1. Why is Elemica described as an example of an industry consortia net marketplace? How does it differ from other types of net marketplaces like ChemConnect? Elemica is a Net marketplace because it is owned by members of the industry and not third parties, also it is intended to provide long-term market place relationships to supply direct inputs to the manufacturing process. In contrast, ChemConnect is a privately owned, third-party firm which offers a bidding platform for chemical firms, and also provides software to coordinate communications among participants in the platform.
2. If you were the owner of 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. 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.
3. Elemica claims to provide a community for participants in which 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 one is a difficult question. The chemical industry is very interrelated with a long history of firms that buy and sell from one another. 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 them from completing their orders.
Elemica 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.
4. Review the concept of an industry-wide private industrial network and describe how Elemica illustrates many of the features of such a network. Such as a private industrial network, Elemica is dedicated to long-term relationships with partners to reduce long-term costs for the firm. Private industrial networks on the other hand, it’s not just a single large firm that controls the network, but it is owned by key industry members trying to coordinate the transactions in an entire industry.