Food Distribution Groups Set Up B-to-B Exchange

FRAMINGHAM (04/13/2000) - Two food distribution trade groups, whose members conduct $800 million in annual business, announced today that they are teaming to build a business-to-business Internet exchange for their members.

There will be several components to the Web service, said a spokesman for Food Distributors International in Falls Church, Virginia. A buying exchange will allow members to pool their purchasing power in order to get lower prices on nonconsumer goods such as office supplies and warehouse equipment. There will be an "auction component" to that service, the spokesman said.

Members of the FDI and the Food Marketing Institute in Washington will also be able to exchange purchase orders, invoices and the like with their customers and suppliers. The Web site will also offer education and communication services for members.

The Web services are being developed by a number of companies, with IBM Corp. as the lead contractor. The site will be available in late summer to food wholesalers, retailers and distributors across North America.

Steve Denault, a food industry analyst at U.S. Bancorp Piper Jaffray in Minneapolis, said the development is noteworthy because the exchange isn't being set up by a for-profit third party, as is the case in some industries.

"There's a lot of momentum and credibility right at the get-go," he said. "The trade associations are saying, 'We don't have a vested interest in any one company. We want to see the entire food industry enhance itself, so we are going to do it for you.' That's fantastic."

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