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November 21, 2001 01:00 AM

What do processors want from dot-coms?

Joseph Pryweller
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    ATLANTA (Nov. 21, 11:40 a.m. EST) — With three of the largest dot-com plastics competitors joining for one panel discussion, some Web rivalry could be expected to surface as quickly as a pop-up advertisement on the Internet.

    Instead, the three panelists speaking Nov. 14 at Plastics Encounter Atlanta chose to discuss a common concern: the malaise among plastics processors at adopting Web purchasing tools for their businesses.

    “Processors haven't really understood what this Internet thing is all about,” said David Jukes, senior vice president of global commercial organization for Omnexus, an Internet marketplace with U.S. headquarters in Atlanta. “In the beginning, it was a blunt instrument of pricing and e-auctions. Now, that has been totally augmented by a more customer-focused model to take out supply chain costs.”

    That message — the Web as a no-frills means to enhance a manufacturing business — also was brought home by speakers from GE Polymerland, a major engineering-resin distributor that has shifted more than half its business online, and ChemConnect Inc., an independent trading and negotiation site for chemicals and plastics.

    The companies did disagree on some fundamentals. Their business models are different. In some cases, their uses are different. Their financial sustenance comes from different sources.

    “Time will tell what customers will want,” said GE Polymerland President Peter Foss. “We have a lot of models, and customers will choose the ones that add the greatest value. We can't decide for them.”

    All the companies have some proof, unlike earlier dot-com companies, that they will be successful. Huntersville, N.C.-based Polymerland, with possibly the largest volume of plastics transactions on the Web, expects to conduct more than $3 billion in Internet business during 2001, Foss said.

    The company has added such features as product design and engineering help, a color-matching service and electronic seminars. In the first quarter of 2002, Polymerland expects to launch MyOrder.com, dedicated to helping customers easily identify the status of their orders and update shipping information, Foss said.

    “We already do this internally with our customer-service representatives,” Foss said. “Now, we want to release it in some form to the outside world.”

    ChemConnect expects to conduct more than $2.7 billion in resin and chemicals transactions this year on its site, an amalgam of auction and exchange tools, commodity futures pricing and private supplier purchases. The firm keeps moving globally, recently adding partners in Mexico, South Africa and South Korea.

    The San Francisco-based company, launched in 1995, has witnessed an Internet evolution from basic transaction tools to a greater quest to integrate computer systems to fulfill orders, said Jamie Mosberg, ChemConnect vice president for strategic accounts.

    In June, the dot-com purchased Envera, a Richmond, Va.-based company that links the computer systems of chemical companies.

    “Our critical push in the plastics industry comes from taking long-term costs from [order] fulfillment,” Mosberg said. “The Internet is not a matter of reducing my head count or of reducing efforts to make strategic products. It's a matter of reducing fixed costs so you can add more value.”

    Omnexus also has focused its attention on cost reduction. The marketplace, launched in June 2000, has mustered steam by enlisting more than 20 suppliers as investors, sellers or both. Its mission is to help processors connect directly to those multiple suppliers and to compare resin prices from several companies.

    One of its largest site tools is a new program that can help processors identify cost savings from purchasing products over the Internet, Jukes said.

    Omnexus has achieved many of its first-year goals and now is gathering plastics product makers worldwide to shift to Internet purchasing, Jukes said. Yet, the crash of many earlier dot-com sites, some of which charged fees to processors, has scared off some buyers from again dipping their toes in the water, Jukes said.

    “So many things are possible and so few things have been done,” he said. “There were 14-15 [plastics] dot-coms at NPE 2000, and now it's down to a few. They've left behind individuals who are dazed and confused.”

    The three companies hope to lure processors with new business approaches. None charges fees to processors. And all are focused on shifting strategies away from pure transactions to offering more breadth of functions.

    The enemies of those companies are the fax and the telephone, the existing methods of doing business, Jukes said. In a perfect world, all three sites would operate together and allow processors to link directly without extra work. But that has not happened, and the officials acknowledged their differences.

    Foss said his company is a traditional brick-and-mortar distributor taking its business to the Web, selling GE Plastics products as well as other materials not offered by the Pittsfield, Mass.-based resin supplier.

    ChemConnect has a reputation as an exchange site, one that the company is working hard to replace, Mosberg said. Instead, the company wants to be known as offering an end-to-end solution to Web purchasing.

    And Omnexus, while backed by suppliers, is working to become a central hub for purchasing, where processors move in different directions depending on whom they are buying from.

    But the job still is in the beginning stages. GE does not work with Omnexus on its site, nor did Foss express any interest in doing so, but sells some resin via ChemConnect. None of those companies works with such vertical e-portals as automotive consortium Covisint or consumer-products e-marketplace Transora.

    “We're ready to work with other hubs,” added Mosberg. “But our customers have to determine where we go or which ones we work with.”

    Still, with three companies — and a host of resin suppliers — offering direct-sales sites, the landscape is starting to clear. The dull and boring work of getting processors to try the Internet is just starting, Jukes said.

    “Probably 10 years from now, [Internet] tools will be totally commonplace in the industry,” Mosberg said. “We all hope to be around when that happens.”

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