TechWeb

Chemicals:
E-Channels, ERP Deliver Positive Results


Sep 22, 2002 (08:09 PM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=6503436


Like everyone else, chemical-industry IT managers have had to do more with less this year as the sluggish economic recovery takes its toll. Nevertheless, business-technology executives at Dow Chemical, Eastman Chemical, and PolyOne have pushed ahead with E-commerce and enterprise resource planning projects begun in better times, even as they restructure following mergers and divestitures.

Chemical companies continue to expand private exchanges and one-to-one links to automate transactions with suppliers and customers. Eastman's Customer Center processes 150,000 online transactions per month worth nearly $400 million a year. Eastman also has used XML middleware to build links between its SAP ERP system and those of its customers, processing 1.5 million XML messages annually. PolyOne uses XML links to automate 70% of its raw-materials orders. Dow's E-channel sales last year exceeded $1 billion, and it will link electronically with 80% of its customers by next year.

Online exchanges are finding their place, even though exchanges such as Chemdex and CheMatch have folded. Lubrizol Corp. cut operating costs and improved customer delivery schedules when it contracted through the ChemConnect exchange with a third-party service company to manage rail cars used to ship its chemicals. On the purchasing side, Dow says most of its raw-material procurement will be through the Elemica exchange, operated by a consortium of chemical companies.

In February, Dow integrated Union Carbide Corp., which it acquired last year, into its ERP, plant maintenance, and customer-relationship management systems. The move is expected to save $1.1 billion over four years. FMC Corp., in contrast, divvied up IT operations, including WAN and outsourcing contracts, as it split into independent chemical and energy-equipment companies.

Air Products & Chemicals Inc. is deep into a five-year, $300 million project that began with SAP human-resources apps last year and is expanding into finance, production planning, and sales and distribution operations. "It's probably the single-biggest project we've ever undertaken as a company," says Joe McMakin, global information technology VP. Savings from internal application development and legacy-system maintenance will offset the project's cost.

DuPont & Co. plans to finish by 2004 implementing SAP R/3 across its lines of business, replacing a hodgepodge of legacy systems to standardize internal processes, cut operational and maintenance costs, and better serve customers.

INDUSTRY LEADERS
Rank Company Revenue in millions Income (loss)
in millions
IT
employees
14 Dow Chemical Co. $27,805 ($385)
44 Eastman Chemical Co. $5,384 ($179) 530
53 PolyOne Corp. $2,655 ($46) 135
80 Lubrizol Corp. $1,845 $94 205
115 Air Products & Chemicals Inc. $5,717 $466 740
178 Praxair Inc. $5,158 $430 465
215 IMC Global Inc. $1,959 ($66) 107
234 PPG Industries Inc. $8,169 $387 600
272 Lyondell Chemical Co. $3,226 ($150) 260
288 Bayer Corp. $10,000 850
329 Millennium Chemicals Inc. $1,590 ($43) 109
334 Sigma-Aldrich Corp. $1,179 $141 170
375 DuPont & Co. $24,726 $4,339 1,847
399 Engelhard Corp. $5,097 $226 --
401 FMC Corp. $1,943 ($338) 175
422 Cabot Corp. $1,698 $124 120
453 Noveon Inc. -- -- 64
455 Ashland Inc. $7,719 $417 450
499 ICC Industries Inc. -- -- 19
Financial data is from public sources and company supplied.
Revenue is for latest fiscal year.
Employee data is from InformationWeek 500 qualifying survey.

IN A NUTSHELL
INSIDE COMPANIES
Average portion of revenue spent on IT
2%
Companies providing customized solutions to customers
21%
Companies seeking IT patents, trademarks, or copyrights
32%
HOW COMPANIES DIVIDE THEIR I.T. BUDGETS
Hardware purchases
10%
Services or outsourcing
39%
Research and development
2%
Salaries and benefits
18%
Applications
19%
Everything else
12%
INDUSTRY FINANCIALS
Average year-over-year revenue change
-2.0%
Average year-over-year net income change
-16.0%
DATA: InformationWeek research
See year-over-year shifts in business-technology practices for this industry. Compare and contrast this year's data with last year's.

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