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Materials Purchasing: Grocer buys into online shopping

Grocery retailer H.E. Butt Co. procures packaging materials through the INC2inc Internet marketplace. Now it’s persuading its vendors to climb aboard.

Espino: No more paperwork.
Espino: No more paperwork.

On a Web site called www.inc2inc.com, Linda Espino orders resin used for blow-molding containers, labels for milk jugs, folding cartons for sour cream and ice cream, and other packaging materials. The manager of manufacturing procurement for H.E. Butt Grocery Co. says Internet procurement has delivered several benefits to her employer since it began ordering online this spring.

HEB is a San Antonio, TX-based company with 260 retail grocery stores located mainly in Texas. With 1998 sales of $7 billion in the U.S. and Mexico, the company touts itself as the 12th largest food retailer in the U.S. At its own facilities HEB produces dairy, bakery, meat and snack foods for sale in its own stores.

INC2inc is a business-to-business online food marketplace established in March to serve food and beverage manufacturers, conducting real-time transactions between them and packaging suppliers, brokers and raw- ingredients suppliers.

Espino is responsible for procuring packaging materials and food ingredients. The task requires meeting the procurement needs of the HEB stores, as well as 10 manufacturing facilities and three distribution centers. Until March, procurement was a manual task.

Streamlining procurement

“The traditional ordering method involved taking a piece of paper that would list all the items we would buy from a particular vendor, and checking off how many of each item we would need in a column on the right side of a paper form,” Espino explains. “We might need six of the 60 items on that list, so we would check them off and fax the order sheet to the supplier.”

Problem was, the paper could reside at the supplier’s fax machine for several hours. “People work at their computers nowadays,” she says. “They don’t check the fax machine that often. Also, we require the vendors to fax us a response to let us know they received our fax, so back and forth we go. Then they have to key that order into their system.” In the hours that it often takes to complete those steps, she says, “we can miss a shipment and not receive something we might have needed shipped to us today.”

The procurement process is much quicker now, she says. “By ordering over the Internet, the supplier receives an e-mail and can respond immediately. The company can deliver the order to us in the time frame we’ve requested.”

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