Q&A: Leveraging the new Food Industry Exchange
Just this week, on May 6, FMI — The Food Industry Association unveiled a new digital platform that enables its members to directly connect and help operate a smoother supply chain during the COVID-19 pandemic. The Food Industry Exchange platform — born out of necessity to help retailers and suppliers fill holes in inventory where they can, move perishable overstock and more — also will serve as a way for retailers to discover new suppliers, such as private brand manufacturers.
That discovery side of the system is similar to a platform like RangeMe but less driven by emerging, artisanal or specialty brands looking to get noticed but connecting larger suppliers and retailers already in FMI’s base, although the platform will be open to companies like that as it moves forward.
FMI teamed up with software company The Seam to power the new platform, and it is now available to FMI members, as well as non-members and members of some partner associations such as the International Foodservice Distributors Association right now.
To get more detail into how private brand suppliers can leverage the new platform, Store Brands interviewed Mark Baum, FMI's chief collaboration officer and senior vice president of industry relations.
Store Brands: How did FMI get involved with The Seam?
Mark Baum: I've known The Seam for quite some time. They were originally founded to create a digital trading exchange for the cotton industry back in the year 2000. They grew to become, I think, the largest electronic trader of cotton globally. I did some work with them back in the late 2000s, extending their platforming capabilities into the food and beverage space, both in retail and foodservice, and into some very specific categories, including the protein business.
In that case, we were putting up proprietary platforms on behalf of individual companies with tremendous functionality. When we were starting to stand up these partnerships with our trade associations within the food industry, they were a known entity to all of them and us. They've got a very well-developed, proven and evolving software as a service platform. So we felt that they would be very good partners.
SB: How do you see private brand suppliers leveraging this platform in the current climate and beyond?
MB: Well, I think in the current climate, this is really more a matter of fulfilling demand. We've got just incredible, pent up, consumer demand, huge increases across any number of categories. Private brands, interestingly enough, as you well know, plays in all of those categories. I like to say often, if you were to aggregate private brands across categories, under own label or whatever it is, it's 18 to 20% of the volume, depending on who you ask, which makes it the largest supplier to the store.
When you look at it that way, and you look across categories — center store, frozen perishables and the like — it's a great opportunity for those suppliers to expand distribution and to enhance their own sales revenue, and enhance and expand their customer base.
On the other side of that is the opportunity for retailers to do what we'll call product discovery.
If the retailer is in search of a product, they can organize on the platform in a way that they can get down to category or product specifics, and then search through the supplier database and discover companies who are offering those products.
They may not even know about these private brand manufacturing partners until they ask.
SB: Has FMI ever done anything like this before?
MB: Quite like this? No. We have done some of this manually in the past.
In fact, I'll say, honestly, again, the genesis of the Food Industry Exchange was a partnership that we started about five weeks ago, out of necessity with the International Food Service Distributors Association, because our members had a specific need for product. Obviously, the broad line foodservice distributors had excess capacity, because most of their business is in commercial restaurants and some institutions. We literally, manually put up what we’ll call a fillable form. Think of it as a glorified Excel spreadsheet, whereby retailers could outline their needs for product or transportation services or warehousing and storage capacity. Then we were manually sharing that with IFDA, they would align that with their distributors across geographies who had those capabilities, and then we would put them together.
We realized as we started working with them and with the produce suppliers and the protein suppliers and the like, that manual was just not the way to go. That it was chunky and clunky, and that we needed to get out of the way. The other thing that we started thinking about, and you've just alluded to it, is that while necessity is the mother of invention, and we're standing this up during the COVID-19 pandemic, and that will address some immediate concerns, that this is a utility that will be of use for the industry year-round.
A private brand manufacturer partner, for example, can use this online marketplace to improve sales performance and enhance and expand their customers. As I said, as a retailer, they can continually, on a discrete basis, seek out new product supplier partners and products.
Then, once you get accustomed to using this system, almost think of it as a secondary sales platform or procurement platform. When we do have a crisis, and we're coming into hurricane season or some other natural disaster, all you have to do is turn up the volume. It's there. It's already in place.
As we've looked back, how wonderful would it have been to have this at the beginning of this epidemic?
SB: Bravo for pulling it together so quickly.
MB: It's interesting you should say that, because this current circumstance has pushed all of us into this need-for-speed mode in ways we never had before. As you know, our supply chain, while resilient, flexible and expandable, does not necessarily move at clock speed. This has been a real test of resilience and our capacity, but it's also allowed us to prove our mettle.
I think that's important also that The Seam, because of their work in the industry, immediately understood what we were looking to do, knew what fields to program and how to code this thing in a way that we could set it up relatively quickly and then get it populated.
SB: How do suppliers get involved with it?
MB: We have launched it as a member service. We have invited all of FMI's retail and wholesale members to be part of it on the buy side, and we've invited all our associates and product supplier members (CPG manufacturers, private brand manufacturers) on the supply side. We are also going to invite non-member companies through our partners in other associations. They are our sister associations in the areas of foodservice distribution, in fresh produce, fresh meat, fresh seafood, bakery, frozen and the like. We are going to make the platform available to their members as well. They don't necessarily have to be part of the exchange, but if there are members who see value in it, they can go in and kick the tires on it, and if they like it, they can participate in it.
SB: What’s the future vision of the Food Industry Exchange?
MB: The way we envision this is it will help ameliorate the current set of conditions in the context of the COVID-19 pandemic, and it will take some time. It will build over time for trading partners to use it on a year-round basis, so that manufacturers who either have special offers that they want to make, or they're long in a particular product, or it's perishable and they need to move quickly, can make these buy-now offers to retailers. They can also get exposed to a much broader set of retailers than if they're a regional supplier who would like to expand their exposure and distribution into other regions. So It'll allow them to do that on a much more cost-effective basis, because it's an online marketplace. It's not like you're physically having to travel to trade shows or deploy a field sales organization. It's up there, and it's immediately available.
Then, as we see more transactions take place, I think we're going to reach a critical mass. It's going to be one of those things we look back on and say, "You know what? The pandemic really allowed us as an industry to discover a whole new set of tools that are just going to become part of the way we do business."