E-Procurement Marketplace

1. E-Procurement Marketplace

2. Internal Processes Promotions Management Retail Fulfillment Unsaleables Management Order Management …Other Applications Collaborative Planning Sell-Side Processes Customer Management Item Master Item Master Item Master Item Master Item Master Identify and Compare Materials and Suppliers Demand Forecasting/ Planning Purchase Aggregation (Group Buy) Buy-Side Processes RFP/RFQ Sourcing & Auctioning Supplier & Material Rationalization Product Development Collaboration Matching Supply with Demand eProcurement (Requisition & Approvals) Spend Analysis & Optimization

3. E-Procurement Marketplace Requisition Catalog Selection Distribution E-Marketplace Approval Payment Buyer Seller

4. Buyer Benefits • Compare products and check prices • Create purchase order • Order tracking • Order receiving • Payment http://www.isteelasia.com

5. Purchase Options • Catalogs with fixed prices • RFQ posting • Use RFQ to negotiate • Trade leads • Alerts • Auctions

6. Option Comparison

7. Catalog and Content • Catalog type • Product catalog • Service catalog • Customer-specific catalogs • Content • Information on products and services • Content imported from multiple suppliers • Content aggregation by categories • Buyers can retrieve content directly from suppliers http://dmena.dmecompany.com/cgi-bin/ncommerce3/ExecMacro/DMENA/R2DMENA/r2_catalog.d2w/report

8. Procurement Process • Facilitate communication • Maintain catalog content • Requisitioning and order management • Real-time tracking • Order fulfillment • Invoicing and payment • Workflow and transactions • Infrastructure • Customized processes

9. User Management • Who may access catalogs? • Who may create or edit requisitions? • Who may access purchase orders? • Authorization to use e-procurement • Enrollment of users • Access to trading community • Catalog filters • Unique contractual relationships between buyers and sellers • Supplier identification • Shipping parameters

10. Pricing and Billing • Fixed and negotiated pricing • Dynamic pricing • Computation of usage charges • Distribute operating costs to specific orders

11. Data Transmission • Messaging • Publishing • Transactions are sent over the Internet as messages • Synchronize with buyer/seller financial posting • Security

12. Process Step Manual/EDI E-Procurement Time (Minutes) (Minutes) Product Selection 20 3 Availability/Price Check 10 1 Requisition Creation 11 2 Requisition Approval 21 3 PO Generation 11 0 PO Approval 3 0 Send PO to Vendor 14 0 PO Confirmation 4 0 Status Check 11 1 Receive Shipment 12 2 Match Invoice Receipt 8 5 Process Exceptions 8 3 Payment Approval 4 3 Payment Generation 8 5 Process Returns 5 3 Total Minutes/Purchasing Cycle 150 31 Cost/Cycle Time (Avg. $0.50/minute) $75 $15.50 Price Advantage Source: NAPM and Commerce One, Inc. Source: NAPM and Commerce One, Inc.

13. Characteristics of structured and unstructured procurements Structured Procurement Unstructured Procurement Product characteristics -Low demand uncertainty -High demand volume -Specifications do not change with each order -High risk of supply uncertainty -High demand uncertainty -Low demand volume -Greater product variety -Low risk of supply uncertainty Process characteristics -High level of automation -Mostly of re-orders -Product selection, supplier selection and order details and coded in to procedures -No approvals needed for individual transactions -Orders initiated manually -Mostly of one-time orders -Product selection, supplier selection and order details vary by transaction -Approvals are required for most transactions Examples -Tooling items -Welding supplies -Custom replacement parts -Office furniture -Office equipment

14. Effects of procurement types on organization and information systems

15. Selling Online • Create and deliver product content • Brand messaging and promotions • Deliver customer service • Punch-out capability • Consolidate catalogs using scattered data in different databases

16. Order Processing • Different channels • Web, call centers, cell phones, and brick and mortar locations • Customer-specific catalog • Buyers must receive targeted content relevant to their products • Need to update content for customization • Use of data-mining technology • Enforce customer-specific contracts and business rules • Track contract terms and conditions

17. Customized Catalogs Customer 1 Customer 2 Customer 3 Product Catalog 1 Product Catalog 2 Product Catalog 3 Products Pricing Promotion Content E-Marketplace http://www.x-solutions.poet.com/eu/solutions/xsolutions/buyer/xbuy.html

18. Selling Channels • Existing contracts (fixed price sales) • Auction for surplus goods • Distributors

19. Distributor Model • Connects sellers to distributors • Replenishment orders sent to sellers automatically when inventory runs out • Buyer sees distributor’s price and product availability • Distributor can negotiate with sellers for discounts

20. Distributor Model Manufacturer 1 ORDER CONFIRMATIONAND STATUS ORDER RESPONSE Buyer 1 Manufacturer 2 PURCHASE ORDERS SALES ORDERS Distributor Buyer 2 Manufacturer 3 Manufacturer 4 Catalog Buyer 3 Contracts Orders Buyer Purchasing Scenario 1.Buyer views distributor catalog and contract prices 2.Manufacturer responds to distributor on sales orders 3.Buyer receives order confirmation Manufacturer 5 http://www.e-distributor.com/index.html

21. Differentiation • Loss of differentiation • Can only display standard product information • Customer-specific catalogs • Punch-out capability to access specific supplier’s site (from e-marketplace) • Evaluate multiple product information and return to e-marketplace to complete transactions

22. Punch-out Capability Punch out to Supplier 2 Supplier 2 Web Site Supplier 1 Supplier 2 Supplier 3 Buyers Suppliers E-Marketplace