As eCommerce becomes commonplace, smart chemical firms will refocus their Net activity on product development. According to a new Report from Forrester Research, Inc. (Nasdaq: FORR), leading chemical firms will implement a process Forrester calls “adaptive development” — using the Net to craft formulations and services tailored to meet customers’ specific application needs.
Since chemical makers operate in a highly competitive environment, leading firms are looking to the Net for simple cost cuts and efficiency gains. These plans are pushing firms to move sales to the Web and build online customer support tools. However, as slower-moving firms erode early performance advantages, leaders will look for new ways to use technology to stay ahead.
“Moving basic commerce functions online makes sense for chemical firms — it will improve operating performance and help firms outpace their offline competitors,” according to Steven J. Kafka, senior analyst at Forrester. “But during the next 12 months, these eCommerce activities will become standard practice among chemical manufactures. As early eCommerce advantages fade, the leading firms will revamp the way they bring new products to market and embrace adaptive development.”
As firms focus their eBusiness efforts on new products, they will uncover new ways to satisfy customers. This wave of discovery will give rise to adaptive development. In this fresh environment, chemical firms will focus on solving customers’ problems rather than creating new products. Instead of requiring customers to select products from simple catalogs, chemical makers will reformulate their core products to meet each customer’s specific needs.
Today, sales reps spend countless hours identifying products that match customers’ nebulous requirements. To cut time and resources out of this process, chemical firms will offer online design tools that facilitate product selection. And when off-the-shelf formulations don¿t do the trick, customers will be able to work with the manufacturer’s technical design staff through streamlined development portals.
Chemical firms will also use the Net to collaborate with highly specialized partners. When customer demands require an entirely new product, developing the basic science can take an enormous amount of time. Rather than building every new technology from scratch, manufacturers will contract with design firms for their coating expertise or plug in to intellectual property exchanges to find an existing patent to license.
For the Report “Custom Chemicals Materialize,” Forrester spoke with 50 eCommerce executives at large chemicals and plastics companies. While our interviewees expect just 3% of their sales to flow over the Net this year, they see an oncoming wave of online buyers pushing eCommerce revenues up to 35% of total sales in 2002.