Case Studies of Business platforms
What can be learned from other attempts to establish a business/ digital platform - what worked and what didn't?
Ultimately, even when the platform doesn't achieve traction in the market, the value of establishing a common language to exchange data between organizations is a significant value proposition.
eFS Network
Summary of Success
My view - the launch of this business platform succeeded because they had a three-way value loop (Consumer/ Producer and Platform) and the business could sustain long enough to get through the high costs of connecting partnerships to the platform which required clean data and sustainable processes.
Below is the news release of eFS Network that turned into: iTradeNetwork.
Cargill, McDonald's, SYSCO and Tyson Form Electronic Foodservice Network (eFS Network)
Independent B2B Marketplace Will Facilitate Sales and Purchases To the Foodservice Industry
PRNewswire
CHICAGO
Jul 25, 2000
Cargill, Inc., SYSCO Corporation (NYSE: SYY), Tyson Foods, Inc. (NYSE: TSN) and McDonald's Corporation (NYSE: MCD), through eMac Digital, a company recently formed with Accel-KKR, announced today the formation of electronic Foodservice Network (eFS Network), a company that will operate an independent B2B marketplace to facilitate sales and purchases to the foodservice industry. eFS Network, which will be based in Chicago, will be open to all segments of the industry -- from foodservice suppliers and distributors to multi-unit operators -- and will help maximize Internet-based efficiencies and savings for its participants across the entire supply chain.
Fragmentation in the foodservice industry and a complex supply chain provide tremendous opportunities to cut costs and create efficiencies. eFS Network's' neutral web-based marketplace will streamline information flow between participants and promote industry-wide technology standards. It will feature both a public exchange that will promote connections between participants in the foodservice industry and private exchanges that will enable confidential customer-supplier interactions. Initially, the exchange will focus on U.S and Canadian foodservice distribution, a $150 billion industry.
"This is unlike typical B2B arrangements we've seen so far because it includes all segments of the foodservice industry, from food manufacturers and distributors to restaurant chain operators. Together, we can produce efficiencies for all founding and future exchange participants. This exciting partnership is just one example of the kind of new thinking and new opportunity we're aggressively pursuing at McDonald's and at eMac Digital," added Wayne Wolf, Vice President for Corporate Strategy 'in charge of B2B digital efforts at McDonald's Corporation.
"We believe that eFS Network will lead the way in revolutionizing the current foodservice marketplace. This is an industry-backed effort designed to bring e-commerce to the foodservice industry, greatly enabling the realization of benefits more quickly. This distinctive approach of connecting operators, distributors and suppliers is an ideal model to drive costs out of the entire supply chain," said Tom Lankford, Executive Vice President of Foodservice Operations and FreshPoint, Inc. at SYSCO Corporation.
Each of the four founding partners are leaders in their respective segments of the industry. In addition, eFS Network expects several additional strategic partners from other chain restaurants, distributors, and branded and private label manufacturers of foodservice products to join in the near term. eFS Network will have its own board of directors and will begin immediately recruiting a chief executive officer and senior management team.
"Tremendous opportunities exist in the foodservice supply chain to gain greater efficiencies and drive out costs," said Robert Lumpkins, Vice Chairman of Cargill, Inc. "The expertise that we and our partners bring to the table can offer unparalleled benefits to all users of this marketplace. Our conversations with potential investors and participants indicate that interest in eFS Network is very strong."
"The foodservice industry is faced with its own unique challenges in the development of a successful business to business model for our marketplace. The priority for eFS Network and all the other industry participants who will join in the future will be to lower the total cost of inventory ownership by the development of a more efficient and visible foodservice supply chain. It is indeed an exciting opportunity," said John Lea, Executive Vice President and Chief Marketing Officer, Tyson Foods, Inc.
James Breyer, Managing Partner of Accel Partners and a Director of both eMac Digital and Accel-KKR, said, "Bringing global industry leaders like Cargill, McDonald's, Sysco and Tyson together to optimize the supply chain of the foodservice industry is a great example of how to use the Internet to create significant and sustainable value. We look forward to working closely with our new partners and others to bring this enterprise to market. We plan to leverage our e-commerce experience, resources and relationship to make eFS Network a successful industry venture."
Business inquiries for eFS Network should be directed to Pete Levangie, 630-430-2434, or visit eFS Network's website at http://www.efsnetwork.com/ .
Foodservice Network (eFS Network)
Cargill Inc., Sysco Corp., Tyson Foods Inc., and McDonald's Corp. announced that they have formed electronic Foodservice Network (eFS Network), which will operate in Chicago as an independent B2B marketplace to facilitate sales and purchases in the foodservice industry.
The alliance will feature public exchange between participants in the foodservice industry and private exchanges, which will enable customer-supplier interactions.
"This is unlike typical B2B arrangements we've seen so far because it includes all segments of the foodservice industry, from food manufacturers and distributors to restaurant chain operators,"
This network has a better chance of survival than its precursors in other industries, says Neil Z. Stern, a partner at McMillan/Doolittle in Chicago, because it's got a larger base of suppliers and customers than other B2B exchanges.
