The Main Goal of the Company
Elemica main aim is to impact growth in the entire chemical industry in terms of the supply chain management and connectivity in terms of procedures and operations. It achieves this by providing web based orders hence chemical companies are able to purchase and sell chemicals using the web which is a more efficient and effective method of marketing. Elemica is described as an industry consortia market place because it is the first e-commerce company in the chemical industry to initiate a successful program which is commercially accepted in the ERP-to-ERP connectivity.
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According to Shtub, the ERP were developed by large scale producers in order to develop a system that enhanced a systematic production or manufacture method (Shtub & Karni 2009). Some of the production processes carried out by the ERP program is warehousing and storage, transportation and operations control. Elemica is different from chem.-connect in that it does not sell or buy its own products but acts as a conduit or facilitator between companies that buy or sell chemicals. The revenue that Elemica gets is from the charged fee that is one of the requirements of the key players in the chemical industry where the fee is charged per the transaction. One of the advantages that companies that have signed with Elemica is that they stand a greater chance of transacting business with many partners registered by Elemica and this creates a network that makes the business process more efficient and cost effective.
Pros and Cons of Cooperation
As a small chemical company, joining Elemica would have both positive and negative impact on the company. Despite linking the company to a wide customer base, joining Elemica increases competition among the key players in the chemical industry. As a result of its size, the company would enjoy limited cost in its operational cost due to the fact that Elemica charges companies that have registered with it fee according to the volume of usage. This means that the responsibility to control cost is placed under market forces rather than being the responsibility of the company. Despite the benefits that come along with joining Elemica, the key players in the chemical industry are put on a level playing field as a result of the connectivity by Elemica. This means that small companies that are not well established face a lot of competition from the more established trading partners. This goes on to affect the overall revenue these small companies get from the process. The connectivity between the trading partners also means that companies that are registered with Elemica can be able to access company analysis of other companies that are also registered with Elemica. This means that a small company would not be able to effectively formulate strategies that are aimed at improving daily operations without the competitor’s knowledge.
Elemica creates a global community of both consumers and manufactures to effectively transact business and effectively handle the operations process. This community-like network is facilitated by the ERP systems that link up all the companies that are registered with Elemica. Companies are able to communicate with one another and also transact business at their convenience. This however crates some sort of competition where the companies registered with Elemica sell their end products to the automobile, airline and manufacturing industries. According to Motta, competition may be a stagnating factor for some companies since some companies may enjoy or control a large market group and output (Motta 2004). This competition is however neutralized by the fact that Elemica offers the companies registered with it a system to link their processes. Companies can buy output from other companies or use the raw material for the other key companies in Elemica to level the competition. This helps the companies reduce unfair competition by key players in the market. This creates the overall role of Elemica in that it brings together or crates a community of buyers and sellers with mutual interest hence production and transacting daily business becomes easy for firms in Elemica.
Elemica offers an industry-wide private industrial network in that when it opened its doors in 1999, there were up to 50 companies that were registered in the startup period. This is because Elemica’s goals and objectives aim at effectively eliminating the supply chain barriers but at the same time not be actively involved in actual buying and selling. Most of the player in the chemical industry is diversified in terms of operation and output level. Elemica crates a systematic flow of information between firms in the industry hence global trading partners can access information related to market forces in the industry and have a system to correct some of the errors occurring from the supply chain management.
Elemica is a more advanced system that tries to effectively and efficiently link companies in the chemical industry. Though it does not actively participate in buying and selling, most of the services from Elemica are aimed at improving the supply chain and connecting firms in the industry to respond to relevant market forces. Most companies have benefited from Elemica like Shell in Europe who started using Elemica as a result of logistical problems and paperwork delays. More and more companies are joining the system to form a community of buyers and sellers with a common goal at least cost.
Motta, M. (2004), Competition Policy: Theory and Practice, New York: Cambridge University Press.
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Shtub, A. & Karni, R. (2009), the Dynamics of Supply Chain Management, New York: Springer.