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In the Press

E-Purchasing Hits the Bottom Line Modern Plastics International, April 2001 Matthew Defosse

Processors purchasing materials over the Internet are realizing many benefits, including access to a wealth of technical information and processing guidance, plus extensive product-design assistance. Now, word of the keenly awaited Internet benefit is leaking out: Processors are getting more bang for their bucks on the web.

Buyers at Miele, Gutersloh, Germany. a household-appliance manufacturer with captive molding operations, are sold on e-commerce. Wilfried Rott, who ran pilot e-purchasing efforts for the firm over the ClickPlastics.de auction site, says that bids, including some from new suppliers, pointed to substantial savings on materials.

Electronic purchasing does not guarantee immediate savings, however. Molder Technimark's maiden Web purchase was also the first order placed at resin dot-com Omnexus. Brad Wellington, Technimark marketing manager, says that while the material (PS, supplied by Dow) was not bought at a discount, he remains an e-purchasing fan. "It's a trend we see continuing," he says. "We wouldn't do it if we didn't think we'd eventually save money."

It is not surprising that Technimark paid the going rate; Omnexus, which links processors to material suppliers, is not a discounter. Nor is it alone in seeking to exploit Web technology without caving in to the Web's fire-sale mentality. Fred Buehler, vp. of e-business at Eastman Chemical, Kingsport, TN, says processors benefit from increased access to information when purchasing through Eastman.com but should not expect lower prices. "I'm not sure lower prices will be a sustainable position."

Eastman sells material over its own Web site as well as occasionally using third-party auction sites. Independent cyber-auctions are ideal for Web-savvy processors looking for deep discounts And processors are using these sites at a rapidly increasing rate; CheMatch, Polysort, and ChemConnect all recently posted their highest monthly sales volumes to date.

Odd lots, supply/demand inequities, and other exceptional circumstances leave suppliers with excess material that they try to move at auction. While technical details on the materials are provided, sellers usually leave out brand names.

According to Linda Stegeman, senior vp. of marketing at ChemConnect, Processors searching for Internet bargains need to change their materials-purchasing mindset. Off-line purchasing involves calling different suppliers for a specified amount and type of plastic, weighing the offers, and then ordering the material from one of the suppliers. On-line, processors should expect to split orders among various potential suppliers.

For example, an Internet-posted request for 100 tonnes of LDPE will likely bring offers from potential suppliers. But by dividing this 100-tonne block into requests for a number of smaller amounts, processors open themselves to offers from suppliers and even other processors with odd-lot quantities to unload. This, she says, is where processors can benefit from pricing advantages.

Another approach is employed at Polysort.com and India's Polymerupdate.com. These sites aggregate processor orders for standard materials, which can lead suppliers to offer discounts for the larger orders. Both firms actively encourage e-purchasing by telephoning service subscribers when potentially interesting buy or sell offers appear.

Dow Chemical's Web site, www.e-epoxy.com, which sells epoxies and related materials, cuts prices by selling material in only half or full truckloads and requiring fixed payment terms with penalties for late payments, order changes, and cancellations. Ian Telford, site director, says Dow is the sole owner of the site and no competing materials will be offered; however, complementary materials to Dow epoxies from other suppliers will be listed.