Write a Problem Analysis & a Summary of the following case:

It may seem unusual to refer to an entire industry as a community, a word reserved typically for

collections of people who more or less know one another. Trade associations are one example

of an industrial community. Trade associations form in an effort to pursue the interests of all

members in the community although usually they do not include customers in the community.

Elemica is a B2B cloud-based, digital supply chain platform aiming to revolutionize the entire

supply chain of the chemical, tire and rubber, energy, and other process industries worldwide.

Elemicas purpose is not just to foster cooperation on a one-to-one inter-firm basis, or just to

foster collaboration on multi-firm projects, but instead to lift all boats on an industry tide by

providing an inter- firm platform for communicating B2B information, and thereby making all

firms more efficient. Elemica is one of the few survivors of the early B2B e-commerce years.

Elemica today processes over $600 billion in annual transactions across more than 7,500 process

industry trading partners, 10,000 network participants around the world, including over 100 of

the largest global process manufacturers, thousands of their direct material sup- pliers, over 500

logistics service suppliers, as well as thousands of end customers. Clients include BASF, BP,

Continental, The Dow Chemical Company, DuPont, The Goodyear Tire & Rubber Company,

Lanxess, Michelin, Shell, Solvay, Sumitomo Chemical, and Wacker.

Elemica was an early example of a B2B e-commerce industry consortium. It was founded by 22

leading corporations in the chemical industry (including oil and industrial gases) to provide cloudbased

order management and supply chain applications and services. A single platform provides

one-stop shopping so that companies can buy and sell products to one another through their

own enterprise systems or using a web alternative. It also helps companies automate all of their

business processes, creating efficiencies and economies of scale that lead to an improved bottom

line. In 2016 Elemica was purchased by Thoma Bravo, a private equity firm, reportedly for more

than $1 billion. In 2019, Eurazeo Capital, a leading global investment company listed in France,

acquired a majority interest in Elemica from Thomas Bravo.

How does Elemica achieve community among a diverse, global collection of firms where firms

are often both customers and vendors to one another? It unites community members by linking

together their enterprise systems. This is the social glue that sets Elemica apart. This super

platform permits companies to communicate with one another and to conduct transactions,

handle logistics, and keep the books. The Elemica commerce platform has effectively

standardized industry business transactions for all network members regard- less of the type of

enterprise system they have, and it has leveled the playing field for trade partners who are less

technically sophisticated. This neutral platform facilitates millions of transactions for industry

suppliers, customers, and third-party providers. In this sense, Elemica is one of the most

sophisticated technology platforms in the B2B space.

One of the largest investments for a company is its enterprise system. Despite these investments,

intercompany relationshipsthe backbone of its supply chainare often left to outdated and

unreliable processes. These shortcomings cost billions in lost productivity, revenue, and profit.

Elemicas platform changes that. It helps its clients leverage their enterprise system investment

by incorporating transactions to external trade partners. Elemicas QuickLink ERP connectivity

enables companies to link their internal IT systems through a neutral platform so that information

is moved into each companys database while maintaining confidentiality and security. The

chemical and oil industries were among the first users of enterprise systems (referred to in the

early years as manufacturing resource planning systems). These large-scale systems were

developed by single firms in order to rationalize and control the manufacturing process. They

achieved this objective by identifying the outputs, inputs, and processes involved in

manufacturing and automating key elements including inventory control and planning, process

control, warehousing and storage, and shipping/logistics. If a company needed to produce 10

tons of polyethylene plastic, its enterprise system could tell it precisely how many tons of

petrochemical inputs were required, when they should be delivered to manufacturing, the

machinery and labor force required to manufacture the product, how long it would take, where

it would be stored, and sometimes how it would be shipped. The systems can estimate the cost

at any stage.

Heres an example of how Elemica works. Lets say you need to order vinyl acetate from one of

your suppliers. You put the order into your internal enterprise system, the order is automatically

routed to Elemicas QuickLink network, Elemica routes the order to your suppliers internal

enterprise system, and you get a confirmed receipt of the order. Elemicas QuickLink Network

ensures the accuracy of the item number and purchase order number and sends an alert if theres

an issue. Once an order is confirmed, Elemicas platform can be leveraged to plan and coordinate

delivery and automatically send an invoice and submit payment. For small or medium firms that

may not have an enterprise system, Elemica has a web portal with online software that allows

firms to participate in the community with suppliers and customers. The platform offers a closedloop

process, end to end, from the purchase order, to acknowledgments, load tenders and

responses, carrier status updates, and dock scheduling. All of this takes place in a few seconds

with little or no human intervention. The customer can send the purchase order via e-mail or efax,

which is then routed to Elemica. Elemica then routes it to the supplier in its preferred format,

integrated with its enterprise system as though it were a true electronic order. This holistic

approach to order management allows suppliers to automate the process with both strategic and

core customers, without asking its customers to change their processes. Its a win-win situation

for suppliers and customers. Elemicas QuickLink Network is sometimes referred to as Come As

You Are network because it allows firms to use whatever communication tools they currently

use, such as EDI, XML, and even e-mail, or formats associated with their enterprise systems.

Unlike the automobile industry or the airline industry, where a few companies dominate, the $5+

trillion global chemical industry is made up of many companies of all sizes. In addition, unlike

many other industries, chemical companies often buy the output from other chemical companies

to use as raw materials for their products. Thus, chemical companies are often customers of one

another as well as competitors.

