News & Press
A Fruitful Union - As chemical companies strive to improve their procurement process and minimize costs, Trade Extensions is offering one solution
May 11, 2008 ICIS Chemical Business - Article by Elaine Burridge/London
A marriage made in heaven is how Garry Mansell describes his partnership with algorithm expert Arne Andersson.
And, as with all successful marriages, there is a clear division of labor at Trade Extensions, the online procurement company where Mansell is president and Andersson CEO. The arrangement means Mansell is also president of Trade Extensions Europe, the European subsidiary based in Norfolk, UK, with responsibility for commercial development, allowing Andersson to focus on what attracted Mansell to Trade Extensions in the first place - its software.
Both men had known each other and worked together for a number of years. Mansell, formerly head of Freight Traders, an online freight tendering service, had been using Andersson's software and was his second-biggest client. "Arne writes fabulous software that nobody can get close to," says Mansell.
Trade Extensions was set up in 2000 by computer scientists from Uppsala University, in Sweden. Founder and CEO Andersson is one of the leaders in the field of algorithm design and sort theory. His software is already used by many large companies worldwide and is the engine that powers global consultancy AT Kearney's e-procurement offering.
The company was not for sale, but, when its parent company, global consumer group Mars closed Freight Traders, it rapidly became obvious that joining with Trade Extensions was the right way forward.
A number of former Freight Trader employees, including Mansell, invested in the new business, which started operating in June 2007.
Mansell says that he and his colleagues have brought experience that will allow the firm to exploit fully the commercial potential of the software. He says: "Previously, the commercial benefit of a project was sometimes secondary to the satisfaction of solving complex mathematical problems. We were saving companies and governments millions of Swedish krona but not getting much in return. Now, we are also benefiting more, which allows us to invest and grow."
Trade Extensions' offering is basically specialized and highly sophisticated software that can process large and highly complex tenders. So, how does it work?
Mansell explains that anybody who uses Microsoft Excel can use his firm's software. Excel is the interface for the whole process, providing an easy and common language for both buyers and sellers on the web.
The buyer provides information, which is expressed in lots - such as routes and load sizes - to the marketplace. Bidders then input their offers on the spreadsheets, with different columns representing individual definitions such as price, town and equipment type. Bids can be ranked and weight factors added too.
The really clever part of the process, says Mansell, is the optimizer.
Most buyers typically go for the lowest price at first, but this does not always give the most efficient solution. The optimizer lists other scenarios so that buyers, for example, can minimize the number of carriers and maximize savings.
"The system is hugely flexible and complex, but it is very easy to use and suitable for all types of procurement. It puts the power back into the hands of the buyer and seller," says Mansell.
Trade Extensions' customers already include some big names in the chemical world, with majors such as Huntsman, INEOS and US specialty chemical group Rohm and Haas using the software.
Mansell says the chemical sector is a key focus for Trade Extensions and it currently accounts for about 15-20% of the company's turnover. Other sectors it is active in include food and construction.
In the US, Trade Extensions has licensed its software to major transport and logistics company Schneider Logistics, which uses it to run freight tenders under the name BidSmart. "With BidSmart, Schneider runs about one-third of all online freight procurement tenders in the US at the moment," says Mansell.
The company is setting up an office in Houston, Texas, to serve its growing US base, which should be operational in June.
Mansell is also talking to interested parties in Asia, but thinks entry into this region will initially be via consultants. He says: "I have to control growth of the business. We are not a virtual business, we are a real business and we need to show commitment to customers and have people on the ground."
Growth over the past year has been phenomenal and Mansell says that, as of February this year, Trade Extensions had doubled turnover and its volume of booked orders since its start-up last June.
Who ever said numbers were boring?
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