ecFood Approaches Profitability -
An Internet Trading Exchange Bright Spot
Featured Author - Olin
ecFood (www.ecFood.com) has announced $50 million in transactions
for the first quarter of 2001. The quarter's volume continues the upward
trend set over the past three quarters. The end of the first quarter also
saw the first year's anniversary of providing paid online services to
the food and beverage industry. ecFood's highly focused customer base
of buyers and sellers continues to grow as the company sees profitability
by the end of 2001. ecFood provides web-based sourcing for the food and
company's roots are deep in the food industry. The majority of the company's
personnel have strong food industry backgrounds. This experience shows
in a number of ecFood's offerings that reflect the realities of sourcing
in the food and beverage industry.
key food industry specific offering is ecSpec, the company's specification
management solution. With ecSpec, a buyer can fully define the specifications
for the items to be purchased and the seller can fully understand the
needs of the customer. At the core of ecSpec is a series of food industry
specific tools including specification templates, industry standard terminology
and ontology, and key word based or parametric searches.
company provides several buying e-sourcing options including reverse auctions,
Request for Quote (RFQ) and one-to-one negotiation tools in a Demand Aggregation
or individual format. These buying options are backed by professional
services that include Market analysis, Item profiling, Sourcing configuration,
SKU rationalization and Supplier recruitment. A combination of professional
services and tools provide the purchaser with work flow to move from their
current state to one of being ready to utilize web-based sourcing. The
workflow assists the purchaser in selecting appropriate SKU's and preparing
item specifications that identify volumes, locations and order patterns
through the purchasing process including the setting of and evaluation
of goals and measurements.
permits the food company to conduct Internet-based auctions for its purchases.
Recent items purchased using e-sourcing included pasta, corn syrup, stretch
wrap, liquid sucrose, apple juice, pallets, and diesel fuel. A recent
auction for 1.2 million pounds of rice resulted in a savings of 12.3%
for one SKU and 10.8% on a second SKU. An auction for navy and pinto beans
resulted in bids from 10 suppliers over a half hour bid period and resulted
in savings of 15%. Discussions with sellers indicate that they are reaching
customers who would be unavailable to them without the use of ecSourcing.
Buyers using e-sourcing have included Bordens, HP Hood,
Hormel, Interstate Brands, Agrilink and Furman
Aggregation allows multiple buyers to combine their demand to gain better
terms with suppliers. The associated buyers could be an industry group,
existing buying group or an ad hoc group assembled by ecFood. Demand Aggregation
opportunities scheduled in the near future include beef trim, butter,
cheese, chicken meat, carton tape, pallets, labels, transportation and
recent Demand Aggregation agreement was created with The Coca-Cola
Bottlers' Association (CCBA), an independent trade association serving
participating member Coca-Cola Bottlers in the United States. CCBA will
use ecFood as part of its cooperative purchasing programs. Under the agreement
ecFood, will provide a full range of e-procurement software and services
including sourcing, supplier rating, negotiated bidding and specification
management. The initial efforts included both ingredients and MRO items.
buyer benefits of web-bases sourcing continue to be documented in most
industries. The unique needs of the highly competitive food and beverage
industry have meant that these benefits have been slow in developing for
these companies. As food industry specific functionality becomes available,
food companies are proving that the benefits shown in other industries
are achievable in the food and beverage industry.
the number of dot coms dwindles, we see some examples of highly focused
exchanges with growth and a path towards profitability. ecFood is an example
of one such exchange. A number of other food industry specific sites have
fallen by the wayside plus the general-purpose sites (for example, ICG
and Freemarkets) have found the needs of the food and beverage
market a significant challenge.
food and CPG consortium, Transora, offers a wide variety of services
to the food and beverage industry. These services include some web-based
sourcing. As of today, the sourcing tools and services available from
ecFood have progressed beyond those foreseen by Transora.
Web-based sourcing is a new tool that extends the efforts of the food
and beverage company's existing procurement efforts. All food and beverage
companies should evaluate web-based sourcing to lower their cost and improve
the quality of their purchasing operations.
food and beverage companies should be especially attracted to these approaches.
Large food and beverage companies typically get the lowest price available
due to greater volume and market visibility. These large companies can
also afford to invest in private exchanges. Web-based sourcing has proven
to provide the mid-sized company with these same benefits at a fraction
of the cost.
members should evaluate ecFood as an alternative to the sourcing options
planned by Transora. At minimum, ecFood should be evaluated as a short
term cost reduction effort and a learning experience in the new world
of web-based sourcing.
should continue its focused approach to the food and beverage industry
and its focus on profitability. It should increase its market awareness
efforts to become a better know name within its target market.
Thompson is a principal of Process ERP Partners. He has over 25 years
experience as an executive in the software industry with the last 17 in
process industry related ERP, SCP, and e-business related segments. Olin
has been called "the Father of Process ERP." He is a frequent author and
an award-winning speaker on topics of gaining value from ERP, SCP, e-commerce
and the impact of technology on industry.
can be reached at Olin@ProcessERP.com.