This model allows Trinseo employees to buy listed items online from their own workstation at a pre-negotiated price from pre-qualified suppliers, or from an approved list of suppliers or aggregators at the suppliers' book price. The advantage of this approach is that the Purchasing function can negotiate, up front, long-term contracts for a large number of items, while allowing the users to buy directly from the suppliers against those established contracts.
In many cases, Trinseo purchases single items or a limited number of low-cost items from a wide range of suppliers with whom we do not have formal contracts. Negotiating a contract in those cases would be inefficient. Instead, we use, whenever possible, an aggregator who can provide Trinseo with access to multiple suppliers. An example of an aggregator is SciQuest.com. When Trinseo's R&D group needs to purchase laboratory equipment and supplies, it can connect with SciQuest.com and search for a specific item using SciQuest's search capabilities. This allows the user in the laboratory to obtain the needed equipment without having to leaf through a mountain of catalogs from multiple suppliers.
This model allows Trinseo and other global companies to come together with a wide range of suppliers from around the world. Business is transacted between them on the web, using information technology capabilities as an enabler. For the purchase of raw materials, Trinseo uses the services of ChemConnect and its World Wide Chemical Exchange.
This is a model similar to the virtual marketplace, but is focused on a single company. It is a model that has many potential uses. Trinseo can conduct an online auction with invited, pre-qualified suppliers. This model allows us to work only with companies we already know, who already have been qualified, and who we are already confident that we can do business with. Applying this model through the ChemConnect or the FreeMarkets website, we have proven capability to purchase raw materials, as well as ocean freight, heat exchangers, and pipes.
Our Purchasing team works with each supplier to determine the right procurement system through which we will transact business with that supplier.