Case Study Questions
Chapter 12

1. If you were a small chemical company, what concerns would you have about joining Elemica?

Although small and medium firms do not need to have an ERP system to connect to Elemica, they do require some level of technological sophistication even to use the online portal. Elemica offers a Web portal for those companies not as technically sophisticated as the larger global chemical companies. For all firms, Elemica reduces the burden on IT staff. In fact, one of the missions of Elemica is to help companies do more with fewer resources—including IT staff. As a small firm, you would be concerned that you would be able to respond to requests for large quantities of commodities that might be requested by partners.

 

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 chemicals to end-user firms in the automobile, airline, and manufacturing industries. How is this possible?

 

This is a difficult question. The chemical industry is very interrelated with a long history of firms buying/selling from each other. All firms in the industry at one point or another end up with spare inventory they would like to sell, or come short on specific chemicals preventing order execution. The Elemica hub is perceived as a neutral trading platform where all can benefit from lower-cost-to-serve, greater efficiencies, and overall more efficient operations that can serve customers better. By keeping bids and quotations anonymous, and the community fairly large and open, members can get a sense of “market price” and available quantities quite easily without revealing their names.

 

3. Review the concept of a private industrial network and describe how Elemica illustrates many of the features of such a network.

 

Like a private industrial network, Elemica is focused on long-term relationships with partners to reduce long-term costs for the firm. Unlike a private industrial network, it’s not just a single large firm that controls the network, but rather it is owned by key industry members trying to coordinate the transactions in an entire industry.