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CIDX: Streamlining Efficient And Secure Chemical Supply Chains

3 June 2005 - Opening Address By Mr Khoong Hock Yun, Assistant Chief Executive, Industry Group, Infocomm Development Authority of Singapore By CIDX Seminar for the Chemical Industry, Hotel Intercontinental.

Opening Address By Mr Khoong Hock Yun, Assistant Chief Executive, Industry Group, Infocomm Development Authority of Singapore By CIDX Seminar for the Chemical Industry on 3 June 2005, Hotel Intercontinental.

Good morning,

Jo-Anne Norton, CIDX Executive Director,
Distinguished Speakers,
Ladies and Gentlemen,

Singapore's Chemical Industry and Its Necessary B2B Transformation

1. Welcome to the CIDX seminar. Unfortunately, my schedule doesnt permit me to stay through the entire seminar. Hence I like take this opportunity to share IDA's thoughts on how ICT can impact the industry and specifically how CIDX can streamline efficient and secure chemical supply chains.

2. The chemical industry represents 28% of Singapore's S$180 billion manufacturing output. Singapore has developed a vibrant chemical ecosystem and it is the second biggest manufacturing sector after electronics. For example, there are more than 70 manufacturers on Jurong Island, forming an integrated supply chain network of oil refining, petrochemicals and specialty chemicals facilities. The cluster consists of value-added manufacturing facilities from global industry leaders, for example, Sumitomo (methyl methacrylate or MMA), Akzo Nobel (surfactants), and others.

3. Despite the continuing success of our industry, challenges exist. One of them is the increased pressure to improve the bottom-line that has been heightened due to globalisation and competition from lower-cost manufacturing locations.

4. To address this challenge, companies have embarked on internal cost-cutting measures. In this regard, there is much room to increase transactional efficiency between business partners in the chemical supply chain. CIDX, a global industry consortium supported by more than 40 global companies such as BASF, Dow Chemical, Rohm and Haas and Shell, plays a major role in further improving this efficiency. Its collaborative method of developing a common B2B language called Chem eStandards has resulted in their becoming the de-facto standards. Chem eStandards specify consistent protocols and data formats that can be used in the exchange of information.

5. According to a study quoted by CIDX, in the chemical industry, only 5 to 15% of transactions between trading partners is done electronically. There is potential to further reduce costs via B2B integration using Chem eStandards, for example, from reduction in errors, order transaction costs, inventory levels and logistics costs. Also, integration would serve to strengthen business relationships by improving customer response times. Therefore it is timely that companies consider implementing the standards.

IDA's Vision for Adaptive Value Chains in Singapore

6. The CIDX initiatives play an important role in IDA's vision of adaptive value chains in Singapore. An adaptive value chain or AVC is a business network of value chain partners which uses technology to sense and respond in a coordinated manner to changes in its environment. Besides needing integration within its own industry vertical, an AVC will require integration with other key industry verticals. For example, semiconductor manufacturers selling to electronics companies need to get their supplies from chemical companies. Another example is that logistics and financial services providers serve multiple industries including chemicals.

7. We can find good examples of well-integrated supply chains in the high tech manufacturing industry. RosettaNet's XML standards serve a function in this industry similar to CIDX Chem eStandards in the chemical industry. To date, more than 30% of the high tech manufacturing companies in Singapore have adopted RosettaNet standards for e-business. Singapore also hosts a RosettaNet Architecture Centre of Excellence (RACE) that spearheads the development of next generation RosettaNet standards. For example, the centre is working to incorporate RFID information into RosettaNet standards.

Convergence Opportunity with CIDX and the Chemical Industry

8. We see a similar opportunity with CIDX. Singapore is a host to many world-class chemical companies, including CIDX members, and logistics and finance companies. Therefore Singapore is well-placed to be a test-bedding hub for cutting edge CIDX processes. Singapore can also serve as a spring-board for CIDX into the Asia-Pacific region.

9. Today we have taken the first step in forming a CIDX User Group. This is an industry-led forum to address local implementation issues for CIDX. IDA will work with the group to promote CIDX standards, to identify and support pilot projects and to address any implementation barrier. To date, we have CWT Logistics, Elemica, IBM, Rohm & Haas, SAP, Shell and Vopak confirming their participation in the User Group.

10. As more companies join the Chem eStandards network, the benefit to the industry will rise exponentially. Hence, we would encourage those of you who are keen to explore the local implementation of Chem eStandards to participate in the User Group.

11. Meanwhile, we hope that you will have a fruitful session this morning as the distinguished panel of speakers from CIDX and the industry share with you the benefits of CIDX.

12. Thank you.