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Omnexus, the
plastics marketplace, is back on track with a new integration tool
News Release May 09/ After
nearly two quiet years of introspection and hard work, Omnexus is putting
on its public face again with new technology, a hot new light-integration
offering, and a refreshingly honest assessment of what it learned from
the hard times that followed the bursting of the e-business bubble. (5/8/2003)
Michael J. Walsh, who wears the double hats of COO and CFO at the plastics marketplace, candidly volunteers that Omnexus spent most of the past two years overhauling faulty technology built on aggressive timetables at great expense during the dot com boom. During that time, adoption has slowed to a crawl. In 2002, Omnexus hosted just $120 million in transactions. By the end of 2003, the company projects transaction volume will climb to $500 million. “In retrospect, it would have been better to slow down (the technology development), but that wasn’t possible at the pace the market was moving when we were launched in June 2000,” Walsh says. “By 2001 it was clear our technology wasn’t where it should have been, so adoption was slow. The buyers wanted something more intuitive so we spent most of 2001 getting on top of that and fixing our technology so it would be much easier for our buyers to use.” In the process, Omnexus changed from its original transaction fee model to a subscription-based model. The transaction fee model discouraged use by imposing a fee each time a member used the system. The subscription model, by contrast, charges users a set monthly fee, which makes the investment more attractive the more a member uses it. UltraLite to the rescue But usage has really begun to take off since Omnexus introduced UltraLite, a free light-integration service that eliminates the problem of double entry for buyers without requiring the large investment of a full, deep integration. Thanks to UltraLite, usage was up 40% in both January and February, and Walsh predicts that when final figures become available, total volume in 1Q will be found to have climbed by 50-60%. “That’s a large percentage on a very small base,” he cautions. “But people are really liking it, and we think it’s only going to continue to grow adoption.” Buyers who use Omnexus do so in part because they want to automate their order processing, Walsh said. But the system didn’t really deliver that when buyers had to enter an order into their purchasing system, then turn around and enter it again at the Omnexus web site. UltraLite solves that problem by extracting the necessary information from the buyer’s purchasing system, formatting it into an XML message, and then transmitting that information through Omnexus and into the seller’s ERP system. Although UltraLite works in only one direction – a seller can’t use the same pathway to send a message back into the buyer’s purchasing system – its elimination of a critical, error-prone step is proving enough to spur adoption, Walsh said. Buyers who want to continue to monitor the status and other particulars of their order can continue to do so by pointing their browser to the Omnexus web site. And members who want to pursue a full ERP-to-ERP integration can do so through Omnexus’ partnership with its sister company, Elemica. “To be frank, people in the plastics space aren’t looking for deep integration,” Walsh said. “Light integration will save them a lot of time because they don’t have to fax and they don’t have to phone. They don’t have to check any more that the fax got there or hope that the information was entered correctly on the seller’s end. And it’s in two languages, English and German. We see it as an extension of the marketplace and something that distinguishes Omnexus from the individual company websites.” A buyer’s experience Tom Freudenwald, a buyer with Sta-Rite Industries, a Wisconsin-based manufacturer of water-handling products, said he wishes all of the plastics companies Sta-Rite does business with offered something like UltraLite. “We did something similar with GE Plastics about a year and a half ago,” Freudenwald said. “We send them the order electronically and the buyer gets an e-mail acknowledgement that the order has been received, or if there are any delivery issues. That cut down on the need to have the buyers chasing this information, which is very important because we operate on a just-in-time basis here. If something comes in even one day later, it can cause real problems. “We liked that arrangement so much that we looked for others who could do this same kind of thing on a real-time basis. But most resin suppliers just didn’t have the resources to develop their own B2B system as GE did. That’s where Omnexus stepped in; they provide this as a service that would be too costly for many resin distributors to develop on their own.” With UltraLite, Freudenwald said, Sta-Rite buyers enter their orders directly into their own purchasing system. In the past, he said, a Sta-Rite fax system then faxed that information to the seller, which then re-keyed the information into its ERP system. Now, UltraLite extracts the information from Sta-Rite’s purchasing system and sends it through Omnexus to the seller’s ERP system, eliminating the potential for lost faxes or re-keying errors. Sta-Rite can then monitor the status of its orders on the Omnexus web site. “In the past, it could be a full-time job for an expediter to follow up on purchase orders