Charter members of the South Main Buying Group saved a lot of money last winter when they bought 280 million lb of thermoplastic resins through an online auction. In fact, savings were so healthy that the five-company consortium plans to expand its membership and use the electronic procurement capabilities of ChemConnect.com to tender annually for a billion pounds of various polyethylene and polypropylene resins.

Already, four members of the group will inaugurate an electronic reverse auction this July for seven million pounds of color concentrates.

Original idea was to pull the resin buy together from companies that were geographically close, noncompetitive and financially strong. The idea came from resins buyers at three reusable plastic packaging firms—Myers Industries Inc. in Akron, Ohio, its Buckhorn Inc. subsidiary in Milford, Ohio, and Greif Bros. Corp. in Delaware, Ohio. Discussions about a buying club between various companies began in March 2001. Several meetings were held at an office building on South Main Street in Akron, Ohio, hence the name for the group that now includes::

• Greif Bros. Corp., Delaware, Ohio, a producer of industrial shipping container products, including plastic drums and water bottles,
• Myers Industries Inc., Akron, Ohio, a producer of reusable plastic containers, pallets, and plastic flower planters,
• Blitz USA, Miami, Okla., a manufacturer of plastic gas cans, automotive products, pet products and seasonal bird feeders and houses,
• Pitt Plastics, Pittsburg, Kan., producer of plastic bag products and can liners, and
• Plastek Group, Erie, Pa., a manufacturer of consumer packaging and personal care products.

As a group, these firms and their subsidiaries purchase up to 700 million lb/year of polyethylene and polypropylene grades and almost 10 million lb of color concentrates. They pulled their purchasing data together, interviewed several Web-based auction houses and decided to test their leverage by holding a ChemConnect reverse auction last December for 240 million lb of high-density polyethylene (HDPE) resin and 40 million lb of polypropylene (PP) for use in 2002.

The five firms had 13 resin suppliers but only 11 chose to participate in the auction process, which included a variety of types and grades of PE and PP resins. The South Main Buying Group believes this was the largest online bid for resins in history, and resulted in an $84 million buy. Interestingly, three of the firms saved money while the other two simply confirmed that they had been buying at the best prices available.

The South Main Buying Group is using lessons learned from the resins auction in this summer's e-procurement of color concentrates. For example, the request-for-bid documents were very detailed and went out earlier than usual so potential suppliers could study them. Also, potential suppliers had to verify their capabilities to perform before they were allowed to bid.

Knowledge gained from these two e-procurement events is being used to prepare for this autumn's HDPE and PP electronic auction, which the South Main Buying Group hopes will include more participants and expanded volume.