Transformers: Eastman Chemical Co.

For an outfit born around the time your grandfather was snapping action shots with his Brownie camera, Eastman Chemical Co. has developed a notably forward-thinking e-business strategy. The $4.6 billion, 80-year-old chemical maker began experimenting with its first e-business effort-a humble intranet-in 1994, the same year Eastman Kodak spun it off as an independent company. Since then, Eastman has opened a customer center on the Web, begun buying raw materials online, unveiled a supply-chain integration initiative, and invested millions in dotcom startups and new e-commerce technology vendors (it aims to invest $25 million to $50 million by the end of this year). It has also hatched two independent e-business ventures, virtual logistics provider ShipChem.com (a joint venture with Global Logistics Technologies Inc.) and a B2B marketplace called PaintandCoatings.com (a joint venture with trading exchange VerticalNet Inc.).

Initially, Eastman Chemical let each business unit pursue its own e-business initiatives-a decentralized approach that was simply too slow, says Earnest W. Deavenport Jr., the company's chairman and CEO. Last year, Eastman formed a corporate-level group to manage e-business and parachuted the group's leader from its Kingsport, Tenn., headquarters into Silicon Valley. "We can move pretty quickly in the structure we've got, and that's important in B2B," Deavenport says. "You need to be flexible enough to move quickly and not get bogged down in the traditional ways that you do business."

Forrester Research Inc.'s Laurie Orlov, a research director, notes that Eastman understood early on that it needed a multipronged strategy to become an e-business, and its strategy makes sense. Investing in technology vendors and dotcoms was the best way to learn about the online world. She adds that ShipChem is a "win-win e-marketplace," meaning it can improve logistics for all chemical companies that participate without getting in the way of any of their other e-business initiatives. Meanwhile, Eastman is on track this year to do more than $200 million in business through its online storefront and to buy from 15 percent to 20 percent of its raw materials online.

Looking across the company's e-business portfolio, Deavenport says some of the investments are profitable now and some are not. But long term, Deavenport believes that the company really has no other choice but to charge into the fray headfirst. "This is the world we live in," Deavenport says. "If you don't move and change with it, you'll fall behind."

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