Chemunity - Pragmatic Procurement of Chemicals

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	ChemUnity evolves into software vendor ChemUnity, one of Europe's oldest dot com companies serving the chemical industry, is completing its evolution to software vendor with this week's introduction of a Procurement Suite including five modules. The Procurement Suite builds on the Sourcing Portal that Netherlands-based ChemUnity introduced in July 2001 by adding inventory monitoring, fulfillment, integration and business intelligence modules. All modules are available through online subscription. Buyers also have the option of receiving the software on CD for installation on their own systems, but ChemUnity CEO Herman Rijks emphasizes that users will realize the greatest synergies with the online option. The new suite of products is designed to automate the pre-purchase order portion of the buying and selling process, consistent with ChemUnity's original vision. The Sourcing Portal, the centerpiece of the suite, respects the fact that most buyers have established relationships with vendors they like to do business with and so merely automates their existing processes. The portal allows companies to request and submit bids, negotiate prices and award contracts - everything up to the point of issuing a purchase order. The service replaces the current system of phone, fax and e-mail communications with a simple point-and-click process that's fully electronic. "It's interesting, but one of the biggest challenges we're facing right now is confusion around what Elemica is doing versus what we are doing," Rijks said. "We really consider our service a complement to what Elemica does, because they handle all of the messaging around a transaction after a purchase order has been issued. We handle the process up until that point so there's really no overlap, but many of their members are reluctant to talk to us because they think there's a conflict. "It's like the difference between a taxi and an airplane. One takes you to the airport and one flies you to your destination. They're both part of the journey, but the taxi isn't competing with the airline." ChemUnity's services also are not analogous to ChemConnect's, Rijks said, because ChemUnity does not offer price negotiation tools such as forward and reverse auctions. ChemUnity speeds up and automates the paper-based process of negotiating deals with a company's preferred vendors, Rijks said. It is not focused on spot deals or vendor discovery. "Our biggest challenge right now is getting past people's misperceptions of what we are," he said. The new modules build on the functionality of the Sourcing Portal. The inventory monitoring module allows a user to monitor their inventory - both liquids and dry goods - automatically online. By combining inventory levels with production rates, plant managers can plan when and how much product to re-order. The module has proven very popular as a standalone option, Rijks said, and is being ordered both by producers and by suppliers, depending on which group is taking responsibility for inventory monitoring. The second new module provides fulfillment information, including real-time information on delivery dates and shipping modes. An intelligence module allows users to easily access and analyze their historical information from the other modules. For example, Rijks said, the intelligence module would allow a user to track the pattern of bids made by each of his suppliers since signing onto the service. That information can provide a valuable starting point for renegotiating future contracts. The final module integrates the other four with a client's back-end ERP system. This prevents double data entry and further increases efficiency. The introduction of the new modules also completes ChemUnity's evolution from a company serving primarily small and medium enterprises (SMEs) to one firmly focused on larger companies. "What we found was that most of the SMEs were far from ready to use the technology because they haven't finished building their back-end systems," Rijks said. "That also means our focus has shifted from being primarily browser based to being fully integrated. The larger users don't want to have to enter data multiple times, so full integration is important." ChemUnity currently has 30 customers for the Sourcing Portal and two for the full suite of procurement tools. The full suite costs 100,000 Euros, including implementation. The Sourcing Portal alone is priced at 5,000 Euros for implementation plus a subscription fee of 300 Euros per month. Sellers may participate for free, and buyers may interact with as many sellers as they wish at no additional charge. Each of the modules is available as a standalone, but Rijks said ChemUnity recommends that users start with the Sourcing Portal or the inventory monitoring module before adding the other modules. Rijks said he is confident the new suite of products will allow ChemUnity to meet its goal, established last July, of breaking even financially by September of this year. Although adoption has been slow due to the current economic recession, the company's pipeline of potential new customers is encouraging, he said. ChemUnity received an additional 8 million Euros of investment last year and costs about 2.25 million Euros annually to operate. Author: Bernadette Hearne, Editor, e-business Chemicals Newsletter