Chemicals:<BR>E-Channels, ERP Deliver Positive ResultsChemicals:<BR>E-Channels, ERP Deliver Positive Results

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.