PASADENA, Calif. -- Business-to-business communication is moving into its teenage years, Patrick S. Steele, executive president of Boise, Idaho-based Albertson's, said here last week, and the industry -- like good parents -- must have the patience to nurture B2B through to adulthood.
Speaking at a workshop on B2B communications during the SN/Executive Technology Summit, Steele said, "This stuff is very hard work, and as we attempt to introduce e-procurement options and more collaborative efforts with vendors, we're changing the jobs people do. The companies that are ultimately successful will be the ones that recognize the need to make those changes and force it to happen. But it won't happen without pain."
Most of the changes are likely to occur in the next two years, Steve Robinson, executive vice president and general manager for customer relationship management at i2 Technologies, Dallas, said. "Some people feel B2B exchanges are a fad that won't mean anything, while others are becoming active participants. But over the next 18 months there will be opportunities for all retailers to examine where they are, because the industry is under an all-out assault, and it's changing rapidly."
Among the changes evolving from B2B exchanges, Robinson pointed out, are the development of new business models like Merchants Consortium, a buying group he said has been formed by three members of the WorldWide Retail Exchange (WWRE) -- H.E. Butt Grocery Co., San Antonio, Texas; Meijer, Inc., Grand Rapids, Mich., and Wegmans Food Markets, Rochester, N.Y. All three are members of the WWRE.
Wegmans declined comment last week, and neither H.E.B. nor Meijer returned phone calls to comment.
According to Steele, the consortium is "trying to share ideas and, where it makes sense, create buying power to compete with other, larger players in the marketplace.
"It's a way of using the investment in the WWRE as a mechanism to customize CPFR (collaborative planning, forecasting and replenishment) for all three companies and to leverage that investment in technology at one-third the cost.
"I think what they're doing is smart. It doesn't cost a lot, and they get the benefits of shared learning. And the faster exchange members can understand how to use these new tools, the better the WWRE will be."
Speaking from the audience, Natan Tabak, senior vice president, Wakefern Food Corp., Elizabeth, N.J., said the industry seems to be ignoring core problems, such as slow inventory turns and escalating reclamation costs, "in favor of looking for excuses to use technology to solve everything."
Steele responded that the 17 companies that founded the WWRE last year "have invested time and money to address those kinds of issues, and if we can let systems remove problems and develop tools to get better information to share with each other, then we will get inventory turns up and reclamation claims down.
"It's taken years to get to this point, and it's not going to turn around overnight. But that's what B2B is all about doing."
Another workshop panelist -- Robert E. Rizzo, director of Marketplace Strategies for S.C. Johnson & Son, Racine, Wis. -- expressed similar thoughts. "The good news is, the problems you've identified are among the initiatives B2B exchanges are dealing with. But it will take some time to develop and implement those solutions."
According to panelist James McCurry, chief executive officer of Cerespan.com, Norcross, Ga., "Using B2B metrics to communicate is not an end in itself, but a prelude to improving productivity, taking costs out of the supply chain and executing better at retail."
What's needed, Robinson said, is to adopt a reverse-engineering approach that studies problems from the store shelf back to the supplier. "That will cause the industry to deal with a lot of pain points, but using business processes, collaboration and technology to solve some of these problems is what we're working on today," he said. "The use of B2B is a table-stakes issue, in which organizations will distinguish themselves by how well they execute."
Steele said Albertson's has started to do electronic procurement through the WWRE with selected vendors and plans to launch a test of CPFR in June. "Longer-range, we anticipate a true collaboration with manufacturers on event promotions. But first we must establish standards."