Elemica Marketplace’s Analysis and Characteristics Case Study

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Introduction

The rise of e-commerce and technological advancement in the economy and trade provides new opportunities for companies of the small, medium, and large sizes to use the benefits of electronic supply chains for more efficient operations. A medium-sized chemical company that establishes selling services to similar companies in the industry might obtain significant business advantages when shifting from manual purchase order processing to an advanced electronic database and B2B community such as Elemica. A shift from EDI to a cloud-based e-market is a chance for the company to improve its sales and procurement operations in terms of productivity and efficiency in a short-term perspective and create a qualitatively new electronic supply chain in a long-term perspective. This report is designed to analyze Elemica from the point of view of its classification and characteristics. The analysis is followed by evidence-based informed recommendations developed on the basis of advantages and disadvantages of the proposed e-marketplace as compared to the currently utilized supply chain strategy and alternative e-marketplaces. The findings of the report might be used as a basis for making a decision as per using Elemica as a cloud-based supply chain in the future.

Analysis of Elemica

Elemica is a cloud-based B2B e-marketplace designed specifically for the companies operating in the chemical industry. The consortium incorporates multiple companies of small, medium, and big sizes in a single digital marketplace, which provides business opportunities for suppliers and buyers. It functions as a community where inter-company relations are enforced, and business transactions are possible between any companies within the community. The newest highly developed technology allows for processing smooth operations on different levels of B2B cooperation with maximized automation and minimum resource losses on members’ side.

When categorizing Elemica as per its type of e-marketplace, one might apply several frameworks for classification. Firstly, from the perspective of ownership or governance, Elemica is a private e-marketplace (Akingbesote & Ogbeide, 2018). It is owned by a single private firm, Thoma Bravo. The investments of this owner are expected to “expand its trading ecosystem to a broader range of industries” (Laudon & Traver, 2019, p. 863). As a privately owned e-marketplace, Elemica might be exposed to changeable fees and membership policies.

Another classification approach necessitates considering its orientation on a particular group of members. According to Akingbesote and Ogbeide (2018), there are independent, buyer-oriented, and supplier-oriented e-marketplaces. In terms of orientation, either on buyers or sellers, Elemica is an independent B2B e-marketplace. It is defined that an independent e-marketplace functions as a B2B online platform that is “operated by a third party which is open to buyers or sellers in a particular industry” (“E-marketplaces, online auctions, and exchanges,” n. d., para. 2). Therefore, there is no bias in this e-marketplace for sellers and buyers. As for the vertical or horizontal scope of Elemica, it is classified as a vertical net-e-marketplace, where online access is provided to companies “vertically up and down every segment of a particular industry sector,” chemical industry, in particular (“E-marketplaces, online auctions, and exchanges,” n. d., para. 6). The use of a vertical system allows for improved efficiency of operations, minimized supply chain costs, and procurement time.

In terms of value creation, Elemica provides its participants with full procurement automation free of errors and participation in the sustainability program. The members are entitled to use the Supply Chain Operating Network, as well as utilize Process Control Tower. This is a graphical interface that allows businesses to observe all their operations with all partners within the e-marketplace for better controlling and planning (Laudon & Traver, 2019). The companies entering the community have an opportunity to engage in intercompany relations, build networks, increase transactions and business processes capacity, and improve procurement and operational efficiency. They can save inventory costs and increase the rate of successful transactions. The access to Elemica is obtained upon connection to the system, which is possible to be made by any company in the industry. The pricing system depends on fixed fees per transaction, which derive from Elemica’s function of an intermediary agent that connects buyers and sellers. Therefore, this e-marketplace incorporates industry-specific entities in search of intercompany relations and productive transactions. The platform provides connections with prospective cooperation sides for resource-efficient and reliable B2B transactions.

Recommendations as per the Use of Elemica

Advantages of Shifting to Elemica in Comparison to the Currently Used System

At present, the company utilizes EDI, which is a type of cooperation between the computers of two companies. In such a manner, the company engages in selling procedures with only one buyer at a time with much organizational, controlling, documenting, and logistic work done manually or through additional systems. Such traditional e-commerce “facilitates the exchange of transactional data … based on the Application-to-Application data exchange between the trading parties for sending and receiving transactional data such as e-orders and e-invoices” (Pala et al., 2019, p. 132). However, new cloud-based e-commerce platforms like Elemica provide an opportunity for a more efficient B2B cooperation that allows for eliminating several concerns. They include the identification of outputs, inputs, and processes, “inventory control and planning, process control, warehousing and storage, and shipping/logistics” (Laudon & Traver, 2019, p. 864). All these processes are rationalized and automated by Elemica, which saves much time and assets, which might be spent on business growth and competitive advantage creation.

