Time to order online

Jan. 26, 2004

When a Gordon Food Service rep installed online ordering software on Michelle Burt's computer five years ago, he said she now could order all GFS' products through the Internet 24-7, access all her past and current orders online, tap into a bottomless well of product information, even pay the bill if she wanted.

Cool, she thought. I like this.

"But I never touched it," said Burt, president of Spanky's Pizza in Freemont, Mich. Almost two years later, though, another GFS rep convinced her to use the software. She regrets she didn't do it sooner. "I'm not sure why I didn't until then, but after he showed me how to use it, showed me everything it could do, I've used it ever since."

Today, Burt's a whole-cloth convert to online ordering, but she's among a minority of operators who use the Internet to procure their products. Most operators, say distributors, either phone their orders in to live sales reps or fax in handwritten documents.

"Less than 2 percent of our active customers are currently using Power Net for ordering online," said Jeff Panning, information systems manager for Toledo, Ohio-based distributor Sofo Foods. The company launched Power Net, its proprietary online ordering system three years ago. Yet over the past six months, its use has risen sharply; the number of operators ordering online is up 81 percent, and the number of orders sent through the Web portal is up 164 percent.

Still, it appears the option is a bit advanced for many of Sofo's current customers. "There just aren't a lot of them who are comfortable doing it right now," said Panning.

Apparently many distributors are equally uncomfortable with online ordering. Only about a dozen serving the U.S. pizza industry offer the service.

That's frustrating to food manufacturers who'd like to see the entire foodservice supply chain linked electronically—especially when they know the technology exists to do it.

"It would make things a lot simpler," said Ron Peters, CEO of Paradise Tomato Kitchens, a Louisville, Ky.-based supplier of pizza and tomato sauces. "I think that when a lot of people don't understand it, they're just slow to try something new."

Old-tech, but good tech

For nearly two decades, manufacturers and distributors have relied on and shared a technology called electronic data interchange (EDI). EDI handles orders via computers rather than humans, and valuable supply chain information (such as inventory levels) is shared in real time between those business parties.

Problem is, there are tens of thousands of parties, and nearly all of them have different EDI standards—codes, electronic forms, data management strategies, etc. The lack of a single

What's Important

Barely a dozen pizza-focused distributors offer online ordering, and only a handful of their customers use the service.

Operators who use online ordering systems say they're not only simple, but that they reduce order errors and even help with food cost and menu planning.

Though some operators fear they'd see their distributor rep less if they ordered online, operators who order online say they not only see their rep more often, but that the rep provides services that are more valuable than mere order taking.

standard between them creates inefficiencies and increases costs.

But in the past five years, "intermediary" companies have developed software and data management devices that bridge the EDI gaps between suppliers and manufacturers. A distributor now can place orders for thousands of products from many suppliers at once, and without worrying about meeting every unique EDI standard.

Chicago-based EFS Networks is one such intermediary. Founded in 1999, its 356-member network includes distribution giants such as Sysco Corp. and mega-manufacturer ConAgra. Domino's Pizza, which owns its own distribution company, also is a member.

"The majority of our member companies are interfaced to their current purchasing system, so what we do is build an electronic connection that enables them to leverage what they currently have," said Susan Boyme, director of business development at EFS. "We send their orders to the suppliers electronically, and we direct all the electronic confirmations and electronic invoices to the right places so their whole supply chain cycle is automated."

For smaller companies without elaborate EDI systems, the company has a Web application that allows order placement via the Internet. "They basically can choose whether they want to be fully Web based, or fully operable within their current system."

Why this matters—or at least should matter—to pizza operators is that the technology has trickled down to the independent operator's level. Not only can operators enjoy the benefits of electronic ordering, their increased use of such systems opens a three-way exchange of valuable information between their operations, distributors and manufacturers.

"The goal is to be fully integrated from the store level to the distributor to the supplier and back again," said Peters. Such a free flow of information, he said, would help suppliers make timely raw materials purchases and more precise manufacturing decisions. It also would help distributors warehouse products more on an as-needed basis rather "than just ordering a lot to cover himself. ... Ultimately a supplier would like to see (real-time) levels of inventory in the store. He then could better understand buying patterns at the store level and base his (manufacturing) decisions on that."

A lofty goal to be sure, but one the industry is closing in on, said EFS's Boyme. "There are lots of dots to be connected still, but it's happening as more companies do it."

The 'GFS Experience'

According to Bob Eichinger, director of marketing at GFS, only 20 percent of all of its customers use the distributor's online ordering software, dubbed the GFS Experience. Most of those, he said, are non-commercial clients, such as school and hospital foodservice operators, who he believes have greater Web access and whose ordering patterns are more structured than many independent restaurateurs.

Still, he's surprised more pizza operators like Spanky's Burt don't use the service yet.

"Once they start using it, they don't want to stop because it's so intuitive and such a time-saver," he said. "For us, it's a good way to secure customers, because it's difficult for them to go back to the old way of doing business."

That includes calling in orders to salespersons, something Sofo's Panning said Power Net allows that company's reps to do a lot less. Reps for customers who use Power Net are able to spend more time solving customer problems, showing them new products and helping suggest marketing ideas.

According to Burt, her GFS rep, a former restaurant operator himself, now has the time to meet with her service staff to talk about ways to increase their tips.

"It doesn't seem like it would happen this way, but I get more time with my rep instead of less," she said. "I think some (operators) are worried that their rep won't be around if he's not there taking their orders."

More than anything, Burt said, the convenience of the GFS package has turned her into a devotee. Instead of beginning her order cycle with a single, long inventory session followed by an early-morning call to the distributor, she builds her order over a couple of days on the GFS Web site. When completed, she submits it on a scheduled day.

Once the order is received, a message appears on her computer screen offering a printout. A follow-up call from an inside sales rep follows later.

The software, she said, has a purchasing manager that catalogs any item she's ever ordered from her distributor, and that that information becomes a simple checklist for future orders.

The software notifies her of items that are on sale and tells her about new items added to the GFS product line. If she wants more information on any product, a "right click" of her mouse reveals a detailed description.

"It'll tell you the weight of an item, the number of packets in a case or describe an item like this bread," said Burt, reading the details of an item she buys. The text describes the bread's texture, provides baking instructions and even nutritional information. "It even gives you marketing ideas for every product."

Burt said she also uses the software to cost out new menus and may soon use its "recipe book" function to catalog and cost all her ingredients and recipes.

Sound like territory traveled only by the computer savvy? Not if you're counting her, said Burt.

"You just need a good rep who knows how to get into it and show you how to use it," she said. "It's tremendous. Now all they need to do is make it work hand-in-hand with my POS."

Topics: Domino's Pizza , Independent Operation , Online Ordering , Operations Management

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