Business climate demands new coordination of supply chain for better efficiency, savings - Opinion

Broad adoption and utilization of B2B exchanges within the foodservice supply chain would offer operators, distributors and manufacturers significant financial savings and enhanced supply chain-management capabilities.

Yet the current exchange landscape -- with the pressure exerted by competing customers to adopt different exchanges -- continues to create confusion for many companies. Value realization thus far by operators, distributors and manufacturers has been low to almost nonexistent. But the situation doesn't have to remain that way.

Three main exchanges for the distributor-to-manufacturer connection exist in foodservice. EFS Network, focusing exclusively on the distributor-to manufacturer trading connection, has been funded by a group of distributors, manufacturers and operators. Transora, which also focuses on that trading connection, has been funded by a group of approximately 60 retail and foodservice manufacturers. Amphire, which is funded by a group of foodservice distributors, is focused on both the operator-to-distributor and distributor-to-manufacturer trading connections.

While not an exchange per se, a fourth noteworthy foodservice initiative is Profile.com, which is a database of product information created in response to the Efficient Foodservice Response initiative.

Most distributors and manufacturers either have aligned with one of the above three exchanges or have taken no action because they don't understand the business benefits or are waiting for an eventual "winner" to emerge.

To realize the potential cost savings and enhanced supply chain-management capabilities, leaders in the supply chain have two tasks. First, distributors and manufacturers should encourage their respective exchanges to create "interconnectivity" with other exchanges. To put it in simple terms, interconnectivity would allow exchanges to "talk to each other," leverage each other's service offerings and accelerate data flow and commerce between distributors and manufacturers who may be integrated with different exchanges.

Why is that important? Everyone who works in this area knows how expensive it is to integrate with multiple exchanges. Furthermore, the power of an exchange is to connect the masses through a many-to-many solution, and unless the masses choose a single exchange, full value realization never will materialize without interconnectivity. Last, from a capitalization perspective, most of the exchanges don't have sufficient capital to "go it alone."

The second key task for the industry is to adopt a single product-data catalog with enhanced B2B capabilities vs. those offered today. A single catalog is important for ensuring data accuracy, as manufacturers need to be able to move their data to a single location and from there have the data published directly to all appropriate parties. Recipients and users -- distributors and operators -- of the data need the same capabilities. What are those enhanced B2B capabilities? The first is back-office-to-back-office connectivity, rather than Web-based alone, allowing the data to be downloaded into a distributor's or operator's internal systems. Those capabilities also include a tool that scales across retail and foodservice, providing one catalog for the many manufacturers and distributors who compete in those and other channels and mapping capabilities to match often unique manufacturer- and distributor-specific product coding.

Such a robust data catalog not only is critical to enabling data accuracy up and down the supply chain but also will serve as the foundation for order management and most other exchange-based offerings. Transora recently launched a catalog with such capabilities. Profile.com, with its existing integration and relationships with many foodservice operators and distributors, should explore a synergistic role with Transora.

Exchanges can serve the needs of large, medium and small players. Leaders need to push for interconnectivity of exchanges and begin to transact business and attack the billions of dollars of unnecessary costs in the supply chain. Without exchanges working together, realizing a more efficient supply chain will be a slow and financially draining experience.

The time is right for leaders to "prove" the value to the rest of the industry. Manufacturers, distributors and, most important, operators all will benefit from a more efficient supply chain, but it will be realized only through collaboration. It all starts with a robust data catalog that will become the foundation for almost all exchange-based service offerings. What can your company do?

Charles Michael and Paul Edmondson are with Procter & Gamble Foodservice e-Business Team. Procter & Gamble is one of the approximately 60 manufacturers who funded Transora more than a year ago. Among other Transora investors are Kraft Coca-Cola, Nestle, Sara Lee, Heinz and Unilever.

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