Midwest distributors form ChemSource
By Staff -- Purchasing, 10/7/1999
In today's current business climate, consolidation has run rampant. Larger companies are acquiring smaller companies as corporate management tries to gain marketshare, reduce operating costs, and position their companies for the future.As chemical companies continue to be acquired, a group of independent, Midwest-based chemical distributors have taken action in forming ChemSource LLC, which member companies believe will allow them to compete with much larger companies through electronic commerce.
"The company is designed to provide a world-class infrastructure and systems for independent chemical distributors that wish to remain independent while larger companies target them for consolidation," says Larry Hayes, Chairman of ChemSource. "We believe this is a proactive move, rather than a defensive one.
"This initiative will also help chemical distributors reach customers that they ordinarily couldn't, both on a national and an international level," says Hayes.
The founding member companies include: Chemical Distribution, Inc., Lisle, Ill.; Producers Chemical, Batavia, Ill.; Seeler Industries, Joliet, Ill.; Tinker Chemical, Westmont, Ill.; and Viking Chemical, Rockford, Ill.
While the company is still in its development stages, primary initiatives include:
- An e-commerce site for member companies designed to provide a solution for independents to capitalize in the ever-growing business-to-business e-commerce marketplace.
- Central negotiation of commodity products, equipment, services, and supplies.
- An online forum for the exchange of best-practice information and employee development and education.
- Full-scale expansion of small, regional companies--allowing them to participate in international markets via e-commerce.
ChemSource has contracted Distribution America, a $4.3 billion distribution, marketing, and merchandising organization based in Des Plaines, Ill., to assist in the development and administration of ChemSource's online programs and activities.
Distribution America is in the process of setting up a platform and online catalog to display member companies' products. When completed, the member companies will control access to their catalog by issuing passwords to purchasers. Member companies pay an annual transaction fee to Distribution America for the service.
In addition to the product catalog, there will also be an information section on usage and best practices and a chat area, where buyers and suppliers ask and answer questions and discuss various issues. The chat area will be a message-board in which messages are "posted" in real time.
Greg Hauca, vice president of marketing and information systems at Distribution America, says, "Medium-sized distributors can find better growth by associating with a network organization. By joining forces with other independent distribution companies across the country, members can compete with the huge corporate distribution organizations on a national level, while maintaining their autonomy and strength in their own individual markets," he says.
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