TOPCO CUTS COSTS WITH E-AUCTIONS

Anthony Coia

SKOKIE, Ill. -- Topco Associates here has cut its procurement costs for designated products by more than 10% this year through the use of online auctions.

Topco, a member-owned cooperative that includes such chains as Giant Eagle, Meijer, Ukrop's, Bashas', Hy-Vee and Wegmans, began using a reverse-auction online procurement solution from Intesource, Phoenix, earlier this year. The cooperative is currently in the ramp-up phase, having conducted 18 auctions. Leveraging its members' purchasing volume, Topco buys corporate and national brands, perishables, equipment, supplies and business services.

Dave McMurray, vice president of purchasing, best practices and cost containment at Topco, said the company looked at online auctions as a sourcing tool for four categories of merchandise: value-added grocery products, supplies, commodity-based groceries and canned goods. "Instead of using the time-consuming request for proposal process, which can take weeks or months, we decided on e-auctions," he said, noting that Topco began using online auctions for commodity-based items such as microwave popcorn.

Intesource hosts the auctions so that Topco does not need to install any hardware or software, explained Kevin Don-oghue, senior vice president of sales and marketing at Intesource.

Topco posts requests for bids for particular items and quantities, and receives bids from pre-approved vendors. The process allows Topco to include more vendors in the bidding process than it otherwise could, Don-oghue said.

Using the system, McMurray noted, Topco can avoid spending "days or weeks evaluating the bids because we know the outcome instantly." Another advantage is that as soon as buyers get through one auction, they know how to handle the next one.

Topco plans to market the system to its members to show them how it functions. The cooperative can work with individual members who may need to source commodities other members don't carry.