Moreover, the system allows for the automatic estimation of costs at any stage of cooperation. Another important advantage of Elemica in comparison with the currently used EDI system is that even for a company without an enterprise system, the e-marketplace provides “a web portal with online software that allows firms to participate in the community with suppliers and customers” (Laudon & Traver, 2019, p. 865). Therefore, several significant advantages serve as a basis for considering Elemica as a valuable e-marketplace with an opportunity to advance the business in an industry community. This B2B electronic consortium incorporates companies of all sizes from the chemical industry, which allows for middle-sized companies to obtain relevantly equalized chances to compete with bigger ones. Finally, such a platform will help the company save significant assets on investments in less effective EDI systems and intercompany relations. With Elemica, the company will have both intercompany ties and efficient automated business processes in one digital place.

Disadvantages of Shifting to Elemica in Comparison to the Currently Used System

Despite the numerous benefits Elemica might provide for the company, there are some disadvantages. Indeed, a shift to a fully electronic cloud-based supply chain might produce a threat of “becoming dependent on this sales channel and neglecting the growth of the seller’s own online shop” (Kawa & Walesiak, 2019, p. 523). Also, in e-marketplaces that incorporate several companies of different sizes, changes to the sales and fees policy are frequently observed, as well as high costs of services that might impede the company’s budget (Kawa & Walesiak, 2019). A high level of industry-specific companies’ competition might hinder the middle-sized company’s competitive opportunities. Finally, when a company engages in public cooperation with its buyers, the competitors copy ideas, which might diminish the competitive advantage.

Advantages of Shifting to Elemica in Comparison to General e-Commerce Databases

Upon analyzing a general e-commerce database, several advantages of Elemica have been identified. Indeed, such horizontal e-marketplaces as Amazon Business provide a wide range of B2B selling and buying opportunities without concentrating on a single industry. In such a manner, it might be assumed that the quantity is prioritized over quality, which is not beneficial for the company in search of long-term reliable cooperation with business clients. Also, the number of business companies from different industries selling through the platform, as reported by the official website, reaches more than 150 thousand (Amazon, 2020). Such a large number of sellers might impose a significant competition for the middle-sized chemical firm, which might be harmful to the overall business operations. On the contrary, the vertical e-marketplace provided by Elemica is more industry-oriented, includes only the companies from the industry, and might provide a more favorable competition level for a middle-sized company. Thus, there are better opportunities for the company when it joins Elemica instead of a general e-marketplace like Amazon Business.

Disadvantages of Shifting to Elemica in Comparison to General e-Commerce Databases

However, it is relevant to consider some of the downsides of prioritizing industry-specific Elemica over general Amazon Business. By using the services of a more general e-marketplace like Amazon Business, a company might obtain a more significant scope of inter-industry connections and brand recognition on a bigger market. Since large multi-industrial platforms like Amazon Business operate globally and with multiple industries, it might be a good chance to enhance product promotion and improve channels of reaching buyers abroad (Amazon, 2020; Kawa & Walesiak, 2019). Also, Elemica’s limitedness to one industry restricts the company’s opportunities for broadening the scope of its operations for cooperating with other industries.

Conclusion

In summation, the reviewed and analyzed e-commerce cloud-based marketplace has its benefits and potential disadvantages for the middle-sized chemical company. On the one hand, there are several disadvantages of shifting to Elemica, namely, possible dependence on only one selling channel, neglecting the development of the company’s online shop. Also, e-marketplace might impose a high level of competition for a middle-sized firm and limitedness to one industry. However, the automation opportunities, business process automation, easy access to clients, and the ability to engage in effective networking and community integration serve as strong advantages. Thus, based on the presented advantages and threats, one might recommend the company to shift to Elemica due to the greater number of benefits acquired. They include a continuously available large pool of potential buyers, more efficient procurement processes, resource-efficient automation of inventory, control, planning, storage, and logistics, as well as the opportunities of networking inside an industry-specific community. It is recommended that the company joins Elemica to facilitate its business growth in the field of e-commerce in the near future.

References

Akingbesote, A. O., & Ogbeide, O. L. (2018). Distributed approach to cloud oriented e-marketplaces: A constructive review. International Journal of Engineering and Computer Science, 7(10), 24319-24326.

Amazon. (2020). [Data set]. Web.

(n. d.). Nibusinessinfo. Web.

Kawa, A., & Walesiak, M. (2019). Marketplace as a key actor in E-commerce value networks. Scientific Journal of Logistics, 15(4), 521-529.

Laudon, K. C., & Traver, C. G. (2019). E-Commerce 2019: Business, technology and society. Pearson.

Pala, M., Edum-Fotwe, F. T., Ruikar, K., Doughty, N., & Peters, C. (2019). Post-implementation analysis of a B2B e-marketplace. Journal of Information Technology in Construction, 24, 129-153.

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