WASHINGTON -- The consumer packaged-goods industry is launching an initiative to create an Internet-based cooperative exchange designed to offer industrywide efficiencies on a global level, the Grocery Manufacturers of America here said last week.
The GMA said the goal of the initiative is to reduce the $200 billion manufacturers spend on goods and services to support their operations.
According to C. Manly Molpus, president and chief executive officer of the GMA, more than 50 major food, beverage and consumer goods manufacturers are joining with the association to develop an electronic business-to-business marketplace that will be open to all supply-chain players and that can transform traditional business models and processes using the Internet.
An executive steering committee comprised of top executives from six major manufacturers was scheduled to hold its first meeting last Friday to begin the process of establishing industry standards, as well as the name, ownership structure and confidentiality provisions of the proposed Internet marketplace.
The committee includes executives from Procter & Gamble, Kraft Foods, General Mills, Nestle USA, Unilever and Bestfoods. PricewaterhouseCoopers will provide e-business consulting support for the initiative, including strategy, design and infrastructure consulting services.
Steve Davis, senior vice president and global customer business-development officer for Procter & Gamble, Cincinnati, and a steering committee member, told SN last week the idea behind the electronic marketplace is to cut the supply chain of approximately 120 days in half by enabling the industry to work on a parallel production schedule rather than a sequential one.
"The exchange will enable us to take time and inventory out of the system to create a better value for the end consumer by creating efficiencies within the industry," he said.
Davis said he expects the industry to cut costs a minimum of 5% to 10% on procurement alone, "but the big savings will come from taking time and inventory out of the system, which will reduce costs and improve operating efficiencies."
Through the establishment early last year of UCC Net -- an Internet-based system to facilitate real-time transmission of electronic data -- the industry has already begun the process of setting overall standards, which means the exchange could be up and running by the end of the year, if not sooner, Davis said.
A GMA spokesman told SN the association expects the steering committee to complete its exploratory work by mid-May.
Initially, the marketplace exchange would probably involve the procurement of materials, supplies and services, the GMA said. However, it could eventually be expanded to provide other goods and services.