Fewer vendors in manufacturers' plans (sidebar)

Internet ordering proves as easy as H-E-B

Not too long ago, ordering packaging materials via fax was the ne plus ultra of packaging procurement. Today, it’s the Internet.

Just ask H.E. Butt, a San Antonio, TX-based grocer/food retailer that uses an online business- to-business site called www.inc2inc.com to facilitate packaging materials orders. INC2inc (Dallas, TX) and H.E.B. developed the site together. Established in March, it lets food and beverage manufacturers conduct transactions with packaging suppliers, brokers and ingredients vendors.

While Internet ordering speeds H.E.B.’s procurement process, determining if Internet ordering consolidates the number of vendors is uncertain. On one hand, the more vendors that sign up to use the INC2inc site, the more options packagers like H.E.B. have from which to select materials. H.E.B.’s manager of manufacturing procurement, Linda Espino, is actively trying to persuade more vendors to jump aboard. On the other hand, she says the company tries to limit vendors to two for a particular material, based on its ability to run on H.E.B. equipment.

“Sourcing [of packaging materials] is faster on the Internet than by traditional methods,” comments Espino. “By ordering over the Internet, the supplier receives an e-mail and can respond immediately, and that company can deliver materials to us in the timeframe we requested.”

While that’s also possible with a more traditional order placed by phone call or fax, there’s an important difference.

“People work at their computers nowadays,” says Espino. “They don’t check the fax that often. When we fax an order sheet to the supplier, it could reside at the supplier’s fax machine for several hours. And we require the vendors to fax us a response to let us know they’ve received our fax. In the time it takes to complete those steps, we could miss a shipment and not receive something we might have needed today.”

Procurement advantages

Espino estimates that she can order on the Internet in about half the time it takes with traditional methods, and without the mountains of paperwork. Espino now has about 15 packaging suppliers from which her company orders approximately 30% of its packaging materials over the Internet.

She says, “The system can benefit vendors tremendously. We expect to get most of our vendors online [by this fall].”

For packagers like privately held H.E.B., economics present another advantage of online ordering. “We don’t have to buy software or pay any up-front fee,” says Espino. In fact, H.E.B. pays no fee at all to use the INC2inc site.

“There’s only the monthly online fee [to the Internet service provider], which many companies already pay,” she explains.

INC2inc makes money through fees paid by the vendors that use the site. According to INC2inc, these suppliers are charged monthly on a per-transaction basis.

How it works

Labels, folding cartons and corrugated cases are typical packaging materials ordered on the site by H.E.B. purchasing representatives. Some resin is ordered, too, as H.E.B. does a portion of its blow molding in-house. Printing details, thicknesses and other material specifications are made by H.E.B.

To create an order, Espino, or one of the purchasing agents, goes online and enters a name and password to enter a specific account on the INC2inc site. H.E.B.’s account is organized by vendor, so the agent simply selects a vendor’s “catalog” and selects the item(s) and quantities as needed.

While many ingredients ordered on the site are considered commodities, Espino says that “in the packaging arena, they’re almost all special orders because they have to be printed with our names and product logos, and to our specifications.”

Once items and quantities are selected from the vendors, H.E.B. reviews the purchase order and submits it to INC2inc. INC2inc e-mails orders to those suppliers. “They [the suppliers] go into the INC2inc Web site in the same fashion that we do, but whereas we click on as a buyer, they click on as a seller,” Espino explains.

“They pull up a form that looks to them exactly as it does to us so we’re all looking at the same information, with the same order and quantities,” she continues. “If they can fulfill the order in total on the required delivery date, they ‘accept’ the order on the site. We then receive an e-mail indicating the order has been accepted.”

The actual shipping process is the same with an Internet order as it is with a phone or fax order. “But there will be a future enhancement in terms of transportation options,” she suggests.

Espino says that “a handful” of H.E.B.’s packaging material vendors “are developing their own proprietary Web sites” from which packagers can order materials. “But we will still ask them to use the INC2inc site,” she says. “It’s a ‘neutral’ marketplace, so if need be, our neutral marketplace can ‘talk’ to their proprietary marketplace.”

However, ordering from individual sites, she contends, “would create hundreds of little icons on my computer. And every company would have a different procedure and a different process” that H.E.B. would have to follow. “The neutral marketplace allows us to go to one place and do it the same way every time.”

For a more comprehensive look at how H.E. Butt uses the inc2inc.com site, please see p. 8 of NetSourcing, a supplement enclosed with this month’s issue of Packaging World.

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