Acquired by iTradeNetwork
As of 2006, EFS Network, Inc. was aquired by iTradeNetwork, Inc. EFS Network, Inc. provides electronic supply chain network, which supplies solutions for the foodservice industry. The company’s network provides relationships of foodservice companies and eliminates costs throughout the foodservice supply chain. It focuses on order management and supply chain efficiency products and services that enhance the existing trade relationships among foodservice manufacturers, distributors, redistributors and operators. EFS Network, Inc. was founded in 2000 and is headquartered in Chicago, Illinois.
Market Network Platform
Purpose of this platform is to: "Release globally, the passion in every person, to champion the growth of another, so they can both be all they were born to be."
Serving the champion and helping them quickly became the focus of Gloo. Seeing the challenges that ministry leaders faced—from lack of access to technology and funding to the need for equipping and connection, Gloo set out to build a trust-based platform that powers every champion’s purpose...one person at a time.
Examples of Market Invalidation
Rooster
March, 2000
Du Pont Co. and Inver Grove Heights, Minn.-based Cenex Harvest States Cooperatives to launch an online exchange where farmers can buy supplies and sell produce.
Novopoint
Launched March of 2000
Directly involved
Cargill partnered with Ariba
Food and beverage manufacturers and suppliers
There was not a close-loop value proposition to sustain it
Levelseas
A market place for buying and selling bulk ocean transportation for commodities such as oil and ores
GoCargo
A place where shippers of container cargo can trade space
Global Steel Exchange
This exchange was active for quite a few years until it ultimately shut down...
International buyers and sellers of more than 50 steel products began trading online at GSX. The Global Steel Exchange, founded by Duferco, Cargill, TradeARBED and Samsung Corporation, exceeded volume expectations during its month-long trading pilot in April. A total of 247,200 tons of raw products and semi-finished and finished steel were traded across the exchange. During the pilot trading period, over US$ 60 million was traded with average volume of 13,700 tons per transaction. The largest transaction was for 48,000 tons. "International steel buyers and sellers are clearly ready to conduct business differently," GSX CEO Lou Schorsch said, "We undertook the pilot primarily to ensure the site functions well. We never expected to achieve the volumes we've seen over the past month." During the pilot trading period, participating companies paid no transaction fee to GSX. In order to give the entire industry an opportunity to trade at no cost, GSX will charge no transaction or subscription fee until June 1. Because GSX offers both a product and service exchange, registered members can directly negotiate for products, then move to the Service Exchange where they compare prices and negotiate for logistics and financing packages. GSX registration is open to steel buyers and sellers anywhere in the world. GSX founders and investors throughout the world have committed USD 5 billion in transaction volume over the next two years. That committed liquidity ensures a constant supply of online products. Over the last four weeks, products were traded across GSX, including pig iron, billet, hot and cold-rolled coil, wire rod, pipe and tube, and stainless. Participating buyers and sellers negotiated from Brazil, China, Japan, Russia, Singapore, South Korea, Switzerland, UK, Ukraine, and the United States. On May 11, 2000, Cargill, Duferco, Samsung and TradeArbed announced they were forming the first international steel trading exchange in order to bring transparency and efficiency to the trading process. "A lot of people have worked very hard over the past year to build a truly global enterprise ? involving real market leaders ? to serve the steel community. Starting today, international buyers and sellers can find each other online and negotiate directly for products and services," said Shorsch. "It’s exciting to envision where the industry will be this time next year, after twelve months of increased market reach, lower costs, and better price realizations."
The Global Steel Exchange increases transparency and reduces costs in international steel trading. Because buyers and sellers can directly negotiate, they benefit from new market reach and actual information about pricing and market conditions. GSX offers trading on two distinct marketplaces - users will trade more than 50 steel products on one, and will negotiate for packaged trading services on the other. GSX was founded by the world's leading steel trading firms: Cargill Steel, Duferco, TradeARBED and Samsung Corporation. Strategic investors include 12 leading steel producers that are major participants in interregional steel trade. GSX currently has offices in Atlanta, Belo Horizonte, Chicago, Hong Kong, Jakarta, London, Moscow, Singapore, and Taipei. The company's website is www.gsx.com.
The Global Steel Exchange, based in Chicago and backed by four of the world's largest steel traders, is one of the newest entrants in a field that so far has yielded little but a drumbeat of bad news.
About the same time as the Florida trader's deal closed, MetalSite, a 3-year-old online pioneer founded by some of the country's best-known steel companies, shut down after running out of money.
They've recruited an industry veteran as chief executive: Lou Schorsch, who headed McKinsey & Co.'s global metals and mining practice.
In addition to the four trading companies, investors include 13 large mills in Russia, the Ukraine and South Korea that export as much as 60 percent of their production.
Backers have committed a total of $2.5 billion in trading annually to the site for each of two years. Their aim: to attract sufficient buyers and sellers with enough cash to create an efficient market.
Efficient markets--stock exchanges are good examples--give participants better information, making prices easier to gauge and narrowing the spreads between bids and asking prices.