Chemunity - Pragmatic Procurement of Chemicals

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	The sky is the limit for ChemUnity Arnhem, The Netherlands - July, 2000 - The neutral online commodity exchange ChemUnity is aiming to overshadow its competition. It aims to do this through being the best at its job, rather than spending the most money. ChemUnity chief executive officer, Herman Rijks, compares the company to a seed in the rainforest. 'We've already grown a bit, but we are dwarfed by the surrounding trees,' he explains. ChemUnity was dreamt up by Herman Rijks and Mark-Jan Terwindt. The duo set up the neutral web site late last year to enable buyers to find full truckloads of commodity chemicals online. The site was backed by venture capitalists Gilde and Optimix in the Netherlands with €1.5m ($1.4m) of initial funding. To date the company has set up suppliers to represent 60% of the European market in acetone and methyl ethyl ketone (MEK), and more than 15 other products have been launched including ethanol, caustic soda and glycols. Buyers register an inquiry with ChemUnity, which is then sent out to every registered supplier. The suppliers then have 25 hours to respond and the lowest priced qualifying offer is sent back to the buyer. Buyers are then obliged to accept the lowest bid if it falls within their price indication. Rijks believes this will allow him to avoid the pitfalls other exchanges have fallen into. 'A lot of people are misusing existing exchanges,' he said, 'they are getting a great price on an exchange and then going back to their old suppliers and using it to pressure him, this means that the exchange does not have any revenue and it's a real problem for them right now.' There are big plans for delivery of goods to buyers on ChemUnity. Unlike the majority of exchanges that have opted for one logistic firm to offer its services, Rijks wants to establish a series of logistic companies that would vie for trade on the internet, much like the chemicals business. However, it has signed agreements with product leaders which will act as back-up suppliers as well as setting up a logistic agreement with P&O Trans European to deliver goods if no-one else comes forward. 'Freight is a captive market,' said Rijks, 'why restrict it, that's the easy way.' Similarly, ChemUnity has signed an agreement with SGS, an inspection company that will monitor supplier compliance. Compliance will work on a points system. A supplier will receive plus points for good service, such as delivering on time, but negative points if they fail to come up scratch. If a supplier's balance becomes negative, they are removed from the system for six months. It will also monitor the transactions as they happen. The system will be fully automated until something goes wrong, 'then a little red light goes on in my office,' says Rijks with a smile, 'and we begin to investigate.' Source: European Chemical News, 17-23 July 2000