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e-Business in the chemical, rubber and plastics industry3.4.2 Connectivity hubs for data exchangeHow e-marketplaces turned into connectivity hubsThe CRP –and notably the chemical– industries are among those sectors where internetbased trading platforms were expected during the new economy boom phase to becomevery important. In the broadest sense, the concept of such electronic marketplace can bedefined as a business-to-business Internet trading forum in which buyers and sellersexchange goods and services. From the beginning, this term was not without problems,since different marketplaces in fact offer different types of transaction functionality. e-Marketplaces can be categorised according to these functionalities, including for examplecatalogue-based e-markets, pinboards (message boards), exchanges and auctionservices. 96After the e-marketplace hype of 1999 and 2000, and the subsequent shakeout, severalmarketplaces changed their business models. Although the chemical industries are stillone of the more important sectors for B2B marketplaces, the role and importance of 3 rdparty trading platforms is quite limited even in this sector, compared to other forms of e-commerce. In this section, two of the most important intermediaries that provide e-business related services to the CRP industries are presented: Elemica and cc-hubwoo.Elemica – a connectivity hub for the industryElemica (www.elemica.com) is a platform and network provider for the global chemicalindustry, developed by 22 leading chemical companies in 2000. The service focuses onimproving supply chain efficiency by offering browser-based and Enterprise ResourcePlanning (ERP) connectivity. Elemica claims that it is not an "aggregator" of chemicalpurchasing, nor a "buyer," "seller," or "owner" of products, but a facilitator of transactions(order processing and supply chain management of contract and repeat chemicaltransactions). The similarity with marketplaces (such as ebay) and other intermediaries(such as credit card companies) is that Elemica is financed by transaction fees: for eachtransaction conducted by members through the Elemica network, a certain fee ischarged.However, apart from this parallel, Elemica is a horizontal and vertical B2B intermediarywhich does not present itself as an e-marketplace in the sense of a trading platform thatopenly displays offers or demand. Essentially, it is an IT service company that promisescustomers a more cost-efficient way of trading with business partners. The motto is"connect once – connect to all", (instead of maintaining numerous point-to-pointconnections with trading partners via EDI, for example) – see Exhibit 3.4-3.96A more detailed definition of various types of electronic marketplaces, and an overview of recentdevelopments, is available in a Special Briefing by the e-Business W@tch to the EuropeanCommission: "The Current State of B2B E-Markets", Jan. 2004. The briefing has not beenpublished but may be made available by the EC on request (e-mail: entr-ict-ecommerce@cec.eu.int).75
e-Business in the chemical, rubber and plastics industryExhibit 3.4-3: Elemica – a horizontal and vertical e-intermediaryStandardised business processesStandardised business processes via via ElemicaElemicaCompanyERPFunctionalitiesOrder managementVMICIDXChemeStandardsElemicaBusiness partner11Business partner22LogisticsBusiness partner33Source: adapted from SEEBURGER(see: www.seeburger.de – solutions for the chemical industry)The goal is to offer customers a "one-stop" experience through browser-based andEnterprise Resource Planning (ERP) connectivity with their business partners. Toachieve this, Elemica offers different solutions, including light connectivity and moresophisticated forms of system integration. Smaller companies, notably those without anERP system, will typically opt for the light modules ("Buyer Direct" / "Seller Direct"), whilelarger customers may prefer the fully-blown Elemica Connected Solution. The servicesportfolio includes the following options:Elemica Connected Solution ("Connect Once - Connect to All"): the mostadvanced type of connection, offering full ERP connectivityElemica Buyer Direct: the "light" integration connectivity for buyers or sellersElemica Web Solutions – Elemica Seller Direct: this complements standardERP connectivity by supporting additional electronic message types; it functions asthe technology bridge that allows a seller to receive and process orders from anERP-connected buyer using a web browser interface.Elemica Supply Chain Solutions, such as supply chain planning, VMI (vendormanaged inventory, and CPFR (collaborative planning, forecasting andreplenishment);In 2007 about €35 billion worth of transactions were handled through Elemica, involvingover 1,800 industry trading partners. 97 Customers include companies in a variety ofindustries including chemicals companies and their customers and suppliers, notablyfrom the automotive, consumer packaged goods, paper, plastics and pharmaceuticalindustries.The benefits which companies that connect via Elemica aim to reap is an increasedefficiency and effectiveness in transaction processes; "effectiveness" means in particulara reduced error rate compared to manual or other non-standardised forms for data entryand transmission; "efficiency" means in particular reduced processing times. Ultimately,these improvements are expected to turn into cost savings. Elemica claims that in sales97The figure quoted by Elemica is US$ 50 billion; converted into EUR by the study authors.See http://www.elemica.com/About/History/page.aspx (accessed in January 2008).76
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