e-Biz e-Lation at Eastman

Chemical giant reports 2000 e-business results

KINGSPORT, TENN.  February 26, 2001  In these days of strum und drang on the e-business front, any bit of moderately good news is enough to give us the warm und fuzzies.

The bearer of glad tidings du jour: Eastman Chemical Co.

The chemical giant reported today that it achieved its goal of making 15 percent of total sales (at an annualized rate) through e-commerce channels in 2000, while missing by just 1 percent its objective of using e-procurement to buy 15 percent of its total direct and indirect materials.

All those percentages reflect an annualized rate, mind you. But Eastman also announced it had met its goals of establishing 15 system-to-system connections with key trading partners and of launching three digital business ventures. At the same time, the company reported that equity appreciation from its e-business investments and launches did not reach the $25 million goal.

"Our primary rationale for making digital business investments has been to enable Eastman to help transform the way the chemical industry does business and to help create industry standards," said Roger Mowen, vice president of global customer solutions and chief information officer at Eastman.

"But," Mowen added, "we're also pleased to see these investments creating realized value, especially during the downturn in high technology markets last year."

Eastman has several e-business channels operating, including eastman.com, eastmanmarketplace.com and online marketplaces. In addition, the chemical company last year partnered with other companies to launch the three digital business ventures, including PaintandCoatings.com, a provider of marketing and commerce solutions for the paint and coatings industry; ShipChem, a virtual logistics provider for in-transit freight and services; and Asia BizNet, to help manage chemical industry e-business solution investments in China and Asia.

Looking forward, Mowen said, "Our strategy this year is to continue to focus on driving inefficiencies out of the industry." Eastman's e-business goals for 2001 included electronic sales at an annualized rate of 30 to 40 percent of total sales; e-procurement at an annualized rate of 30 to 40 percent of total procurement; and 20 to 30 new system-to-system connections, as well as one collaborative planning, forecasting and replenishing (CPFR) pilot that will link a customer, Eastman and a supplier.

Eastman also plans to launch two or three new digital business venture launches and to achieve an internal rate of return in of about 25 percent of venture fund performance.

Recent implementation of all SAP R/3 Enterprise Resource Planning (ERP) modules, supply chain optimization software and other manufacturing systems have helped the company make more rapid progress in digitizing processes, according to Mowen.

Headquartered in Kingsport, Tenn., Eastman Chemical Co. manufactures and markets chemicals, fibers and plastics. Eastman employs approximately 15,000 people in more than 30 countries and had 2000 sales of $5.3 billion.


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