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Preserving collaboration in the age of e-procurement

How General Mills intends to tap Empriva to gain efficiencies while increasing speed to market.

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General Mills’ top supply chain executive believes much of the current crop of online auctions, catalogs and e-marketplaces will potentially stifle financially beneficial supplier collaboration. He believes one exception is a site called Empriva (www.empriva.com), (formerly known as idmarket.com), which General Mills hopes will promote such collaboration to achieve even greater efficiencies through group buying and faster speed to market. Net Sourcing conducted this interview, edited for brevity, with Randy Darcy, GM’s senior vice president, supply chain.

NS: Before we get into e-procurement, can you explain General Mills’ philosophy of collaboration?

Darcy: We have found over the years that there is tremendous value in collaboration with our suppliers. For example, we worked with one of our corrugated suppliers and an [unrelated] U.S. beverage company that also used a similar corrugated box. We felt that if we pooled our demand to literally dedicate a specific corrugated line to our production and the beverage company’s, we could create some synergy through efficiency and through scale. We saved significant dollars as a result.

NS: How does Web-based procurement affect such collaboration?

Darcy: As I look at some of the auctions and catalogs and consortium buying activities that are evolving now in the Net marketplaces, I have a real concern that they have a potential for eliminating this collaboration. When you think about how you would post your requirements online, it really eliminates the intimacy that you have with the individual suppliers. If this collaborative interaction is decreased, then you run the risk of not being able to find the innovative improvements that are so important to supply chain efficiency. [As a result,] some of these Net market technologies could be relatively short-lived.

NS: How do you intend to benefit by doing business through Empriva?

Darcy: This is an emerging deal for us, and we see two components. One, they have a fantastic tool that helps us really manage our packaging material specification and development activities. Take, for example, a display merchandising unit that you’d see in the grocery store, where we’d maybe display a Chex Mix promotion. Normally a brand manager or a marketing manager would decide they want to do such a promotion, and they’d ask for a display unit. Our graphics art people and packaging engineers would literally go to the drawing table and create a display. We’d send it to our packaging materials suppliers, have them bid on it, receive the bids, select one, and they would go build it.

This program that Empriva has, called the Sma/rt System, will allow us to do all that online and connect graphic arts with our packaging engineering with our suppliers and potentially maybe other alliance partners.

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