Chemunity - Pragmatic Procurement of Chemicals

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	ChemUnity business model evolves AMSTERDAM, the Netherlands – July, 2001 If e-business people have learned anything in the past year, it’s that you have to be flexible and open to change if you’re going to survive, and that the customer ultimately determines your fate. Those are lessons the founders of Netherlands-based ChemUnity are taking to heart as they overhaul their matching service for chemical buyers and sellers to address the concerns of their users. In the process, ChemUnity says it has begun signing up more users than ever before and expects to reach the break-even point by September 2002. “You have to be willing to reinvent yourself in this business, and it was clear from a financial standpoint that we couldn’t continue to do what we were doing and be successful,” ChemUnity CEO Herman Rijks said during an interview at the recent EyeforChem Europe 2001 conference in Amsterdam. “But it’s also clear, after surveying 1,500 buyers of chemicals at medium-sized companies, that less than 1% have anything automated for the part of their process that occurs before the purchase order. They’re still sending out faxes and taking phone calls.” Automating the pre-purchase order portion of the buying and selling process was always ChemUnity’s vision, but Rijks said his research showed that its execution caused some discomfort for the service’s users. The original ChemUnity concept allowed both the buyer and the seller to remain anonymous until the deal was done. That left sellers uncomfortable about the legitimacy of the company they were committing to sell to, and buyers uncomfortable about the quality and reliability of the supplier behind the bid they were accepting. The fact that ChemUnity conducted stringent reviews of the players on both sides before signing up participants for its service did little to eliminate their reluctance. The new ChemUnity approach, known as the Sourcing Portal, respects the fact that both buyers and sellers have companies they prefer to do business with, and merely automates their existing manual processes. “It’s not a marketplace,” Rijks said of the new offering. “It’s a communication tool for the part of the process that occurs before a buyer actually issues a purchase order.” The service is designed specifically for small and medium companies that don’t have ERP systems, though it also offers an ERP connection option for those companies that want it. The service uses a browser-based tool to allow participants to locate suppliers, specify products, send RFQs and offers and negotiate prices – everything, that is, up to the point of issuing a purchase order. The system allows each buyer to point and click through a menu of products to choose the ones he wants to buy, and then point and click through a menu of suppliers to choose the ones he wants to communicate with. If a supplier isn’t part of the ChemUnity system, a buyer can nominate them with a few keystrokes, and ChemUnity will recruit that company to join the service. Buyers can create an RFQ, including the quantity, payment terms, delivery terms, product specifications, etc., choose the vendors who will receive it, and send them out electronically. All responses to the RFQ come back to the buyer on a single screen – up to eight offers per screen -- allowing quick and easy comparison. Clicking on any term allows the buyer to drill down for more details on that item. The system also offers a negotiation function, allowing the buyer and vendors to negotiate back and forth on price, delivery times, payment terms and other variables. Once a vendor is selected, ChemUnity drops out of the process. The system also offers built in reminders. For example, vendors who have received an RFQ automatically receive a reminder two days before the RFQ is due, if they haven’t already responded. The fee is 300 euros per month per user, and no upfront investments or expensive implementation projects are involved unless users wish to connect the browser-based service to their ERP system. There is no limit on how many purchase orders each user may negotiate. ChemUnity is offering a free 30-day trial period as an incentive for new users to try the system. The system, which has been in a trial period with 10 customers, is scheduled to launch this week in general availability. Rijks said the company’s tests indicate that even small users have the potential to save the equivalent of thousands of euros per month in administrative expenses by more efficiently researching a broader range of potential suppliers on each purchase. Source: www.eyeforchem.com July-3 2001 Copyright 2000 eyeforchem.com