakers say they don't intend to use the site to collude on prices or orders--only to create a common, international infrastructure for suppliers.

News.com's Rachel Konrad also contributed to this report.

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