Report: Chemical Firms To Custom-Mix Products on Web

In the coming years, chemical firms will shift their Internet strategies from conducting 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, leading chemical manufacturers will start a process of "adaptive development" for their online activities, in order to tailor specific formulations to meet customer application needs.

"Moving basic commerce functions online makes sense for chemical firms -- it will improve operating performance and help firms outpace their offline competitors," said Forrester senior analyst Steven J. Kafka. "But during the next 12 months, these e-commerce activities will become standard practice among chemical manufacturers."

Through using adaptive development, the report said, chemical makers will be able to center their attention on solving customer problems. Moreover, companies will be able to expand their product offerings beyond catalogs and reformulate core products to meet each customer's specific needs.

Mix and Match

Chemical firms will also begin to offer online design tools that facilitate product selection, said Forrester. When the "off-the-shelf formulations" do not 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, according to Forrester.

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

Boom Expected

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

The executives told Forrester that while they expect only 3 percent of their sales to be generated via the Web this year, the oncoming wave of online buyers will push e-commerce revenues to as high as 35 percent of total sales by 2002.

Chemical Evolution

In its appraisal of current industry operations, Forrester said that many chemical companies are now looking to the Internet as a simple method of cutting 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 satisfy customers.