GIANT EAGLE STARTS PRIVATE EXCHANGE

PETER PERROTTA

PITTSBURGH, Pa. -- In a move that may be indicative of things to come, Giant Eagle here said it has created a "private" electronic trading exchange with the Hubert Co., Harrison, Ohio, for buying small wares.

Steven Tassaro, a vice president at the 200-store chain, said the new exchange is used to purchase numerous items used in the deli and fresh market sections of the stores, including bowls, spoons, forks, knives, displays, shelving, racks and more.

He said the creation of the private electronic exchange may result in a savings of up to 20% on the purchasing of small ware items.

Tassaro and equipment manager Donna Bryant told SN that the new exchange has made the entire ordering and purchasing process a lot more efficient and faster.

"What we did by creating this exchange is take all of the paperwork out of the system," Tassaro said.

Under the new system set-up, Giant Eagle purchasing specialists are able, via a secure Web connection, to access the Hubert Co. electronic catalogue and order small wares on-line.

A recent report issued by Internet B-to-B consultants, Media Matrix, New York, forecasted that an increasing number of companies plan to use private trading networks, or PTNs, for collaboration over the next 12 months.

"Private trading networks represent a new tool to line the interests of buyers, suppliers and distribution partners," said Tim Clark, senior analyst at Jupiter.

"Initially, PTNs promise cost savings, but their ultimate value will come through effective cooperation that benefits all three parties," he added.

Tassaro said that Giant Eagle has found the new system to be less costly and more efficient.

"It took us about one year to put it together, but now that we have established it, the user is in total control. The [buying] specialist goes on-line, enters a password, places an order and the whole transaction is secure -- complete with a bill-to-ship for more than 2,000 small wares items," Tassaro said.

Tassaro said the private exchange was a joint venture between Giant Eagle and the Hubert Co.

"If you ever purchased anything on-line, it's almost exactly the same as buying something from Amazon.com, except it's a secure connection for Giant Eagle.

Tassaro said the Hubert Co. has set up a similar private exchange with Marriot Hotels and Restaurants.

Bryant listed the following advantages of the newly created private exchange with Hubert:

Reduced paperwork.

Orders get to stores faster.

Better reports and status provided by a real-time tracking system.

Streamlining of the processing of invoices.

Considering that it takes about $50,000 worth of small wares -- some 50,000 items -- to outfit the typical new store, Tassaro said the new system goes a long way toward improving buying efficiency.

He said if Giant Eagle can save 20% ($10,000) on outfitting a new store, it would be a "nice little savings."

"Everything is a lot more organized now," Tassaro said. "It also promotes a lot more consistency among stores."

Tassaro said he wasn't ready to say whether Giant Eagle would be creating more private exchange networks like this with other vendors or suppliers.

"I really can't comment on that right now. All of those decision will be made on an individual basis, vendor by vendor," he said.

For now, Tassaro said, the PTN with Hubert fits very well.

"We have eliminated reams of paperwork," he said. "This is a piece of e-commerce that really works.

"It works for the vendor, it works for the buyer. We have taken the whole process and made it electronic," Tassaro said.

"But, really, the intangible part is the elimination of the paperwork process."