Interview with Rich Katz, CEO of Elemica
Elemica is the industry leader in business to deliver a digital connection between manufacturers and their suppliers, logistics providers and customers. High visibility into the supply chain yields a level of fact-based insight that significantly facilitates the process of optimisation, among numerous other benefits. Here, CEO Rich Katz gives us his own insight into the Elemica story.
Thank you so much for the opportunity to have this interview with you today, Mr Katz. Fast-moving trends and constant disruptions in the digital sector are evident and competition continues to rise. Can you tell us what is at the front of your mind every day?
Industry markets are dynamic. The way business is conducted today and in the future is in flux. Outside of corporate strategy, consideration needs to be given to changing geopolitical, economic, trade, regulatory and climate dynamics. Our digital solutions provide a solid foundation for our clients as their business models evolve in response to these external changes. We ensure the data architecture is in place for our clients to be agile enough to mitigate any risks from impending market changes. At the same time, our solutions enable clients to be responsive to customer needs, providing the full customer experience that B2B customers expect.
Internally, evolving business dynamics open up new avenues of growth for Elemica. For example, B2B is shifting towards omni-channel business models. Enterprises now want full ownership of the B2B customer experience, and to manage the relationship at every touchpoint.
What is top of mind for me is how to capitalise on this trend and enable Elemica to grow in multiple dimensions. What opportunities does this omni-channel shift represent to our digital supply network from a technology platform perspective? How will it benefit the customer ordering and service experiences of our clients? What avenues does this shift open for revenue growth for Elemica in terms of new vertical markets and geographic expansion? How can I leverage this paradigm and generate new indirect and direct sales channels? How can I most effectively, efficiently and pragmatically manage these new opportunities for growth? These are some of the items that are top of mind for me.
Elemica was founded in 2000, and the company has grown immensely and expanded to connect the world’s leading manufacturers to thousands of their direct suppliers and customers globally. Can you share with us the story of how Elemica started? What have been the major milestones of its successful journey so far?
In 2000, over twenty chemical companies got together to significantly improve the efficiency and visibility of their global supply chains. Out of that initial strategy, Elemica was formed.
In 2010, Elemica announced the appointment of a new management team, following the merger with RubberNetwork. This new team built on the successful track record of both companies and combined industry veterans with the wealth of knowledge and experience that propelled Elemica towards leadership in the digital supply network market.
By 2016, with a market presence of over 500 clients worldwide, a major investment by Thoma Bravo in 2016 through 2018 ensured the next-generation digital supply network, applications and the acceleration into adjacent markets. Market success and significant profitability allowed continued development of digital transformation solutions including blockchain, AI and the Internet of Things. Gaining market recognition from industry consultants attracted international investment houses, and Thoma Bravo decided to release their investment earlier than planned. A 2019 exit sale was executed with a very favourable outcome.
Since 2019, Elemica belongs to Eurazeo, a leading global investment company listed in France. This new partnership with Eurazeo will support Elemica’s continued global growth and product line development, allowing the company to extend into new industry verticals with its expanding software product portfolio.
Elemica is the leading digital supply network for manufacturers and has recently been named as one of the top 10 procurement solution providers in Europe for 2019. Will you tell us more about Elemica’s unique solutions and services that set you apart from your competitors?
Elemica created a digital supply network connecting clients across global manufacturing industries, their suppliers, logistics service providers and their customers. This digital network facilitates global trade and transactions, enabling trading partners to transact and do business with each other with maximum efficiency. The network, combined with Elemica’s focused set of applications, is unique, allowing participants to react to supply/demand changes for their products.
Participants gain insights into supply chain performance inside and outside their enterprise for actionable activities. Competitors have component parts that compete against Elemica, but no player has the complete model that Elemica has built, making Elemica a go-to company.
Our patented digital supply network (DSN) integrates and synchronises product, demand, and supply networks. This powerful technology takes data irrespective of the format it was transmitted and “cleans” the data by standardising it into a common format. Then our proprietary technology will link the data and send it back into our clients’ systems through APIs. The data that is transmitted back via this patented technology is used for analytics, delivering intelligent visibility in terms of logistics, order management and fulfilment.
