The chaotic state of today's supply chain has left industries ripe for solutions, with e-marketplaces evolving to fit the needs of various markets.
One of the largest of these is Elemica, the global, independent chemical marketplace announced recently by the worldwide chemical and pharmaceutical industry, based on a solution developed by e-business and marketplace leaders, SAP and Commerce One. Twenty of the initial 22 Elemica members are SAP customers.
Due to go live during the second quarter of this year, this electronic marketplace is set to reduce chemical industry supply chain costs for buyers and sellers by standardising and automating information exchange.
Elemica, which facilitates the buying and selling of a broad range of chemical products, will focus initially on contract-based transactions, where the largest supply chain inefficiencies - and opportunities - exist.
The inefficiencies of today's supply chain are mainly due to excessive inventory made to cover poor forecasting, manual processing of routine transactions, sub-optimised logistics networks, poor information flow and complex contract management.
"Elemica minimises the chaos in the contract business supply chain, alleviating these problems and generating huge savings," says Freek Malherbe, solutions manager: manufacturing at SAP Africa.
Elemica's open e-commerce community will be based upon the collaborative mySAP.com e-business solutions environment and marketplace technology.
The SAP/Commerce One solution will initially incorporate contract management, ERP integration for buyers and sellers - including catalogues and contract call-offs, and transportation order execution, tracking and tracing. By year-end, it will incorporate complete supply chain planning including transportation planning and optimisation.
"Supply chain costs make up a large proportion of the huge worldwide chemical industry," says Malherbe.
"Total merchant sales in the US, Canada and Europe exceed $600 billion per year and current supply chain costs equal $120 billion per year, or 20% of total sales.
"E-marketplaces can save the industry billions of dollars in supply chain costs by eliminating inefficiencies," he says. "For example, by eradicating redundant inventories, automating routine transactions, lowering transportation costs, improving document flow and electronically facilitating contract management, the industry globally can save between $15 billion and $20 billion in the contract market."
Effective information exchange is key to reducing supply chain inefficiencies. Elemica expects to serve as a single point of contact for sharing information between contract buyers and sellers. The e-marketplace will increase the reach of participants as well as facilitate this reach with online catalogues Elemica offers standard connections to services. Buyers, sellers and third-party service providers, such as logistics providers, can transfer information to and from Elemica in several ways. The most efficient is via direct ERP-to-ERP connections, which reduce error rates, cycle time and staff time. However information can also be transferred via a Web browser, or members can make use of ERP hosting offered by Elemica for those without in-house ERP systems.
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