Seeing ".com" at the end of a name has a way of stirring unrest in the minds of people today. It was not that long ago that the dot-com was the darling of Wall Street and everyone was sure that everything would be done through e-business. The coatings industry was no different, as e-business companies sprung up, seemingly by the dozen. Then the dot-com crash hit, and the overnight millionaires of the Internet were gone just as quickly as they came. So too were many of the e-commerce sites serving the chemical and coatings industries.
Although many of the e-commerce sites that dotted the Internet landscape are gone, the e-business wave is far from over. Like many business tools, new methods are often times evolutionary rather than revolutionary. Though it hasn't happened overnight, as many people predicted, e-commerce is an important part of the coatings business and is growing more important all the time, say industry insiders.
"I think there were some expectations that e-commerce would be larger than it is right now, and of course, many of these expectations haven't come through," said John Everett, project leader for e-epoxy.com, a web site for the sale of epoxy resins and related products. Mr. Everett said that there is a false perception in the coatings industry regarding the use of online portals and e-commerce. "There are more and more companies placing orders and transacting through the Internet than one would think."
Why? The answer is simple: e-commerce can provide many advantages for companies looking to improve and speed up their procurement process. Placing an order through electronic methods allows for information to be called up and transferred in seconds, and linking different companies together into one network places a vast amount of data in one place. E-commerce can also help combat miscommunication.
"A key area where time is saved is in the accuracy of the data input," said Mr. Everett. While no method is entirely goof-proof, e-commerce professionals contend online ordering can help eliminate verbal misunderstandings, which can continue throughout the system.
"Verbal communication has problems," said Christopher Whiston, vice president, marketing and sales, COO, indigoB2B.com. "We put it all online, in print, and right there in front of you."
"By customers inputting precisely what they want themselves in a written form, information can't be misinterpreted," Mr. Everett said.
Post-sale, Mr. Everett added, is where the benefits of e-commerce are most apparent. Once the order has been captured by the Internet and is on the database, it's readily available. The Internet doesn't close at the end of the day, meaning an order's status can be checked 24 hours a day, seven days a week.
E-commerce sites that feature a number of suppliers provide other advantages to a buyer. Because a user has the opportunity to view many offerings, it is possible to purchase a variety of items from an array of different suppliers at once, a convenience Mr. Everett believes customers want.
"Customers are looking for easy-to-use, one-stop shops," he said. "And therefore, multiple suppliers, through a straightforward to use system, is desirable from a user perspective."
Mr. Whiston, agreed, adding that viewing listings from a variety of suppliers also allows the buyer to seek out the most favorable price and performance value.
All e-commerce portals stress the fact that their services are available on a worldwide basis. e-epoxy.com, originally relegated to western Europe and the U.S., has since expanded around the world, "with a couple of exceptions being China and India," Mr. Everett said.
Elemica is another portal that operates on a global basis, featuring 18 major suppliers. According to Chuck Gruber, vice president commercial solutions, Elemica, "Elemica is adding about four suppliers a month."
Elemica currently has contracted with 26 companies, all major suppliers to the industry, to electronically connect and transact on the network. It has grown from four companies in September 2001, to 18 connected and running today, and is adding four or five new companies per month. The remaining eight companies from the 26 currently under contract are presently in the process of setting up and testing the network software for use.
"Elemica was built by the chemical industry to provide an information network connecting all the buyers and sellers of chemicals around the world into a single network," said Mr. Gruber. "We provide a secure, efficient, cost-effective way of sharing real time information between buyers and sellers. We are just the messengers."
Mr. Gruber added that the exchange of information and business through e-channels allows companies the potential to achieve major savings. "That primarily falls in the logistics and supply chain areas, as well as basically taking people out of the routine," he said. "We quote a $15-20 billion savings opportunity out of the $1.7 trillion chemical industry." (Elemica members came up with this number by tallying up the savings to be had by way of reduction of inventory, savings in freight rates due to higher utilization of carrier fleets, as well as more optimized freight loads.)
Chemdeals.com is a portal for the anonymous trading of surplus chemicals, specialty chemicals and raw materials. The site allows suppliers to unload surplus materials while protecting brand names, while buyers pick up chemicals at lower than normal prices.