In the late 1990s, senior leaders at some of the larger chemical companies began to focus on

changes in technology that made the adoption of information technology and the tools of ecommerce

more appealing. The questions were how to best use these advances to benefit their

businesses and how to establish industry standards for electronic transactions to make them

accessible and attainable for all. Leaders from companies such as Dow Chemical and DuPont

determined that a cooperative alliance would be the most efficient way to move forward. They

were met with initial skepticism by marketing and sales staff, worried that online procurement

would negatively affect relationships. Further, senior corporate leadership wasnt sure that ecommerce

would have any use in the chemical industry at all. And companies were cautious

about the expense of investing in the infrastructure necessary for e-commerce.

However, there were compelling opportunities that were impossible to dismiss, including

lowering costs, creating closer connections with customers and suppliers, and differentiating

companies on something other than price. At the same time, new startups like e-Chemicals and

PlasticsNet were making traditional chemical companies nervous. What would happen if their

efforts to use information technology to streamline an inefficient supply chain helped them

capture market share? In other words, if the more traditional companies didnt move forward,

they might end up losing the revenue race.

When Dow began looking at startups that were using e-commerce and talking to their customers,

they found that customers were concerned about making an investment to establish online

connections with multiple firms. Dow and DuPont decided that the best and most economically

efficient option was to offer customers the choice of a neutral one-to-one link. This would

remove the obstacle of multiple connections. A strong, third- party network addressed the

community concern about loss of control. The two companies decided to create and invest in a

neutral e-commerce company, partnering with other companies to create the critical mass

needed to make it viable.

In 1999, the corporate boards of Dow and DuPont agreed that there were major advantages to

online transaction processing and additional online connections among buyers and sellers.

Because time and cost considerations made multiple connections unattractive to customers, a

hub concept was adopted. It was also decided that a neutral community was the best approach.

All participants shared the common goal of creating a neutral platform to facilitate inter-company

transactions and enhance business processes. Dow and DuPont also reviewed the concept with

the relevant regulatory agencies and received up-front approval. Ultimately, 22 global chemical

companies were involved in the launch of Elemica in 2000.

When Elemica opened its doors, there were around 50 startup B2B e-commerce companies in

the chemical industry. Nearly all of these B2B companies were third-party-owned Net

marketplaces suitable at best for short-term sourcing of some direct inputs. Today, only a handful

of these Net marketplaces for the chemical industry remain, although there is renewed

interested in the space, particularly in Europe, where there are 22,500 chemical companies alone.

For instance, recently, Evonik Industries launched OneTwoChem, a platform intended for use by

multiple buyers and sellers.. Elemica focuses on building longer-term business relationships by

creating committed and contractual supply chains. The company acts only as a facilitator of

business transactions and does not directly buy and sell chemical products.

Elemicas business model has been successful primarily because it addresses the needs of

chemical, tire and rubber, energy, and selected process companies of all sizes. It does this by

offering multiple options for connecting to its hub system, multiple products that can be used

alone or in combination, and by ensuring that only one connection integrated with a clients

enterprise system is needed for all transactions. Customers can use Elemica, and take advantage

of the technology it offers, without purchasing an additional internal system.

With Elemica, companies benefit from improved operational efficiency, reduced costs due to

elimination of redundant systems and excess inventory, and a much higher per- centage of safe

and reliable deliveries. The flexibility of Elemicas solutions and network combines simplification,

standardization, and efficiency. And clients have increased their profitability and improved cash

flow through faster payment.

A number of very large companies use Elemicas platform. In Europe, Shell Oil started using

Elemica after recognizing that it had ongoing problems with the coordination of paperwork

processing and deliveries. Truck drivers would arrive at delivery sites and wait up to two hours

while paperwork was filled out. These delays were costing Shell money. Once Shell began using

Elemica, things improved. Today, paperwork is processed 24 hours a day, and truck waiting time

has been cut from an average of two hours to an average of 15 minutes. Given this success, Shell

continues to expand its relationship with Elemica.

AkzoNobel, headquartered in the Netherlands and a major producer of specialty chemicals as

well as a leading global paints and coating company is another example. AkzoNobel decided to

replace its legacy Vendor Managed Inventory System, which it had developed internally, with an

Elemica solution. Under the Elemica system, AkzoNobel no longer has to place orders with

suppliers. Instead, suppliers decide when to deliver materials to AkzoNobel based on inventory

consumption levels, production forecast, and agreed levels of safety stock. Suppliers benefit

because with enhanced visibility into AkzoNobels inventory consumption and forecast, they can

optimize production scheduling and transportation costs by delivering full loads of raw materials.

Another long-time Elemica client, Wacker Chemie, deployed Elemicas QuickLink Email solution

to automate customer orders that might have up to 30 separate line items. Previously, each line

item had to be manually entered by customer support as an individual order, but QuickLink Email

automated the process, saving time and reducing errors.

Through the years, Elemica has continued to innovate, developing new products to address new

chains in supply chain management, including supply chain visibility, supply chain risk

management, supply chain sustainability, and social collaboration tools. For instance, in 2017,

Elemica introduced Elemica Pulse, a supply chain visibility tool that provides end-to-end visibility,

allowing all parties to a transaction to track orders and status through the entire cycle, from order

capture to shipment to receipt, invoice, and payment. Elemica Pulse uses machine learning and

artificial intelligence to provide more accurate predictions of shipping and delivery dates, using a

feature called the Elemica Reality Check, which analyzes data generated across Elemicas entire

digital supply network with proprietary algorithms.