This past week I sat down with Rick Bushnell, VP of North American Sales of Elemica, at their headquarters in Exton, Pa.  We had met once before at the Lehigh University Supply Chain Symposium, and after a brief introduction, I was intrigued by Mr. Bushnell's claims of profitable record growth in a tough economy.

I didn't know much about Elemica except that it is a B2B integration service provider that was founded by the leaders of the industry which it mainly operates; Chemicals.

Elemica was the brainchild of Andrew Liveris, the current CEO and Chairman of Dow Chemical (NYSE: DOW).  In the late 1990's, Mr. Liveris rounded up 21 other investors,

Air Products, ATOFINA, BASF, Bayer, BP, Brenntag, Celanese, ChemCentral, Ciba Specialty Chemicals, Degussa, DSM, DuPont, Millennium Chemicals, Mitsubishi Chemical Corporation, Mitsui Chemicals, Rhodia, Rohm and Haas, Shell, Solvay, Sumitomo Chemical and Vopak,

and convinced them to collaborate on a "one to many" and "ERP to ERP" industry supply chain service company.  Mr. Liveris and the other Elemica investors had a clear vision of the operational efficiencies to gain over "one to one" EDI (electronic data interchange) connections, but they were also concerned with other new exchanges coming to market.

 "We could see a scenario where they would wedge themselves between us and our customers, and then proceed to streamline an inefficient supply chain ... and capture all the value themselves. This would have further commoditized our industry and driven our margins even lower." stated Andrew Liveris at a conference back in 2002, when he was Business Group President of Performance Chemicals (source).

Most industry collaborative efforts fail from paralysis due to competing agendas of the group.  But this was not the case from Elemica.  Since 1999, the company has grown to be one of the largest and most financially stable multi-national business integration service providers.  They have over 20% top line organic revenue growth and 160 full-time employees.  Elemica is a private US headquartered company.  Off the record they did mention their revenue (no, I did not get to check any bank statements), let's just say, I cannot believe they only have 160 employees.  Early this year, they merged with the RubberNetwork, another industry consortium of:

Continental AG, Cooper Tires, Goodyear, Hankook Tire, Kumho Tire, Michelin, Pirelli, Sumitomo, Toyo Tire, and Yokohama,

which strengthened their sourcing capabilities in Asia.  The combined company now has a wider service portfolio to offer its 100 integrated customers and 2,500 network connections.  Earlier this month Gartner placed Elemica just shy of the Leaders Quadrant, and included a note stating the reason for not making it into the leaders quadrant was due to their industry focus.  After talking with Mr. Bushnell, I'll bet you Gartner places them as a leader in 2010. 

{GTBP} Rick, what differentiates Elemica from GXS, Sterling Commerce, and the other EDI VAN networks, and business integration outsourcers?

Elemica has a unique set of solutions that are difficult to compare to classic EDI heritage businesses.  Elemica's worldwide business process network is focused on heavy manufacturing industries.  We put a lot of emphasis on the context of the message [transaction] to the business.   That is how we add value; by putting the data in perspective to what it means to that business.

{GTBP}  What's the elevator pitch for general management folks?

We help in the collaboration space.  The space that is not inside a companies firewall but to make the process work, somebody needs to help the other partner.  We are a multinational company that is best positioned for multinational clients due to our local international presence and 24/7 around the globe, multi-language support.  Our familiarity of the business coupled with world class technology equips our clients to be more valuable to their customers by allowing them to scale with visibility into the supply chain.

{GTBP}  Would you give me an example of Elemica's unique solution offering?

Sure.  In the replenishment process the chemical industry likes discrete purchase orders while the CPG and automotive industry likes demand forecasts.  That is their business model.  Elemica's applications convert the demand forecasting to discrete purchase orders.  We would take the demand forecast and plot it out by dates and volumes and items and it populates that into individual purchase orders.  This preserves each industry's style of doing business.   

This was one big pain for the chemical suppliers in dealing with CPG and Automotive.  We enhance the business process by allowing our clients to stay in their traditional order management system.  Some companies where printing up these demand forecasts, which are quasi machine code, laying them out on long tables and having a team of 4 to 5 customer service reps trying to decipher what has changed to update their spreadsheets which they will later use to create purchase orders.   This approach was massively time consuming and error prone.  We see the same thing in the automotive industry.  In one example, one of the major automotive companies built a second plant and doubled the volume for our client.  The Elemica solution handled the increase without requiring additional human resources.  This also increased their vendor rating in the industry.

In the logistics process, we can deliver the same visibility and automated tendering with carriers as 3PL's, and allow our clients to take logistics back in-house.  We can accurately share, with both parties at customer quarterly meetings, the information that we have across the network, including track shipment statuses and on-time deliveries.

The key success metric here is that you can ship-doc 100% of the time but if the carrier is late to the customer, the customer still rates this as a late shipment.  The industry was very interested in on-time shipment, now they want to know on-time delivery from the customer's perspective.  This is one critical link in the supply chain.  We offer a dashboard and reports on origin, destination, carrier, that allow a user to identify a problem ship doc, problem plant, and problem rack.  Clients can identify if all the carriers are stuck from a specific destination or if the carriers have dwell time just sitting there. 

We have another business process application for appointment scheduling and slot booking.  This allows clients to spread out the tenders to the trucking company for the pickup.   These tools help them to de-bottleneck the site.  Through a web interface, the shipper can schedule by open slots and get feedback from the carrier, or flip it around and have the carrier select a day and time range when and where they want to load.  If they have certain assets that can only be loaded from a specific bay, we can model the system to block out certain appointments.   It's a dynamic system. 

{GTBP}  What are some of the trends that you see in the business process space?

The trend we see evolving is getting B2B transactions closer to the application by taking out other middleware applications that need to be supported.

{GTBP} Where is the future growth for Elemica?

There is still a lot left in the Chemical industry.  There are thousands of mid-size companies that could benefit from our network.  With the merger of RubberNetworks, we have added sourcing services to our portfolio which would be of value to current customers.  But the next big step is duplicating our business process network for other heavy manufacturing industries.  This is where our expertise lies and where we intend to focus.  The next logical step will be into the oil and gas industry. 

{GTBP} Sounds promising Rick.  Where can I submit my resume?  ; )  Thank you for your time.

My thoughts in summary: 

There are a few ways to go to market for a technology, or business process company.  Most companies take the route of venture capital.  Some companies come about as a spin-off of a larger corporation.  But Elemica is a great example of getting your customers to buy into the company, which gives you a vested interest in its success.

The industry leaders designed and implemented a supply chain/business process network that has already paid for itself from operational efficiencies.  Now they are offering the same system to the industry for a flat monthly cost based on subscribed services.  Basically the industry proved its best practices for business process management and made it available to similar process, heavy manufacturing companies. 

Mr. Bushnell and his sales team have all the credibility they need; success stories, a repeatable model, proven technology and high growth with healthy margins in a down economy.  It sounds like the best sales job a person could find.  Rick did mention that the competition is not Sterling Commerce or GXS, but indecision.  They don't get a lot of RFPs.  The Elemica sales team needs to do a lot of evangelizing.  It's a longer sales cycle when you need to begin with education of the need and value. 

Keep an eye and an ear out for these guys.  You'll be seeing more of them.

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