The 66By Deborah Gage | Posted 2002-07-10 Print
The Springdale, Ark., food giant produces more than 146 million pounds of chicken per week and it's looking to electronic exchanges to get more efficient—and gain understanding of the products people want to eat.-Cent Bird">
The 66-Cent Bird
Lambert expects the operations of restaurants, foodservice companies and grocers to blur as more pre-prepared food products start showing up in convenience stores and warehouse clubs. Combinations like the one with Provision X that didn't work a year ago might work in the future as buying patterns change. Wal-Mart, for example, is now growing not just with its hybrid merchandise and grocery superstores, but by pursuing smaller stores called Neighborhood Markets that compete with delis, convenience stores and gas stations.
EFS is in its third and final round of seeking investors and is talking with over 200 distributors and suppliers, based on the companies that its customers trade with already. Next year it will target large national chains such as Wendy's and Burger King, which Lambert says already are Tyson customers.
To engender wider adoption and more efficiency, EFS customers are encouraged to evangelize the network. Collins says his BiRite boss gives him time off to look for customers for EFS. Should EFS become profitable, BiRite as a shareholder will get dividends. "In two years, I believe EFS will completely change the way we do business," Collins says.
Still, money is tight, and all of the marketplaces say their sales cycles are too long. "In Tyson's case, the smaller company bought the bigger one," says iTN's Rob Bonavito. "There's no convincing required whether e-commerce is here. But all of these customers have their priorities and are marching to their customers' requirements."
The networks also may get more scale by more consolidation. EFS and Amphire continue to talk. Lambert says "if the industry gods had started with a clean sheet of paper today," there would be one network for the entire foodservice industry, and not two.
But two years ago—as the Internet bubble was about to deflate—there were a dozen networks or more. Amphire CEO Mark Barnekow says there is plenty of business left in the foodservice business to develop, even if talks between the two networks fade. Because of the size and power of EFS's founders, Amphire has signed some of those founders' powerful competitors, including ConAgra Foods Poultry and Burger King.
EFS continues to talk with and watch the development of other marketplaces, like consumer goods exchange Transora, at the same time. The reason: a single marketplace would mean more efficiency. A producer such as Tyson can save money by doing all of its business with its distributors and retailers online; and one system for taking, tracking and fulfilling orders is more efficient than two or three or more. Thus, Cooper's "one order, one truck" mantra.
After all, even if Tyson hasn't yet realized the savings from better order and sales tracking, it's not as if Tyson can't see where the benefits lie. The pressure for the poultry industry to get more efficient has been inexorable since John Tyson first made his way to Chicago more than six decades ago.
To put it in practical terms, the value of a bird to a farmer was 66 cents, when the senior John Tyson took chickens to market back in 1936. That's the equivalent of $8.20 today. But, thanks to constant efforts to remove inefficiencies in the means of growing and getting chickens to market, the farm value of birds in his grandson's era—now is just $3.
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