Report: Chemical Firms To Custom-Mix Products on Web

In the coming years, chemical firms will shift their Internet strategies fromconducting online transactions to designing customized products — with chemical buyers making use of online development portals — according to a report released Monday by Forrester Research.

According to the study, leadingchemical manufacturers will start a process of “adaptive development”for their online activities, in order to tailor specificformulations to meet customer application needs.

“Moving basic commerce functions online makes sense for chemical firms — itwill improve operating performance and help firms outpace their offlinecompetitors,” said Forrester senior analyst Steven J. Kafka. “But during thenext 12 months, these e-commerce activities will become standard practiceamong chemical manufacturers.”

Through using adaptive development, the report said, chemicalmakers will be able to center their attention on solving customer problems. Moreover, companies will be able to expandtheir product offerings beyond catalogs and reformulate core productsto meet each customer’s specific needs.

Mix and Match

Chemical firms will also begin to offer online design tools that facilitateproduct selection, said Forrester. When the “off-the-shelf formulations”do not do the trick, customers will be able to work with the manufacturer’stechnical design staff through streamlined development portals.

Chemical firms will also use the Net to collaborate with highly specializedpartners, according to Forrester.

For example, to meet the demands of customers whorequire the development of an entirely new product, manufacturers will beable to contract with design firms for their specific expertise, as opposedto building the technology from the ground up, Forrester said.

Boom Expected

As part of its report, Forrester interviewed 50 e-commerce executives atlarge chemicals and plastics companies.

The executives told Forrester that while they expect only 3 percent of theirsales to be generated via the Web this year, the oncoming wave of onlinebuyers will push e-commerce revenues to as high as 35 percent of total sales by2002.

Chemical Evolution

In its appraisal of current industry operations, Forrester said that manychemical companies are now looking to the Internet as a simple method ofcutting costs and maximizing efficiency. Firms are moving sales to the Web and building online customer support tools.

However, Forrester found that as e-commerce capabilities become more commonplace, chemical firms will need to retool their e-business efforts for bringing new products to the market,in order to stay ahead of the competition and tap new ways to satisfycustomers.