to make sure they were received, and that’s a problem because we don’t have expediters,” Freudenwald said. “We had to streamline that and UltraLite helps to increase the efficiencies. Because we now have more confidence that we can get our product on a just-in-time basis and get information on a just-in-time basis, we’re better able to reduce our inventory and reduce our lead times.” An IT manager’s experience Bill Bloom, IT Manager at DJ/Nypro, a plastics injection molding company based in Louisville, Kentucky, also is a fan. DJ/Nypro is using UltraLite to send orders to Ticona through Omnexus, and is working on a similar arrangement with PolyOne. “With Ticona, we used their website to place our orders,” Bloom said. “Our purchasing person had to go in and create the order on our system, then flip over to the Ticona website and re-enter the order there. Now, with UltraLite, when he’s done entering the order into our system, he presses a little button that pulls the order and puts it in a file on our AS400. UltraLite, which is running on a server, sees that file come in and whisks it off to Omnexus and then to Ticona.” Bloom said he was able to follow the Omnexus instructions and write the necessary code in just four hours. “I didn’t know our file structure for the purchasing system because I had never worked with a purchase order before,” he said. “Even with having to study that and become familiar with it, it only took a few hours. Within four days we had worked out all of the glitches and were totally running with it. “The other thing is that this was free. A few years ago we were talking thousands of dollars to buy into a program like that; they’re offering this for free. The more we can have uniform, hands-off entry, the easier it is. The more you handle something, the more mistakes can be made. And Omnexus works very well with us. We had a server crash and we forgot to re-start it. Omnexus saw it and called us. We really like working with them.” Such praise is music to Walsh’s ears. Omnexus spent most of 2002 developing and piloting UltraLite, and only began promoting the offering in the past few months. In addition to playing a vital role in increasing adoption of Omnexus, however, UltraLite is a patented product that Omnexus hopes to sell to other marketplaces and hubs. UltraLite available for hosted web sites Another new offering that Omnexus is hoping to sell is its ability to host individual corporate sites for both plastics and chemical companies. “We can take our Omnexus platform and brand it to be your private solution,” Walsh said. “That platform supports five languages, all weights, all currencies, in the U.S. and Europe. If you’re BASF, for example, instead of building and maintaining your own site, you put your private brand on our platform and let us host that as your private site.” Even companies that have spent tremendous amounts of money on building a private site are intrigued by the offering, Walsh said. “There are several advantages. The first is that it’s very quick – it’s built and it’s proven. The second is that the buyer who is used to the functionality of the Omnexus site will immediately be at home with your private site. Third is that our UltraLite is a great extension of it that can differentiate your site. And it’s very cost-effective – we can have you up and running in 60 days.” In addition to offering to host chemical company web sites, Omnexus also is inviting chemical companies to participate in its marketplace, which previously was used exclusively to trade plastics products. The concept is part of its arrangement to pair its offerings to the chemical and plastics markets with those of Elemica. In that agreement, Omnexus is designated as the provider of customer-branded and public marketplaces, while Elemica becomes the provider of deep integration ERP connectivity. Each company has agreed not to intrude into the other’s space. e-marketing through Omnexus The final leg of Omnexus’ offering is what it calls its e-Marketing Services and Omnexus Community. The community has 23,000 registered members representing 13,200 companies. More than 40 companies have engaged Omnexus to help them with e-marketing, including hosting web seminars and distributing product information through the Omnexus Knowledge TechCenter. Omnexus also provides a Material Data Center with Applications Database that allows users to compare polymer properties and other data; a service to distribute plastics-specific news; a center for comparing plastics injection molding machines from 11 major manufacturers; a commerce center that leads users in search of plastics products and services to Omnexus members; and a database listing excess resins available for sale at discounted prices. “Our biggest competition is the traditional way of doing business,” Walsh says. “Right now we’re fighting that battle down in the trenches, one by one. The only way you’re going to get adoption is by making it very simple and understandable, and we will lead users by the hand one by one if that’s what it takes to get there.” If all goes according to plan, Walsh said, the company plans to reach the break-even point by the end of 2003. While that’s way behind the optimistic projections of three years ago, Walsh thinks that – given the long, uphill climb of the past two years – the view forward will be worth the wait.
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Source: EyeforChem
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