LONDON -- Sainsbury's Supermarket here has begun using the GlobalNetXchange (GNX) business-to-business online marketplace for collaborative product development (CPD) of its private-label products, marking the first time GNX has been used for this purpose.
After testing CPD, a workflow process, for frozen recipe dishes, premixed salads and other products, 470-store Sainsbury's is planning to employ it for "over 300 product lines," John Padgett, general manager, B2B development, told SN. Private label represents 55% of revenues for Sainsbury's, which develops around 3,000 private-label products annually.
CPD will focus on the packaging part of product development, including ingredient lists, nutritional claims and legal issues, said Padgett. The tool will automate workflow across up to 12 individuals at Sainsbury's and a comparable number at private-label suppliers, eliminating paper exchanges and reducing errors, he said. "Paper can get left in the 'in tray' or lost in the post," he said. "It can be difficult to project-manage."
Sainsbury's also expects CPD to "get us to market faster," Padgett said. The chain is targeting a 30% reduction in the time it takes to put a new private-label product on the shelf -- traditionally from 30 to 40 weeks, he said.
With the Web-based CPD process, hosted by GNX, Belmont, Calif., a virtual site is established for a given product, and tasks are forwarded by e-mail from person to person as they're completed. Time limits are set, and if they are passed, users see red alerts on their screen and the project manager is notified, Padgett explained.
Padgett said Sainsbury pays for CPD based on usage, and is "looking to share" the cost with suppliers, who also benefit from the system. He described the cost as "a modest fee, a fraction of the sales of the product." Sainsbury's organized a half-day workshop to explain CPD to around 120 of its private-label suppliers, he said.
CPD will be available to any member of GNX. Sainsbury's, which owns Shaw's Supermarkets, East Bridgewater, Mass., is one of eight equity members of GNX, which also has 22 non-equity members. "We would not have been able to access a CPD tool if we had to do it on our own," Padgett said.
Peter Abell, research director, retail, AMR Research, Boston, said CPD was a "significant" addition to GNX's capabilities, given that high-margin, private-label products are approaching 25% of sales in U.S. supermarkets (it's 45% in Europe). He said private-label development is more commonly seen on private trading exchanges.