Chemical Reaction

 
 
By Marc Rapport  |  Posted 2001-04-02
 
 
 

Ever wonder where Cheetos get their unique orange color? It comes from annatto, a natural food coloring extracted from a bean grown in Chile.

Such is the stock in trade on ChemPoint.com, a B2B exchange that caters to the fine and specialty chemicals industry. Founded in May 1999, ChemPoint is a subsidiary of Netherlands-based Royal Vopak, which also owns Van Waters & Rogers, North Americas largest chemical distributor.

"It took us four months to create the business model and secure funding from the parent company," says Chad Steigers, ChemPoints managing director. "Then we spent 19 weeks designing the system and in the building phase with Lante Corp.," the Chicago-based Internet consulting and integration firm.

Lante was chosen from a field of 15 competitors. "We were looking for a company that understood a startup," Steigers says. "Most of the consultants we interviewed were used to integrating legacy systems." He adds that Lante also was chosen for its ability to "work with us on an iterative approach. That means we get to a prototype quickly, get it up and then improve it over time. Thats the methodology we chose for our IT approach. It might cost you more in the short term, but its easier to change and modify over time."

Multiple Sites ChemPoint and Lante put together four integrated Web sites: a public "welcome" site, a customer site, a supplier site and a warehouse site. Lante also had to integrate nine off-the-shelf applications to meet ChemPoints complex requirements.

The sites provide personalized service by creating an individual page for each customer, who can then see sales records online, for example. Sellers can review account info and upload documents tailored for customers individual pages, such as Material Safety Data Sheets, product characteristics and applications brochures.

Most of the supplier information coming to ChemPoint is in PDF format, although most of the orders still come in by phone or fax. That information is entered into an in-house system by some of the 50 or so employees who occupy the 11,000 square feet of space that ChemPoint calls home in Bellevue, Wash.

Eprise Participant Server is employed as the content manager to relay XML-based information among the sites, ChemPoints back-end services, its suppliers and its customers.

"Eprise was the right solution for ChemPoint because of its ability to handle dynamic content, and its all XML-based," says Mike Corrigan, the Lante project manager on the ChemPoint job. Eprise is highly flexible and works well with the other software they decided to use, particularly the Screaming Media software, which tailors new packages for each of the sites, Corrigan says.

"We use Eprise to manage the content, mostly in PDF files that we get from our suppliers. We get a lot of our certifications and specifications via the Web," ChemPoints Steigers says.

The rest of the software includes Business Objects (business reporting), Great Plains (financial management and inventory), Interworld e-commerce server, Microsofts MSMQ and Biz Talk (messaging), Onyx (customer care) and Yantra (fulfillment), Corrigan says.

A network powered by 10 Dell Computer enterprise servers is used to develop and test work on the Web sites and in-house functions. The actual production sites are mirrored and hosted at a Sprint telecom center in Sacramento, Calif. Communications between Sacramento and Bellevue, as well as between ChemPoint and its parent company, go through T1 lines.

"We typically update the Web sites on a weekly basis to categorize products properly," Steigers says. "These updates tend to be code and functionality changes, not the simpler things like changing news stories or redesigning and adding pages."

"Product orders can flow into our site in XML, go through various applications and then out to our suppliers through XML. The reality is that very few of our customers are using XML outside the system right now, but that will change over time."

Examining Eprise The integration of all that software was not without its head-scratching moments.

"There were many limitations and challenges," Steigers says. "Our needs do not exactly match any one application. If it did, it would be perfect, and that would be the application that would run our business."

For instance, not all the apps had XML links, so the partners had to find other ways to communicate, such as COM objects and VBscript. "Thats changing as weve upgraded," says Steigers. "The majority of our applications are XML native now, and that makes it easier for our integration."

Corrigan says he found Eprise, the content manager, interesting because of its graphical paradigm. "It took a little time to get our heads around exactly how Eprise works, but once we understood that, it was pretty easy to make it work with the rest of the system," he says.

The learning curve involved mapping the paradigms of other programs, which tended to be slightly older than Eprise, and then graphing how the information would flow between them.

Since its launch, ChemPoint has focused on fine-tuning the operation and convincing customers—who have long ordered by phone and fax—to order online.

So far, about 15 percent of Van Waters & Rogers customers are using ChemPoint, Steigers reports. "We havent reached the productivity were going to reach. We believe we have an environment that is going to be more productive than traditional suppliers by a factor of five to 10 times. That gives us a real advantage."

He points out that an average face-to-face sales call costs $400 to $500. A telephone sales call typically costs $25 to $30. "We can take 75 percent of our orders over the phone and still be more productive by three times," Steigers says.

By early 2001, the system was handling 300 to 400 order transactions a month, as well as 750,000 hits from 4,000 to 5,000 discrete users, about 80 percent of whom were new each month.

The company doesnt release sales figures, but Steigers says ChemPoint projects $50 million in sales in 2001. "On a transactional basis were profitable today," notes Steigers. "We havent had a return on capital yet, but we expect to see that happening sometime toward the end of the year."

ChemPoint and Lante obviously have the right chemistry.

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