Ciba Specialty Chemicals Uses ChemConnect For Annual Long Term Contracts

28.09.2000

San Francisco, September 27, 2000 – Successfully negotiating annual contracts for the supply of key raw materials is typically a time-consuming and labor-intensive process, long accepted as inevitable by the worldwide chemicals industry. Now, thanks to ChemConnect Inc., the largest global Internet exchange for chemicals and plastics, contracts can be competitively negotiated in record time, online--with significant cost-savings--as Ciba Specialty Chemicals (SWX:CIBN, NYSE: CSB), recently discovered.

In just two weeks, culminating with a half-hour online reverse auction, Ciba, which is committed to incorporating e-commerce efficiencies into its global purchasing processes, successfully negotiated an annual contract for a key raw material for two of its US plants. (Ciba officials said that traditional negotiations would have taken three months.) In addition, during the actual competitive bidding, in a 30-minute online session in a ChemConnect Corporate Trading Room, Ciba secured a contract that represented a significant cost savings over the initial lowest bid.

"The benefits of a real competitive bidding scenario along with potential time-savings were the two reasons we wanted to try out a Corporate Trading Room," said Forrest Peeples, Ciba Specialty Chemicals Purchasing Manager, Consumer Care Division. "Going into the negotiations, we knew what the short-term market was doing, but really didn't know how that should shake out for a long-term contract. We also knew, from experience, given the volume and logistics complexities of what we needed, we had already streamlined a labor-intensive and time-consuming process."

Corporate Trading Rooms, a benefit provided to ChemConnect's corporate and charter members, allow for virtual private negotiating sessions, in an auction model, between chemical industry suppliers and purchasers. Assuring the anonymity of competitive bidders, Corporate Trading Room events simplify the negotiating process, facilitate dynamic pricing, and significantly reduce the time frames for traditionally drawn-out procedures.

With the active participation of a team of chemical industry experts from ChemConnect, Ciba and its potential suppliers worked together to ensure that the negotiating process would be fair and equitable, with all relevant questions answered for all parties before the session began. Senior executives from Ciba's European and US offices, along with similarly highly placed colleagues from the invited bidding companies, all met via the Internet in the Corporate Trading Room at the agreed-upon time.

"Watching the bids come in, seeing the price drop, knowing that we had already saved weeks and weeks of time, and then, to successfully conclude with such significant cost-savings was more than a rewarding process," Peeples said. "It was a confirmation of what the future of contract negotiations in the chemical industry will be."

"Ciba's experience in our Corporate Trading Room is being mirrored by other leading chemicals and plastics buyers and sellers around the world on a daily basis," said John Beasley, ChemConnect CEO. "Overall, our corporate and charter members report cost-savings of 15 percent, on average, of the total value of their spot or long-term contract transactions in Corporate Trading Rooms. Equally important, they tell us they are cutting the time it takes to complete a trade from an average of six weeks down to two weeks for RFQ, RFP, and Auction events by using the

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