E-business at the World Chemical Exchange
7 Apr 2000
As the World-Wide Web spreads into more homes and offices, companies are increasingly seeking ways to use it for business, writes Stuart Nathan. The company website, with its eye-catching graphics and animations, is no longer enough; what’s needed is a way to transform this new communication network into a way of saving - or, even better, generating - money.
One way of doing this is becoming increasingly popular among chemical companies - using the Internet to buy raw materials and equipment. The net’s connectivity makes it ideal for this - companies can use a single site to lodge bids for commodities, and for others to respond. Known as ‘virtual markets’, such sites have much in common with Internet auction houses like eBay, which are now a web fixture.
The most successful virtual market so far is ChemConnect, which has been operating since 1995. The firm runs the World Chemical Exchange, an open virtual market where companies can trade chemicals and plastics. Headquartered in San Francisco, ChemConnect is backed by the financial muscle of firms such as Goldman Sachs, CMAI and Institutional Venture Partners.
Moreover, chemical firms are queueing up to take a stake in the venture: major names already involved include ICI, Borealis, BASF, DSM, BP Amoco, SABIC, Eastman Chemical, PPG Industries and Rohm as are consultants and other information services, including Andersen Consulting and ChemicalWeek Associates.
The reason for this activity is the industry’s growing realisation of how the Internet can work - and how it can enhance its bottom line. ‘The future belongs to the Internet market,’ comments BASF’s chief financial officer. ‘It creates a new transparency, for sellers as well as potential buyers, and results in fast, cost-efficient trading.’ ICI, one of the more recent investors, is equally bullish about its e-prospects: ‘Although parts of the group have been successfully developing their e-commerce activities for some time now, this investment will accelerate the process severalfold,’ says Brendan O’Neill.
According to ChemConnect, members can reduce procurement and transaction costs, receive updated information, and gain access to new customers and suppliers by trading through the Exchange.
