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1. 2. A key to our success is matching the stream of orders to our production and purchasing schedules. We try to avoid excess inventory of parts, and yet we need to have enough parts on hand to fulfill orders. We need to link the demand for our products to the purchasing of parts and supplies. Do you have any ideas on how we can match our purchasing of supplies to the stream of incoming orders? You can suggest here that most supply chain management systems are linked to the order entry system. Based on incoming orders, SCMs will produce data that is fed into the production system, which, in turn, results in a list of parts needed and schedule requirements. Because this position is closely linked to SCM, you should do research on SCM systems to understand their functionality. 3. We’d like to use social media as a way to enhance communications with our suppliers. Do you have any suggestions about how we might build a social network to support our supply chain? Here you can talk about your experience with LinkedIn, Facebook and Twitter, especially about how business firms can use these platforms to build a social community of vendors and manufacturers. The process of building a social network for vendors is very similar to building a social network of customers. Use of video, blogs, comments, newsfeeds, and posts can be very valuable in creating a community of vendors. 4. We are trying to reduce costs of our supplies by participating in a number of B2B e-commerce marketplaces where vendors compete with one another on price and quality to become one of our suppliers. What do you know about B2B e-commerce marketplaces and how they might be helpful for us? You might point out here the different kinds of B2B e-commerce marketplaces. The firm should use e-distributors, such as Amazon Business or eBay Business, to obtain the lowest cost for indirect supplies. The firm could also participate in an e-procurement network such as SAP Ariba to obtain competitive quotations for supplies and direct inputs. 5. We are trying to integrate our vendors more closely into our business planning and even the design of new products. We’re looking for a collaborative effort from our suppliers and greater visibility into our supply chain both for our purposes and our vendors’ purposes. What do you know

12.7 Case Study Elemica: Cooperation, Collaboration, and Community Elemica is a B2B cloud-based, digital supply chain platform aiming to revolutionize the entire supply chain of the chemical, plastics, rubber, energy, pharmaceuticals, food and beverage, and other process manufacturing industries worldwide. Its mission is not just to foster cooperation on a one-to-one, inter-firm basis or 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. about collaborative commerce? What have you learned about supply chain visibility? You could refer to private B2B networks composed of a single manufacturing firm that owns the network and the group of suppliers that work with the manufacturer to design and build component parts, similar to that created by Procter & Gamble. In this kind of collaborative effort, both the vendors and the ultimate buyer of components work together to create and design inputs, and both benefit from the results.

12.7-6 Full Alternative Text Elemica today processes more than $1 trillion in annual transactions across more than 7,500 process manufacturing industry trading partners; 16,000 network participants around the world, including more than 100 of the largest global process manufacturers; thousands of their direct material suppliers; more than 500 logistics service suppliers; as well as thousands of end customers. Clients include AkzoNobel, BASF, Bayer, BP, Campbell’s, Continental, Dow, DuPont, ExxonMobil, Goodyear, Levi’s, Pepsico, Pirelli, and Westinghouse. Elemica was an early example of a B2B e-commerce industry consortium. 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 e-commerce more appealing. The questions were how to best use these advances to

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benefit their businesses and how to establish industry standards for electronic transactions to make them accessible and attainable for all. Unlike the automobile industry or the airline industry, where a few companies dominate, the 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. Leaders from companies such as Dow 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, who worried that online procurement would negatively affect relationships. Senior corporate leadership wasn’t sure that e-commerce would be useful for the chemical industry. 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 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 didn’t 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. All participants shared the common goal of creating a neutral platform to facilitate inter-company transactions and enhance business processes. Ultimately, 22 leading companies in the chemical industry (including oil and natural gases) were involved in the launch of Elemica in 2000. In succeeding years, Elemica has expanded far beyond chemicals to encompass other major process manufacturing industries.

How does Elemica achieve community among a diverse, global collection of firms where firms are often both customers of 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 regardless 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 relationships—the backbone of its supply chain—are often left to outdated and unreliable processes. These shortcomings cost billions in lost productivity, revenue, and profit. Elemica’s platform changes that. It helps its clients leverage their enterprise system investment by incorporating transactions to external trade partners. Elemica enables companies to link their internal IT systems through a neutral platform so that information is moved into each company’s 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. Elemica facilitates transactions of all types including order processing and billing, and logistics management. However, unlike some other companies in the field, Elemica does not buy, sell, or own raw material products. Instead, it acts as an intermediary, or network, linking companies together to automate confidential transactions. Like eBay or a credit card company, Elemica’s revenue comes from charging transaction fees on a per-

transaction basis. Its network of clients opens the door for companies to do business with all other connected buyers and sellers. Elemica offers a variety of services for suppliers, customers, and logistic partners, enabling them to automate both their business processes and their internal purchasing. A modular, cloud-based solution simplifies sales, procurement, and financial processes; integrates supply chain partners to diminish communication barriers; and reduces overhead and errors. Elemica integrates information flow among global trading partners using a cloud-based business process network. This is often referred to as platform as a service (PaaS). Each client needs only a single connection to Elemica, and Elemica manages the connections to that company’s external trade partners. That means a company needs to maintain only one connection to Elemica (important when it’s time for enterprise system maintenance or upgrade) rather than to maintain a variable number of connections and infrastructure to all its trade partners. Once a company connects to Elemica, it can have access to thousands of other trading partners, including suppliers, customers, and logistics firms. Clients are charged for the service based on volume of usage. This is much more efficient than older EDI solutions to inter-company transactions. Elemica provides the platform for collaborative commerce through a fully automated, integrated network of suppliers, customers, and third-party providers. Elemica offers cloud-based solutions for five primary areas, which it characterizes as Buy (supplier management), Move (logistics management), Sell (customer management), Assure (quality management, traceability, and regulatory compliance), and See (analytics). Using a variety of solutions within these areas, companies can automate ordering, invoicing, shipment tracking, and day-to-day business operations. Companies can sign up for one or more solutions depending on their needs. The software applications are software as a service (SaaS) applications residing on Elemica cloud servers and, therefore, do not require participating firms to buy any hardware or software. Firms are charged on the basis of how much of the service they use, on a demand basis. Here’s an example of how Elemica works. Let’s 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 Elemica’s network, Elemica routes the order to your supplier’s internal enterprise system, and you get a confirmed receipt of the order. Elemica’s network ensures the accuracy of the item number and purchase order number and sends

