Globalization: Driving Competitive Advantage Through Community Management

1. Globalization: Driving Competitive Advantage Through Community Management Jonathan D. Gatrell Senior Director Portfolio Strategy and Analysis Inovis 5.17.2007

2. Understanding economic regions • 3 Key region types/models drive commerce and global supply communications • Formal region • Traditional single attribute defines the region • Physical, Economic or Political • Regional distribution and supply models • Warehousing/DC’s, Automotive/Manufacturing regions • Transactional economic activity, order to fulfillment – JIT • Functional region • A nodal relationship across and within a space which unites social and spatial activities • A traditional hub and spoke model, independent of distribution. • Transaction economic activity, order to cash • Perceptual • A region that exists conceptually, both extended and local conotations • Transactional economic activities are bifurcated • Extended supply chains – Production activities • Multi-channel commerce – B2C transactions which drive B2B fulfillment activities

3. Transactional Scale • MACRO • Planning/Forecasting • Bulk Fulfillment/High Value Orders • Monthly/Quarterly • MESO • Multi-Modal Distribution • “DC Fulfillment”/Medium Value Orders • Weekly/Monthly • Micro • Cartage & LTL Distribution • JIT, Store and B2C fulfillment/“Transactional Orders • Hourly/Daily/Weekly

4. Validating Regions • Regional infrastructures and economic maturation drive growth • Carrying capacity of the infrastructure contains/encourages growth • Availability of materials (speed-to-production) • Proximity to end markets/consumers (speed-to-fulfillment) • Spatial “relativeness” and available infrastructure produce transaction economies • Global supply chains represent nodal economies/regions • Interdependence on open governance and trade • Labor availability and wage benchmarks shift economic and geographic focuses to underdeveloped economies

5. Globalization and the Supply Chain • Globalization is not a trend, but a system • Interdependence between regions, economic models and various levels of development required for global supply chains • Integration and interoperability required for the “global supply chain to win”* • Successful global supply chains require uneven development • Example: Wage Structures (labor markets), Skill Sets, Technology Infrastructures • Highly developed formal and functional regions initiate buying cycles and typically are core economic entities • Underdeveloped regions typically support hub entities through primary and secondary sector activities

6. It Used To Be Simple: Hub and Spoke

7. Community Enablement Drivers • Customers are more demanding • Supply chain complexity continues to increase • Customer/consumer direct interactions • More specialist and/or outsourcing • Supply chain management key to success • Consumer direct • Make-to-order • Global Advantage • Technology breeding opportunity and threats • Source: AMR Research

8. Business Communities • Not just customer or supplier • Growth in non-Supply Chain activities • Financial (Payments/Payroll) • Healthcare (Real-time Adjudication) • Marketing (Rich Media, Promotions) • Service (Returns, Warranty) • It’s YOUR community • Leverage your rules • Enforce your requirements • Differentiate your execution • Your community management strategy drives brand equity • Contract manufacturers and quality • Ability to fulfill/customer service

9. The Changing Context of Content • New fulfillment and commerce models • Multi-channel retail • Direct to Consumer • Content exchange is pervasive • Transactional interactions (B2C and B2C) • Bulk content growth • Richer processes and document content • Management and Governance required

10. Increasing Community Value ENABLEMENT MANAGEMENT EVENT DRIVEN INTEROPERABILITY SENSORY Communicate Transaction Awareness Collaboration Interdependence SOLUTION VALUE OF A COMMUNITY • Deep synergy with partners, Self correcting systems • Basic content sharing and events – PO, ASN, Invoices, etc. • EDI and machine-to-machine interaction for automation • Full visibility into demand and supply & compliance • Synchronized fulfillment, logistics, demand and supply processes CONTENT MATURITY

11. You are Here Hubs Spokes The New Hub and Spoke Model Source: Knox & Marston (2006)

12. Where Losses Occur • 20% of all orders across all industries are in error* • 26% for electronics manufacturers* • 62% for CPG/retail suppliers** • 43% result in deductions or overpayments** • Suppliers attribute 6% of selling, general, and administrative expenses to resolving invoicing issues** • Deductions account for nearly 10% of invoiced sales** • Lost sales represent 3.5% of annual revenues due to stock outs*** • Cost to resolve item data and invoice errors ranges from $40-$80*** * AMR 2006 **GMA – 2004 ***GS1 2006

13. Order Ship Bill Collect Advanced Shipping Notice Payment Purchase Order Invoice What Does That Mean To You? Leverage integrated solutions that standardize document formats and synchronize product data for streamlinedinformation flow across the order-to-payment lifecycle.

14. Automating and Extending Processes

15. Supply Chain Spending Priorities 2006-2008

16. Understanding Visibility

17. Why Invest in Visibility and EDI

18. What events require visibility?

19. Visibility Maturity Model

20. Collaborative Realities • Compliance Initiatives Prevail • Hub Specific Requirements • Internal Policies and Governance • Governmental requirements • Well Defined Penalties • Standards Based Communications • AS1, AS2 and AS3 • New Processes and Document Roll Outs • Automation through Integration • Data Synchronization • GS1 • EDI/XML • Transformation Errors • Content • Configuration • Communication Errors

21. Assembling The Right Solution Set

22. Optimizing Supply Chain Communications Trading Community Management -Partner Enablement -Partner management - Connectivity - Content translation • Business Activity Monitoring • - Reconciliation tools • Transaction lifecycle • visibility and alerts • - Real-time interactive alerts • - Interactive reporting Business Analytics - Historical reporting - Deep transaction reporting - Online optimization tools - Rich data export capabilities • Process Automation • Not just for the traditional • supply chain • - Internal operations support • Supporting the “Final • Customer” • - Rule-based execution

23. Increasing Community Value: Visibility ENABLEMENT MANAGEMENT EVENT DRIVEN INTEROPERABILITY SENSORY Communicate Transaction Awareness Collaboration Interdependence SOLUTION VALUE OF A COMMUNITY • Deep synergy with partners, Self correcting systems • Basic content sharing and events – PO, ASN, Invoices, etc. • EDI and machine-to-machine interaction for automation • Full visibility into demand and supply & compliance • Synchronized fulfillment, logistics, demand and supply processes CONTENT MATURITY

24. Strategic payoff: Execution Efficiency • Automate more processes to be responsive to demand and supply needs • Enable more partners, not just traditional supply chain • Identify problems before impact your business: visibility preempts execution breakdowns via early warning alerts • Shrink the number of exceptions, out of stocks, chargebacks, negative supplier ratings • Single version of the truth: visibility of the complete picture • Simplify and automate exception handling and resolution • Improve the reliability, adaptability and timeliness of transaction and document flow across your trading network Deep visibility = Execution excellence

25. Globalization: Driving Competitive Advantage Through Effective Community Management Jonathan D. Gatrell Senior Director Portfolio Strategy and Analysis Inovis 5.17.2007