One of the key elements in any successful business relationship is clear, concise communication. The advent of online eBusiness communities promises to advance current ways of doing business, from such diverse industries as the automobile and aerospace industries to the contract packaging industry. The need for up-to-the-minute, realtime product information is paramount for businesses to remain competitive.
A new contract packaging eBusiness community, called B2BPKG.com, launched its web site in October of 2000. The site, which will launch several additional sections well into 2001, features services for contract packaging vendors and buyers, including a catalog of component suppliers, a series of forums to discuss packaging related issues and a section devoted to facilitating the relationships between buyers and sellers.
The site was started by Robert S. Lerman, chief executive officer and a host of other executives from Naugatuck, CT-based Custom Bottle, Inc., which was also founded by Mr. Lerman. The site describes itself as a new online portal for the packaging marketplace, with goals to reduce costs both for customers and suppliers by providing a neutral, secure, easy-to-use site that facilitates the packaging procurement process and aggregates all order activity in once easy-to-use location.
To illustrate one function of the site, Mr. Lerman gave an example. “Say you’re Merck and in order to produce your product, let’s say it’s nasal spray; you have a bottle vendor, a sprayer vendor, you might have a folding carton vendor, and you’ve got all sorts of components that have to come together for you to fill your package. Merck could potentially buy from vendors who have found a way to web-enable their information, like we’re doing, all on their own web sites. From the buyer’s standpoint, they would have to go to 10 or 15 different web sites, log on to each one with their username and password in order to say ‘Alright, the bottle’s okay. Now let’s go to the pump web site,’ and, ‘Okay the pump is good,’ then go to the folding carton web site. And, ‘Oh, no, that’s been delayed, we’re in trouble.’ So, the idea for us was, if we’re spending the money to produce this technology that’s really great, and works really well, and we’re spending money to host the site, and have the servers and have the technicians, and the administration going on hosting the site for one company’s benefit, then wouldn’t it be great to offer this to other supply companies, so that the buyer could see activity from many of his vendors in one portal? That’s the genesis of the vision.”
According to Mr. Lerman B2BPKG.com, is not a typical B2B organization, despite its name. “The site isn’t really focused around buyers going online and placing orders. Many people get confused by that because they think of B2B e-commerce as buying, but it’s not that. Instead, we stress that we are facilitating the supply process between known trading partners.”
In order to understand the buyer’s perspective, B2BPKG.com assembled a 15-member panel as a customer advisory board, with 11 members of the panel representing large and small pharmaceutical and consumer products companies. The panel responded to an unscientific survey of Internet-use habits, discussing which functions on the site would be of the most use to their companies.
As a result of that panel, B2BPKG.com’s original goal—providing a space for buyer’s to place orders online—changed. The consensus from the panel was that the portal would be used to provide information about products, orders and shipping, rather than buying. Mr. Lerman commented, “Customers may not want to place orders online, but they want to manage them online.”
The site allows buyers to track their orders from the time of purchase to the arrival of the finished product (from each vendor). When a buyer places an order with a vendor that is integrated with B2BPKG.com, the information is automatically posted on the site in the user’s account. The vendor’s manufacturing and delivery dates, set up by both the buyer and the vendor, are also posted on the site. When the manufacturing and shipping dates draw near, the site automatically sends an e-mail checking the status on the order. If the order is delayed by the vendor, an alert is posted next to the order number along with the reason for the delay. The buyer can click on alert symbols to find the reasons for hold-ups and errors. As soon as a supplier indicates in its records that the order is late, an “intelligent e-mail” is sent to the buyer, alerting a company representative of delays with the order, giving the buyer instant access to order status. As an order is completed and shipped, the site also provides the buyer with the shipping company and the order’s tracking number.
If a buyer needs to make a package using three different components, the delivery dates for each component can be set to the same days, even if a vendor’s system is not integrated with B2BPKG.com. The buyer can do this by creating a milestone with the system. The milestone is created by entering the contact information of the “unintegrated” company with the B2BPKG.com system, into the milestone screen. The buyer then sets the milestone date for the product. As that date draws near, the system sends an e-mail about the order status to the non-integrated vendor and, when the vendor sends an e-mail back, the site automatically updates. This function is described by B2BPKG.com as obtaining information manually. Mr. Lerman stated, “That vendor can update the status of that order, totally independent of what is going on with our data. The customer can get visibility of his orders with other vendors, as well as creating his own milestones.”
B2BPKG.com is a service to contract packaging vendors looking to improve its existing relationships with its customers. Each vendor pays a subscription fee to the site. “We are what’s called an Application Service Provider, or ASP, which means we supply the application and the service behind it, for the web hosting and administration. We make money through a subscription fee for managing the vendor’s data, but our thinking is that the suppliers are actually going to save money by lowering their cost of customer service. At the same time, we are providing a better level of customer service and ultimately, the suppliers who participate will have a much higher rate of customer retention, which translates into higher profits.” Mr. Lerman added, “The vendors will benefit because the site exposes them to customers who use the portal, who are a community of qualified and potentially willing buyers.”
The component focused on the pharmaceutical contract packaging industry will be launched in February or March. Mr. Lerman stated, “We will start by having those the current customers of Lerman Container and Custom Bottle, which is our brick and mortar business, accessing the site. Whichever customers we integrate with, the customers of that company instantly become users of that site. In the pharmaceutical industry, some of our customers, for example, are Merck & Co., Hoffmann La Roche and Novartis. Right now we’re not about attracting new buyers to the site, but facilitating the communication between current partners.”
However, like web sites such as Packexpo.com or VerticalNet, B2BPKG.com will soon offer online product catalogs of the supplier companies that participate in the portal. “The reference guides and catalogs are another piece of value that we offer a buyer looking for a new supplier. Buyers can enter in a key word or category and find a list of companies that supply those materials.”
Following the trend of consumer sites like Amazon.com, B2BPKG.com strives to keep customers informed of the orders they have placed, while at the same time providing valuable information and discussion opportunities to suppliers and vendors alike. In order to compete with other companies, real time information and constant communication about orders makes it easier for buyers and suppliers to handle efficiently possible obstacles that may arise during the process, while maintaining clear and open communication essential to successful business relationships.