Chemunity - Pragmatic Procurement of Chemicals

	Home > About Us >

	ChemUnity in between Elemica and Chemconnect in heated panel discussion Amsterdam, The Netherlands - July, 2001 - Clearly expecting fireworks, delegates packed the main venue of the EyeforChem Europe 2001 conference last week to witness the first public appearance of Elemica on the same stage with newly merged ChemConnect/Envera since the merger was made public. The standing-room-only crowd was not disappointed. The major participants lobbed so many verbal grenades at one another that ChemUnity founder Herman Rijks, seated between them on the stage, jokingly asked for a protective helmet. When the session and the two-day conference were over, however, one point was clear: The major chemical companies that founded Elemica are standing by it. Despite the fact that many of them also invested in ChemConnect, which now gives them a share in Elemica rival Envera, speaker after speaker whose company is an Elemica founder and a ChemConnect investor re-affirmed their corporate commitment to Elemica. But ChemConnect/Envera tried to give them – and their individual business units, many of which are free to make their own partnership decisions -- plenty to think about. Rich Chvala, Chief Marketing Officer for Envera, lobbed the first verbal grenade, congratulating Elemica on its announcement two days before that it had successfully completed its first ERP-ERP transactions. “We did that last fall, and today we are running thousands of transactions,” Chvala said. “In fact, AMR just named us the leader in ERP integration.” Chvala said the two companies merged to allow their users to execute a complete supply chain cycle – from identifying a supplier and negotiating terms to completing the transaction and arranging for delivery and payment – over a single channel. “We tried to visualize what the complete supply chain cycle is,” he said. “Yes, 80% of your business is done with contract suppliers with whom you have relationships year in and year out. That’s Envera. But at the same time, ChemConnect has designed a system that goes beyond a commodity exchange to a contract negotiation style that lets you cut down on the amount of time you take negotiating contracts, even with your best suppliers.” One important benefit of the merger, Chvala said, is that it allows Envera to take advantage of ChemConnect’s existing European legal structure, which will make Envera’s services available to companies in Europe as much as a year earlier than would have been possible otherwise. “We had a goal to be available in Europe, and a number of companies in Europe that were interested in joining us this year. We could not have done that on our own, but joining with ChemConnect has allowed us to do that.” But Bertrand Petit, Elemica’s COO in Europe, had a few grenades in his own arsenal. Petit said that Elemica’s founders passed on a chance to join Envera “because we felt we would not have the control we wanted, control that we would have with only chemical companies around the table. Elemica was built with the knowledge of our 22 founders, using secondees loaned by those companies, which assured us we wouldn’t make any wrong marketing moves. In this industry, if you make the wrong choice, it can drive your architecture.” In response to a question from panel moderator Leif Eriksen, chemical industry analyst for AMR, about why companies should continue to invest in both public and private marketplaces, Petit also made a surprise announcement – Elemica is developing an application to serve as the engine behind its members’ private marketplaces. He compared its functionality to that of Travelocity, which serves as a central location for travelers to shop for flights offered by multiple carriers, but which also powers the private marketplaces of several of those same carriers. “It is a proposal to save costs,” Petit said. “It makes sense to have one channel ERP-to-ERP through Elemica, plus also to have your own private site. But now you won’t have to build the engine for that private site, because starting in September Elemica will be able to provide that engine for you.” Chvala, however, urged the crowd to avoid duplicating their efforts by using both public and private connections. “80 percent of our members have one-to-one connections growing out of EDI, and many of them want to keep that going until they see growth in these other areas,” he said. “The unfortunate part is the cost of maintaining that connection. The fact is that many of the technology providers see private exchanges as a way to continue their revenue growth,” he said, implying that they do not have their clients’ best interests at heart when they recommend a proliferation of private exchanges. But the two sides got to the heart of the matter in response to a question from a representative of Ticona-Celanese, who asked how companies like his, which helped to create Elemica but now find themselves investors in Envera as well, should resolve the dilemma. That question brought a wave of nervous and appreciative laughter from the crowd. “I will let my customers and my investors speak,” Petit said. “If you look at the press releases from Solvay and others this week, they have spoken in favor of Elemica. We see ChemConnect and their move as part of the old model, of trying to be everything to everybody. We will stick to ERP integration and we won’t go into price finding. We don’t seek, and our investors don’t want us, to go into marketplace options. We speak to working ERP-to-ERP. We are working on replacing the hamster behind the scene.” Chvala countered sharply, however. “Our board members and equity members voted unanimously for passage of the proposal to merge with ChemConnect,” he said. “For them, the issue was ‘Who gets to see our data? I don’t want to send my secret data through a consortia that’s owned by my competitors.’ The other opportunity is that yes, 80% of your business is by contract, but looking at it from a global perspective, you always want to know what other suppliers are out there, and that’s the discovery provided by ChemConnect. “Now that you have choices, we suggest you explore both options and let your business units make the choice. We’re finding a number of business units of companies that are founders of Elemica are interested in the Envera model.” But ChemUnity’s Rijks, who has revamped his site to offer supplier identification and negotiation capabilities, summed up the discussion this way: “It is ultimately your customers that are going to decide which platform to use, and they’ll decide based on what it’s worth to them and what it will cost them. I’m sure all suppliers will gladly accept a purchase order, regardless of where it originates.” Source: EyeforChem July 2001