Trading Partner Enablement …The Final B2B Frontier! Paul Gonyea Senior Account Executive Enterworks, Inc.

1. Trading Partner Enablement …The Final B2B Frontier! Paul Gonyea Senior Account Executive Enterworks, Inc.

2. Agenda • Brief history of eCommerce; • EDI • eProcurement • UCCnet • Suppliers view • “Best in Class” solution • Some Lessons Learned • BPR; • Is it necessary? • The perception

3. EDI Motivators Cycle Time Reduction Inventory Reduction EDI Administrative Cost Reduction Customer Mandate

4. 30 years of EDI…All the Right Stuff • Electronic communication • Standard document formats – globally accepted • Value-added Networks to handle the load, one-to-many communications and security • Industry support groups …but not for everyone. Recent studies report that EDI is used by 80% of the Fortune 500 companies, but this represents only 20% of available Trading Partners.

5. eProcurement…In the beginning, the message was.. "Nowhere in business is there greaterpotential for benefitthan the interdependence between customer firms and their suppliers. This is thelargest remaining frontier for ongoing competitive advantage– and nowhere has such a frontier been more neglected" Peter Drucker Professor & Management Guru

6. Purchasing Value Added • Negotiate contractswith optimal suppliers • Manage supplier relationships and performance • Manage client relationships and requirements Process • Contract/Blanket Order Agree’nt • Full catalog process • AP & P/C card for payment Non-Production Buying Activity Matrix Volume High Value Low Volume High Value High Volume Value Low Value Low Volume Low Value High Volume RepetitiveActivity Event-drivenActivity

7. Reduce: • Cost of generating PO’s • Number of active suppliers (Supplier Rationalization) • Purchase price • Off-contract (“Rogue”) buying • Cycle time • Non-conforming invoicing errors Buyer’s “eProcurement” DriversReduce Total Cost of Procurement Improve: • Internal productivity • Focus on high-value activities • Supplier performance and client satisfaction • Overall business controls Enterprise Buyers

8. What actually happened… • The euphoria of the early adopters gave way to a realization that the expected ROI was not easily achievable; • Clashes with corporate (local) cultures caused low adoption rate by end users, particularly in companies with strong “decentralized” purchasing functions. • Only the largest suppliers were able or willing to provide catalogs. Small to medium-size suppliers (who actually cost the most through a high volume of low value, manually processed orders) were not enabled for online transactions. • Poor and/or inconsistent quality of catalog data made catalog management and supplier on-boarding a costly and time consuming task. • As ROI proved elusive, numerous companies significantly scaled back, shifted the focus of or completely abandoned their eProcurement efforts.

9. UCCnet Motivators…3.5% of Total Sales Lost Each Year! • Retail Industry loses $40B each year to supply chain information problems! (according to A.T. Kearney) • 30% of items in retail catalogs have data errors, each costing between $60 and $80 to fix and consuming 25 minutes of manual correction (according to A.T. Kearney) • The Home Depot lost approximately 3.5% of it’s $58b in 2002 sales due to supply chain inefficiencies; • Requiring its 10,000 suppliers to join UCCnet by year end and implement the service by June 2004. • Ace Hardware is requiring its suppliers to comply by October. • Lowe’s target is the end of the year. • After January 2004, Wal-Mart will only accept item data electronically.

10. TPE The common thread.. "The catalog… is what I believe is blocking the growth of Internet commerce today. Until businesses can easily produce and manage online catalogs, I don't think we'll see any of the dramatic growth forecasted by the compound growth algorithms embedded in industry pundits’ spreadsheets.“ Geoffrey Moore, author of “Crossing the Chasm”

11. TPE - The Challenge….. “Many suppliers are skeptical of win-win promises. They view [e-marketplaces] as an e-squeeze that will cut into profit margins, or worse, turn their products into commodities . . .” AMR Research Forecasts 10 Critical Trouble Spots for Consortium-Based Exchanges, September 27, 2000 “Business-to-Business (B2B) initiatives will not be successful without Trading Partner Enablement.” The AMR Research Report on Supply Chain Management for April 2001 “If you build it, they will come.” It’s a scenario that works fine in Hollywood but Internet market makers have been scratching their heads since the dawn of the “e-” over the problem of attracting suppliers to the game. Source: Line56

12. Increase Revenue • Quickly take advantage of new markets • Without significant additional investments • Maintain margins • Remain Empowered / Avoid commodity • Go beyond catalog publishing (price/SKU) • Expose full value proposition to customers • Leverage existing investments in infrastructure/solutions • Participate • Be aware of and able to respond to customer demands • Be where the buyers are • Make products and services available • Accept business-level orders (PO, etc.) Supplier’s ObjectivesMaintain Customer Base, Increase Sales & Margins! Enterprise Suppliers

13. Supplier EnablementUniversal Connectivity Dilemma • Trading Partners of any size or complexity • To any other trading partner or e-marketplace • With (1) underlying catalog solution • Allowing for migration & growth • With standards-based affordability Exchange RosettaNet Std EDI Std ? ? UCCnet ? ? ? Suppliers

14. Manage Content Additional Syndication Point Custom Catalogs Enterworks Catalog Builder 1 Buyer Supplier Custom Catalogs Syndication Point Enterworks Catalog Builder ECB License is a one-time cost, suppliers own the license and software Supplier can publish unlimited catalogs to one syndication point (buyer) Supplier can purchase additional syndication points for additional buyers

15. Manage Content ECB UCCnet Solution

16. Seamless Integration Process Automation & Work Flow Buying Community EPX Task Manager Approval Manager Approve Reject Approved Rationalization Questions/Corrections Failed x Validation EPX Rationalization Electronic Catalog Supplier ECB Rationalized & Approved Catalogs 1 2 3 Suppliers create catalogs using ECB Publisher and submit via FTP or email ECB validates catalogs, generates custom reports, EPX routes for approval Approved catalogs are rationalized and loaded into e-procurement platform, managers and suppliers are notified

17. Lessons Learned…Not a single answer, it’s a blend! • Each trading partner is a small project • Trading partners share a common fate • Evolutionary stages (not a BIG BANG!) • Educate, help, and share (invest?) • A process, not a project

18. The savings are in the PROCESS…not the TECHNOLOGY!

19. Traditional Approach V.S.Re-engineered Processes

20. How many F’s do you see? FINISHED FILES ARE THE RESULT OF YEARS OF SCIENTIFIC STUDY COMBINED WITH THE EXPERIENCE OF MANY YEARS OF EXPERTS.

21. Contacts • Paul Gonyea, Senior Account Executive • Paul.gonyea@enterworks.com • (512) 244-3758 Steve Perkins, Director of Business Development • Steve.perkins@enterworks.com • (703) 724-3694