InformationWeek

March 15, 1999

Net Procurement Grows

Rival online lab suppliers sign more customers

By Gregory Dalton

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nline marketplaces signed two supporters last week as Dow Chemical Co. and Hoffmann-La Roche Inc. revealed plans to buy laboratory supplies from two rival Internet services.

The market for lab products is about $9 billion a year, says Scott Andrews, CEO of SciQuest.com, which along with its more established competitor, Chemdex Corp., is using Internet technology to bring buyers and sellers together online. Both took a step forward last week when Hoffmann-La Roche agreed to buy supplies via SciQuest.com, and Chemdex signed a contract to become the online arm of $1.3 billion distributor VWR Scientific Products Corp.

Hoffmann-La Roche in June will begin a pilot of an Internet procurement application for 2,500 U.S. employees that is based on Open Buying on the Internet, an emerging standard for online purchasing. The pharmaceuticals company expects to realize considerable savings by purchasing goods from 450 small suppliers via the SciQuest.com Web site, which will host product catalogs beginning next month. "We'll have almost 100% reduction in what we pay" to process a purchase order, says Hoffmann-La Roche's Internet project manager, Melissa Campbell. "We'll get consolidated billing from SciQuest.com once a month. It's one bill, one payment." Hoffmann-La Roche won't pay anything for the service since suppliers pay SciQuest.com to host their product catalogs.

Chemdex CEO David Perry says the combined Chemdex-VWR Web site will have 700,000 products when the two companies start a pilot program July 1. Dow Chemical plans to use the site to add to the roughly 10% of lab supplies it buys via the Internet. Says Tary Schumacher, global product supply manager at Dow, "We'll move all our global lab supplies purchasing to the Internet and would like to have all procurement in the U.S. on the Net by the end of the year."