What makes Chemdeals.com different from the other e-business portals is that users cannot place orders for products, but can only place bids for products listed. Once a bid has been placed, the seller has the option to accept or decline the offer, notifying the perspective buyer through e-mail and negotiating terms of sale if necessary.
According to Mr. Whiston, indigoB2B.com provides two basic products to its customers. One is the public exchange, where a number of buyers are able to meet a number of sellers. The other is a private exchange, where suppliers and buyers can arrange to deal only with certain companies, rather than with the whole system.
Among the features available through indigoB2B.com is access to a vast array of data for every product available through the site. "Normally testing information is not given out by a manufacturer," said Mr. Whiston. "We provide the full amount of detail for a particular lot so any potential buyer can see exactly what they are buying and what performance they will get from that product."
While e-commerce can be a useful way to look at a broad range of products, it also provides the opportunity to get specific.
e-epoxy.com, for example, provides a portal for any company looking to buy or sell epoxy resins and related products. If a buyer or seller is looking for a way to unload surplus chemicals anonymously, chemdeals.com offers a portal that will meet these needs.
Specificity works in other ways as well. Users of e-commerce portals have the ability to conduct very specific searches for products, often tailoring their search criteria to the smallest detail. By inputting specific search parameters, a buyer can call up only those products that meet their specific requirements, rather than searching through a complete list of items. At indigoB2B.com, for example, a user looking for a pigment with a certain pH range can adjust search criteria to only list those pigments that fall within the specified range.
e-epoxy.com, which provides products from the Dow Chemical Company and silicon-based resins and additives from Dow Corning Corporation, bills itself as a "no frills" site for spot buying of products. It is designed for those that can work with straightforward business rules, such as ordering in fixed quantities, a fixed payment term and penalties for order changes and cancellation. Mr. Everett believes that purchasing this way via the Internet is a trend that will continue in the chemical industry, based on the success it has had in other markets.
"We've seen the likes of Southwest Airlines and Amazon.com be able to provide a low-cost-to-serve operation via the Internet, and to streamline some of their own internal costs. Certainly, for example, in the airline industry in Europe, many companies follow the Southwest style of business, Easy Jet, Go, etc., and these companies seem to be rather successful. We were the first to start that line in the chemicals industry, and now we've seen another similar sight come along."
The site Mr. Everett is referring to comes from Dow Corning. In an effort to make it easier and cheaper for coatings, adhesives and sealant companies to buy its silicone products, Dow Corning has unveiled a new brand of no-frills products called Xiameter, and a web site to sell them.
Dow Corning will offer these lower prices (based on global supply and demand) through xiameter.com. The site is geared to experienced buyers and users of common silicones that need large volumes (truck, tank-car and pallet loads), but can forgo hand holding. More than 350 fluids, resins, adhesives/sealants and antifoams will be sold on the site, providing 24/7 ordering in 50 countries including China, Japan, Taiwan, Hong Kong, Australia, South Africa, Brazil, North America and most of Western Europe.
Silicone products sold through xiameter.com are the same as Dow Corning's, but without bells and whistles like tech support. For example, Xiameter SLT-5100 sealant acetoxy is chemically equivalent to Dow Corning 37132 RTV adhesive/sealant.
Interestingly, there are some that believe e-commerce–something still considered by many to be a fledgling technology–will benefit from a weakened economy. "E-commerce should both reduce costs and ease the transfer of information," said Scott Bearon, president and CEO, Chemdeals, Inc. "I believe that the current economy has made e-commerce solutions more sought out than they might otherwise have been during a hotter economy."
Whatever the state of the economy, e-commerce is here to stay. "We are seeing slowly but surely, the receptiveness of customers to use e-commerce as they integrate web services into their personal and business lives," said Mr. Bearon.
The trend towards further use of online buying will continue, agreed Mr. Everett. "Saying the Internet is going to go away and something is going to replace it. That's not going to happen."
Proponents contend it can reduce costs and ease transfer of information—key concerns for any manufacturer.
By Mike Agosta
Published August 9, 2005
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