Supply Chain Innovators: Elemica

It usually takes about a decade to determine if a new business model will be successful in supply chain. In the late 1990's, the rush to develop on-line buyer/seller networks in every industry was the new, new thing in supply chain. Very few succeeded. One of them is Elemica. 

Founded in 1999 by 22 leading chemical companies, Elemica now processes over $60 billion in  transactions across 2500 companies, including most major suppliers to the industry. Elemica provides chemical industry supply chain participants with sourcing, order fulfillment, procurement, inventory replenishment and logistics technology solutions, all in a cloud computing environment. In 2009, Elemica acquired RubberNetwork.com LLC to further expand their offerings in the space.

Why did Elemica succeed when so many others failed?  Here are a few thoughts:

1. Industry Commitment--the chemical industry has a history of relative cooperation among companies and suppliers, facilitating the difficult issues around collaboration necessary to develop a new business model. The hi tech industry, on the other hand, which had numerous buy/sell start ups eager to manage supplier interactions, is much more competitive and companies were reluctant to join networks where their information might be exposed to competitors.
2. On-Demand Technology--Instead of requiring many companies to adopt new in-house software solutions that may have necessitated substantial technology integration, Elemica was an early user of cloud computing. This allowed companies to share transactions data easily in standard formats, but without major changes to their operating systems.
3. Satisfied Customers--This seems overly simplistic, but it isn't. Elemica has had a program in place since Day One to integrate customer needs for technology and functionality enhancements.  This has enabled them to stay ahead of emerging customer needs by monitoring best practices across all their supply chain partners, seeing where innovations by one company could be shared across the network.

Elemica is the model for supply chain innovation in other industries.  It is too bad that the idea is taking so long to be accepted.  Substantial cost savings have been achieved by doing collaborative development and management--savings shared by all partners. Perhaps others can now build off the model and create other exchanges.

Comments

[dodge challenger]

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