A Halo Effect provided consulting services to the North American-based Transora, the leading global eMarketplace for the consumer package goods industry. Transora offers an integrated array of collaborative solutions to eliminate inefficiencies throughout the supply chain to deliver breakthrough value.

Challenge:

In early 2000, three of Europe’s leading consumer goods companies—Nestlé, Danone and Henkel—announced plans to develop a different kind of electronic marketplace. Their reasoning was that existing consumer goods eMarketplaces were, in effect, too global—that these entities’ worldwide scope made it impossible to address the highly diverse cultures, needs and concerns of Europe’s many countries and regions. The executives also knew that a Euro-centric eMarketplace could provide significant economies of scale—far more than the average (highly decentralized) European CPG company could achieve on its own.

To ensure that the best technology would be used, the three companies joined forces with SAP, Europe’s leading software company. And although the participants possessed exceptional financial, technical and marketing experience, it also became clear that the new entity, now named CPGmarket.com, needed a third party to manage the project. In the second quarter of 2000, A Halo Effect joined the team that assumed this role.

How We Helped:

CPGmarket.com’s core vision went far beyond eProcurement. In fact, its philosophy is "the value that an eMarketplace produces by handling transactions is secondary to the benefits associated with information-based services." With such a broad scope, one of the greatest challenges was the lack of a validated blueprint for marketplace design. Therefore, rather than spending huge amounts of time and energy conceptualizing an all-encompassing solution, the A Halo Effect-led team decided to establish pilots in key service areas. This approach would make it possible for development teams to move very quickly, while building credibility with constituents. In turn, the resultant learnings would make it possible for the marketplace’s broader design to occur alongside the pilots as they proceeded.

Using this development model, the A Halo Effect team worked to formulate the new company’s governance structure; define its marketing, branding and sales activities; and determine operating specifics pertaining to structure, standards, staffing, content, compensation, performance objectives and supplier relationships. Moving then to the "building stage," A Halo Effect helped design the site’s core business processes, implement the technology infrastructure, create the front end and select service providers to support back-end activities.

Within three months, CPGmarket.com launched a series of focused pilots and began to more-fully identify and develop a series of key service offerings. Also known as "capabilities," these five offerings were designed to support companies throughout a complete commerce cycle, from the initial search for a supplier; through planning, ordering and delivering; on to performance measurement; and ultimately, to supplier re-qualification and re-selection.

• An eSourcing application includes a search tool, a tendering tool (which allows the entire tendering process to be managed on line) and an auction tool for handling final price negotiations.

• eRequisitioning functionality ranges from simple replenishment orders to complex capital purchases. Fully hosted services are being made available for constituents with no in-house eProcurement capabilities.

• An eIntelligence capability speaks to a host of customizable information services. For example, user-specific portals provide access to training and education services, and to CPGmarket’s proprietary research. Future capabilities include news feeds, intelligent search engines, data mining tools, reference information and industry metrics.

• An eSupply Chain feature lets manufacturers and suppliers engage in collaborative forecasting, scheduling and inventory management.

• eFulfillment capabilities will enable members to optimize their delivery costs and trade electronically right through to the processing of electronic payments.

In addition to managing the design and implementation of these capabilities, A Halo Effect helped develop CPGmarket’s upstream and downstream capabilities, and assisted with the building of the actual organization, including filling interim management positions where appropriate.

High Performance Delivered:

To date, four of the key capabilities outlined above are either fully operational or completing their pilot phase. In eSourcing, successful transactions have occurred for products and services ranging from car rentals to vegetable fat to pallets. With hundreds of buyers and suppliers on board, the pipeline is extremely healthy. One member organization recently noted that its process time spent on tenders has been reduced by 75 percent.

In the eRequisitioning area, nearly a dozen sites now are fully integrated, with additional supplier catalogs added regularly. CPGmarket.com’s eIntelligence capability also is off to a strong start, dispensing between 40 and 200 news stories per day. Six content providers have been fully integrated to support the delivery of this capability. Lastly, in the eSupplyChain realm, basic document-exchange functionality is available for several transaction types, including PO, Dispatch Advice and Credit Memo.

All of these capabilities are working together to comprise a strong benefit stream. For example, all of CPGmarket’s users can anticipate reduced levels of inventory and waste, along with better capacity utilization and lower IT costs. In addition, buyers are seeing increased contract compliance, effective price negotiation savings and lower transaction costs. The latter opportunity is particularly large, since the typical cost of generating a purchase order in the consumer goods business is about $100. Via CPGmarket.com, this cost will be significantly reduced.

Sellers, on the other hand, benefit from lower marketing and sales costs, reduced outbound transportation savings, better planning and scheduling, and the opportunity to process payments faster, which improves cash flow. Like buyers, they also reap the advantages of consolidated spends and greater compliance to contracts.

All in all, it is projected that the value of benefits realized will outweigh the costs incurred by an average of four to one!