PHILADELPHIA (Oct. 12, 6:15 p.m. EDT) — Believing the elixir for tumbling stock prices lies in e-business, Eastman Chemical Co. is moving resin distribution to a neutral Web site.
In February, Eastman and Shelton, Conn.-based Global Logistics Technologies Inc. founded ShipChem.com in Alpharetta, Ga. Now, Eastman is converting its entire logistics operations — including the transporting of all resins — to the new dot-com, said Fred Buehler, director of electronic business for Kingsport, Tenn.-based Eastman. The site goes live to the public in November.
"This is a highly complicated process," Buehler said in an Oct. 12 telephone interview. "We´ve had the challenge of building a new business. We´re not aware of anyone else actually taking internal functions and carving them into an (outside) services business."
The only comparison could come from Pittsfield, Mass.-based GE Plastics, which shunts resin distribution to its online GE Polymerland site. But few other resin makers have attempted to move distribution entirely to a separate online service.
The initiative by the midsize resin producer — a leading maker of PET container resins — jibes with the company vision of an e-commerce future.
Eastman has set a goal to move 15-20 percent of both its worldwide sales and its internal procurement to Web-based sites by year´s end, Earnest Deavenport, chairman and chief executive officer, said in an Oct. 9 speech at the E-Business for Chemicals and Plastics conference in Philadelphia. The company recorded $4.59 billion in sales last year.
The goal is more than merely Internet posturing, Deavenport said. The company´s long-term survival could depend on it. Eastman´s stock price, as with many other chemical companies, has taken a recent pounding by a jaded Wall Street.
"We´re quickly trying to distinguish ourselves by transforming our company into something that will be much more attractive to investors," Deavenport said. "It´s important for us — I think it´s important for nearly any company — to move quickly and be among the first movers in e-business.
"For many companies — even some chemical companies — we very well might be talking about survival."
Eastman´s stock price, traded over the New York Stock Exchange, was selling Oct. 12 at $37 a share. It had traded at more than $54 a share in May.
Investors want to see more-efficient business processes from chemical and plastics companies, Robert Koort, director of North American research for Deutsche Bank, said at the same conference.
E-business models, offering the promise of streamlined buying and selling efficiency, could be one answer, he said. But talk is not enough.
"We don´t want to see companies lost in the fog," Koort said. "There´s been a tremendous amount of lip service paid to e-business. We want to see action."
Deavenport promised that. Already, customers can conduct online transactions over the company´s www.eastman.com site. The company also is connecting directly to the computer systems of 10-15 of its top customers, Deavenport said.
And last month, Eastman launched a global order-entry system with a full array of capabilities, including order tracking, from as far away as Asia. The company is working on the ability to manage credit and offer technical support over its site, Buehler said.
"There´s no room for hesitancy," Deavenport said. "E-business isn´t the millennium version of the mood ring. It isn´t an electronic pet rock. It isn´t some fad you can sit back and watch pass. You have to jump in, and the sooner the better."
One means of entry is through ShipChem. The Web company plans to gather other resin companies as it grows its materials-transportation business, said Paulette White, ShipChem vice president for sales and marketing.
About 92 former Eastman executives have taken positions at ShipChem prior to its launch, White added.
Eastman spends more than $400 million annually on shipping, Buehler said. The new site offers a way to track shipments electronically and do it 24 hours a day, White said.
"You don´t have to have Fred sitting by his telephone after hours trying to find out where a shipment is," White said. "Any time, he can use our site to find out where a critical order is."
The company also will offer electronic billing and a multitude of shipping options, including truck, rail car and boat. Customers will be given a choice and see an array of prices from different distribution methods, she said.
The service will not cut out distributors, but will work with them as shipping sources, White said. ShipChem is talking to many in Eastman´s former stable of traditional distributors to join the site.
"We´re not trying to eliminate anyone," White said. "We can reduce the problems and make it simple and easy for customers to use. So what´s not to like about it?´´
Eastman recognizes the many inefficiencies in resin distribution, Buehler said. The company is asking all its distributors to use the system, he added.
Distributors should have no choice, if they heed Deavenport´s strong words at the conference. The Eastman chief said he is tired of standing before angry stockholders and explaining why their investments are not turning over.
He said he believes in e-business efficiencies to improve shareholder value. In his speech, he used the phrase "laggards lose" to describe the pace of innovation.
"The age of `either/or´ for being wired is over," Deavenport said. "If you´re not dot-com, you´re dot-dead."