Digital transformation is at the core of Elemica’s value proposition. Would you tell us what are the important factors to achieve a full and successful digital transformation for a company’s business operations?
The first important factor is that most companies will take demand signals in any form that a customer will provide. What you need, therefore, are systems and processes that can transform these diverse inputs into what your ERP system needs. The second step is what we call “data enrichment”: your data should always be correct and up to date. A lack of data governance will lead to incorrect reporting, inability to get systems to scale, hidden workaround processes and manual data manipulations.
Lastly, you should always keep your core competencies within your company while you are moving forward in the digital transformation process. For a manufacturing organisation, this includes product manufacturing, quality, delivery and managing customer relationships.
Technology is continuously changing the world and the way business and industries operate. How does Elemica leverage the latest technology to innovate and ensure that its services and solutions remain cutting-edge and relevant?
Elemica has been launching new solutions for the products our clients are buying, selling, moving, complying and seeing throughout their supply chains. The newest member of the Elemica software portfolio is Elemica Quality. Instead of using a detailed internal quality management system based on lean and total quality management (TQM) processes within manufacturing, Elemica Quality extends the solution to customers and logistics service providers into an entire supply chain quality solution. By providing automated quality proofs during the inbound, production and delivery cycle, companies can ensure compliance, minimise material waste and effectively save time and money on quality measures.
Elemica continually adds functionality to the network and its supply chain solutions. Next-generation technologies like blockchain, machine learning, IoT, integration as a service, and others are being tested, implemented, and integrated into the network and the Elemica offerings.
Aside from the advancement of technologies, what other changes and trends do you foresee that will have an important impact on global supply chain industries?
As far as I can tell, there are two general trends at the moment. The first one is growing the customer experience. This development results from the “Amazon effect”, where buyers are given total visibility of their orders from entry to delivery. Customers today require immediate information, quick deliveries and instant notification if something will be delayed. Businesses want this same visibility into their supply chain processes to gain insights into improving efficiencies, profits and customer satisfaction, while reducing risk.
The second one is sustainability; when it comes to purchasing decisions, price and quality increasingly share the podium with the sustainability of products. The effort for environmental protection within the value-added chain of products is becoming a selling argument. Buyers are attaching more and more importance to environmental protection.
During the first half of 2019, Elemica has already received numbers of prestigious awards. As an award-winning digital supply network, would you share with us some of the best feedback you have received from your clients, and the changes/improvements they have made after partnering with you?
We can proudly say that the material value of transactions on Elemica’s network has more than doubled over the past two years to above half-trillion dollars annually, with tens of thousands leading process industry trading partners leveraging their collective activities to capture real market opportunities.
One of our clients is a leading global paints and coatings company. Elemica stepped in, when this client needed to replace an internally developed nine-year-old Vendor Managed Inventory, (VMI), system. After joining the Elemica Digital Supply Network, the producer of specialty chemicals benefits from full transparency for suppliers to the stock at the client’s plants. Suppliers now optimize their entire delivery and manufacturing process and keep their own customers happy. During peak and slow periods of our client’s demand, the visibility into consumption rates mitigates supplier volatility ensuring that everyone is operating as efficiently as possible.
Another satisfied client for many years now is a global chemical company. This company has been using the Elemica network to leverage their digital transformation efforts and visibility solutions. This global chemical company is actively connecting and automating on the supplier side to transform and digitize the transaction purchase process with Elemica. Through these changes, they have gathered effective benefits. The most significant benefit realized is probably utilizing the same number of people while customer demands and product complexity has increased in a global supply chain. Without the steps taken to connect, automate, anticipate, and transform externally, and internally, they would not have been able to grow and integrate new businesses successfully as they have.
What are your strategies to increase customer loyalty and successful customer relationships?
Elemica is committed to being an advanced technology partner for our clients. We consistently strive to deliver solutions that address the growing complexity of our clients’ supply chains. Ultimately, it is our mission to help clients achieve the visibility and control they need to succeed in the global marketplace. As a result, we have an incredibly high retention rate with our clients.
Clients leverage our domain expertise by using our solutions to solve the challenges of today and partner with us on pilots to test innovation for the future supply chain. As a result of this collaborative partnership, Elemica holds a leading position as a proven partner in achieving the total digitisation of our clients’ business networks.