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an alert if there’s an issue. Once an order is confirmed, Elemica’s 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 an online portal with online software that allows firms to participate in the community with suppliers and customers. The platform offers a closed-loop 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 e-fax, 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 their customers to change their processes. It’s a win-win situation for suppliers and customers. Elemica’s platform is sometimes referred to as a “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. Elemica’s business model has been successful primarily because it addresses the needs of process manufacturing industry companies of all sizes. It does this by offering multiple options for connecting to its platform and multiple products that can be used alone or in combination, and by ensuring that only one connection integrated with a client’s 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 percentage of safe and reliable deliveries. The flexibility of Elemica’s 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 Elemica’s platform. For instance, Swiss-based Barry Callebaut, the world’s leading premier chocolate manufacturer, with annual sales of almost $8 billion, implemented Elemica’s order automation solution to help it deal with manual order entries. Only a small percentage of Barry Callebaut’s orders are being processed automatically via a customer portal or EDI. For the rest, transaction data is embedded in customer e-mails or digital documents. Elemica’s solution will extract that data directly from those e-mails and documents.

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. It has also acquired a number of companies, such as Eyefreight, a SaaS transportation management solutions provider, to expand Elemica’s global end-to-end supply chain network into the logistics market; OmPrompt, which had developed proprietary algorithms, machine learning, artificial intelligence and other tools to help consumer packaged goods, food and beverage, and pharmaceutical businesses automate their supply chain management; ProcessWeaver, a multi-carrier shipping solutions provider that automates the execution of processes required to pick and pack and ship high volumes of small-parcel and less-than-full truckload shipments; and EMNS, a material quality compliance company. Elemica has also developed a sustainability program. In 2020, it received its sixth consecutive Green Supply Chain award for the food logistics industry. It has also received the SDCE Green Supply Chain award for multiple years, recognizing its efforts in promoting sustainable supply chains. In 2019, Eurazeo Capital, a leading global investment company, acquired Elemica from Thomas Brava, a private equity firm that had previously purchased Elemica in 2016. Eurazeo is providing support for Elemica’s expansion into new industry verticals, geographics, and products. Sources: Elemica.com , accessed April 28,2022; “Elemica Acquires OmPrompt, Strengthens Industry-Leading Supply Chain Automation Solution,” Elemica.com , March 8, 2021; “Elemica Acquires ProcessWeaver, Integrates Parcel TMS,” Elemica.com , December 16, 2020; “Elemica Wins Food Logistics Green Supply Chain Award,” Elemica.com , July 2, 2020; “Elemica Expands Logistics Footprint with Acquisition of Eyefreight Transportation Management,” Globenewswire.com , January 30, 2020; “Elemica Celebrates Its 20th Anniversary as a Supply Chain Network Pioneer,” by Elemica, Globenewswire.com , January 22, 2020; “Elemica Acquires EMNS, a Leading Quality Compliance Provider, Elemica.com , March 8, 2019; “Optimising the Supply Chain: The Visible Effect of Elemica’s Digital Supply Network,” Europeanbusinessreview.com , January 22, 2019; “Elemica Wins 2019 Supply & Demand Chain Executive Green Supply Chain Award,” by Elemica, Globenewswire.com , December 11, 2019; “Elemica Closes on Eurazeo Partnership,” by Elemica, Globenewswire.com , September 19, 2019; “Creating a True Digital Procurement Supply Chain,” by Patrick Burnson, Supplychain247.com , May 15, 2018; “Thoma Bravo Completes Acquisition of Elemica,” Elemica, July 7, 2016;“Building Effective Business Networks in Process Industries Improving Supply Chain Value Networks,” by Lora Cecere, Supply Chain Insights, LLC, January 2015; “Elemica: Shifting from a Shared Services Bazaar to Platform ‘PaaS’ Standard,” by Jason Busch, Spendmatters.com , November 18, 2013; “Next Generation Supply Chain Networks Enable More Robust Collaborative Workflows

across Trading Partners to Increase Value,” Becky Boyd, Market Wired, July 2, 2013; “Case Study: Elemica,” Ebusinesswatch.org , August 25, 2009; “Once Elemica Tackled the Hard Part, the Rest Was Easy,” SupplyChainBrain.com , August 5, 2009. Case Study Questions 1. If you were a small chemical company, what concerns would you have about joining Elemica? 2. Elemica provides a community for participants where they can transact, coordinate, and cooperate to produce products for less. Yet these firms also compete with one another when they sell their products to end-user firms. How is this possible? 3. How did the purchase of Elemica by first Thoma Bravo and then Eurazeo Capital change how Elemica fits into the B2B framework illustrated in Figure 12.9 ?

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