March 02, 2001, 12:59 PM — A dirty little secret exists in industry today: In this age of e-business, most business is not electronic at all. Most businesspeople still buy and sell goods via methods that have been around for decades. They write a contract and shake hands. They pick up the phone and send a fax. The truly enlightened might communicate via e-mail.
This is particularly true in the $507 billion North American chemical industry, where most companies have long-standing, contractual relationships with their suppliers. That's why the founders of Envera, a Richmond, Va.-based startup, think their idea of providing an electronic hub through which chemical companies can forge links with each other will strike a chord in the industry.
Consider a typical transaction: After a bidding process, chemical companies generally enter into annual contracts to buy a certain quantity of chemicals at a certain price from a certain partner. A purchasing agent from the buyer then calls the seller's toll-free number to confirm price and quantity and schedule the shipment of an order. The seller's representative keys the order into his company's system -- perhaps making an error or two -- and then faxes back the order acknowledgment. The method works, but it is hugely expensive. All told, it costs between $50 and $100 to process a single order.
Clearly, the way chemical companies conduct transactions is in need of an overhaul. The question remains whether a marketplace such as Envera -- using XML as the linchpin -- can provide the answer.
Looking for an Easier Way