The world has become more connected and so it is important to adopt good risk management strategies. How does Elemica address the need for risk mitigation for different industries?
Elemica offers customers a visibility application, incorporating supply chain threat detection, qualification, early warning and network assessment. Our solution correlates global risk incidents with a customer’s orders and shipments to detect and understand the impact of disruptive events.
Elemica has recently been acquired by Eurazeo. Will you share with us what more to expect from Elemica and how this new investment will benefit and create added value for you and your clients?
This new investment by Eurazeo will support Elemica’s continued global growth and product line development, allowing the company to extend into new industry verticals with an expanding software product portfolio. Additionally, it will support our continued development of innovative digital transformation solutions, such as blockchain, AI, and the Industrial Internet of Things. The commitment to Elemica’s solutions enables clients to achieve the interoperability and the visibility they need inside and outside their enterprise. So we help them automate and integrate business processes, reduce risk and thereby improve their profitability.
As Elemica continues to innovate and expand the portfolios of its services and solutions, how do you see the company in five to ten years’ time? What are the short- and long-term plans for the company?
In the software industry, five years is eternal and ten years is simply a crystal ball. Today and in the future, Elemica supports clients as a solid technology partner. We want to facilitate the digital transformation of their organisations through innovation.
To improve our network and its supply chain solutions, we continually add functionality. Next-generation technologies like blockchain, machine learning, IoT, supply chain quality and others are being tested, implemented and integrated into the network as they become adopted in a pervasive manner from today’s pilot projects with clients. Apart from that, Elemica continues to grow globally with clients and move vertically within the process manufacturing industry. This means targeting adjacent markets such as automotive, pharmaceuticals, aerospace and defence, food and beverage, and CPG.
Giving back to society and becoming sustainable is an important business responsibility to comply with nowadays. Would you share with us how Elemica practises corporate responsibility?
Elemica and our clients have identified corporate responsibility as a significant future challenge. Green chemistry and sustainability create a new reality for chemistry and engineering by asking chemists and engineers to design chemicals, chemical processes and commercial products in a way that, at the very least, avoids the creation of toxins and waste. Our clients and trading partners are collaboratively co-innovating chemical processes and earth-friendly products on our network that will prevent pollution in the first place. This is reducing waste and demand on diminishing resources.
From a digitisation perspective, our digital supply network enables clients to reduce their usage of paper. The result of automating manual processes is lower resource requirements, which ultimately protects trees from deforestation. Electronic purchasing, customer order capture and sourcing, transportation optimisation and shipment visibility are many of the green solutions that Elemica provides to help clients save fuel, while driving sustainability.
Clients have also lowered their carbon footprint and energy usage through their transportation and logistics departments by optimising shipments and loads through Elemica’s logistics and selling solutions.
Lastly, what does success mean to you? What would be your advice for future leaders/talents who want to advance their career in the tech/digital industries?
I always try to encourage young talents not to accept the norm, and to ask questions. I want to encourage healthy debate and hear new ideas that can come from anyone and anywhere. My goal is to achieve a fact-based, visual and active discussion. To be highly proactive in these cases leads directly to different perspectives. Different views create an innovative culture that lays out the breeding ground for creativity and progress.
Thank you very much Mr Rich Katz. We learned a lot. It was a pleasure speaking with you.
Founded in 2000, Elemica is the leading Digital Supply Network for global manufacturing industries. They automate and provide visibility into your supply chain. Half a trillion USD in goods are bought, sold and moved annually through the Elemica Digital Supply Network.
Executive Profile
Rich Katz, a 1990 graduate in Electrical Engineering from Georgia Tech has been with Elemica for over 16 years in roles as President, Chief Technology Officer, Senior Vice-President of Product Management, and Vice-President of Research and Development. Rich is responsible for setting the overall direction of Elemica’s Technology Roadmap, Market Positioning, and will oversee Corporate and Product Marketing. Prior to Elemica, Mr. Katz was the Director of Implementation Services for ATT’s Enterprise’s Ariba Practice (formerly USI) and has held Senior Manager positions in Arthur Andersen’s Advanced Technology and ERP practices.
