The%20PapiNet%20Value%20Proposition - PowerPoint PPT Presentation

Title: The%20PapiNet%20Value%20Proposition


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Realizing the Value of an e-Enabled Supply Chain
Robert Pyzdrowski RR Donnelley October, 2003
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Generating Value And ROI From papiNet

• papiNet offers the opportunity to improve the
  entire supply chain
• papiNet is an enabler for collaboration,
  information sharing, process improvement and
  shared decision making
• A critical mass of participants across the value
  chain is needed in order to generate significant
  value

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Collaboration Across The Supply Chain Benefits
All Parties
Merchandisers Publishers Paper Suppliers Printers
Improved total cost of ownership Supports better decision making through feedback transparency Emulate JIT and best practices used in merchandising supply chain Easier to manage paper across multiple printers Clear view of demand for better forecasting planning Consolidate shipments Less storage space Decreased inventory Enhanced data collection for manufacturing materials optimization Consistent inputs Greater inventory turns and less storage space Better equipment effectiveness Enhanced data collection for manufacturing materials optimization
Universal Benefits Universal Benefits Universal Benefits
Lower working capital requirements Increased consistency throughout the process Lower inventory Lower transaction costs Reduced staffing needs for order and process management Better customer service reporting Global standards enhances ability to service global customers Lower working capital requirements Increased consistency throughout the process Lower inventory Lower transaction costs Reduced staffing needs for order and process management Better customer service reporting Global standards enhances ability to service global customers Lower working capital requirements Increased consistency throughout the process Lower inventory Lower transaction costs Reduced staffing needs for order and process management Better customer service reporting Global standards enhances ability to service global customers
The Network Effect the payoff and benefit of
using a system increases exponentially as the
number of users increases
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The Merchandiser/Publishing, Paper Print Supply
Chain Is Not Optimized Today

• Too many supply chain managers
• Poorly coordinated and non-standardized
  communications and work flows
• Excessive inventory at printer and/or
  manufacturer
• Mediocre returns on invested capital in paper and
  printing
• Investor pessimism results in low stock prices
  and P/E ratio
• Third party intervention Paper brokers,
  dot-coms
• Customer distrust of mills and printers
• Slow adoption of XML and e-business links
• Declining pace of technological innovations
  compared to 1970s and 1980s
• Growth rate at 1 and declining
• Lack of collaboration and shared decision making

These problems will not be solved through
further industry consolidation
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papiNet Provides Standards For Communication
Between Partners

Plan
Make
Deliver
Source
Utility

• Product Attributes
• Planning

• Request For
• Quotation
• Availability
• Purchase Order
• Order Confirmation
• Call-Off
• Order Status
• Inventory Status

• Product
• Quality
• Usage
• Inventory
• Change
• Product
• Performance

• Delivery Message
• Goods Receipt
• Invoice

• Credit/Debit Note
• Business Acknowledgement
• Information Request
• Complaint
• Complaint Request

• Standards are fundamental to an efficient supply
  chain
• Enable timely, efficient and effective
  communications
• Avoid costly non-value added translation
  activities
• Enable fast and widespread connectivity
• Avoid one-offcustom connections

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The Supply Chain Iceberg
Perceived Value
Transactional Efficiency
Data Critical to Making Improvements
Intrinsic Value
Trim waste
Transit damage
Process delays
Web breaks
Strip waste
Press delays
Damage
Press damage
Delays
Yield
End-to-end cycle-time
Excess freight
Inventory turns
Warehouse fees
Multiple handling
Late Deliveries
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Different Perspectives Lead To Different
Viewpoints Of The Value Of papiNet
E-Business Link Perspective Collaboration Perspective
Approach Efficient and cost effective transactions An efficient and cost effective supply chain
Scope Transaction between trading partners The entire supply chain
Objectives Transactional efficiency Operational improvement
ROI Break-even (at best) Positive
Impact Enables reduced admin and systems cost Enables reduced operating costs, improved quality, throughout and working capital
Potential Return Tens-hundreds of thousands/company Tens-hundreds of millions/company
How viewed An IT project A margin improvement project and strategic enabler for supply chain improvements
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papiNet Is An Enabler For Collaboration And
Creating Value
papiNet is the Foundation

• Data Collection
• Merchandisers publishers
• Printers
• Paper Companies

Data Transmission (XML)

• Specifications
• PapiNet Messages
• Common Definitions
• Standards

Implement improvement projects
Identify improvement opportunities and select
improvement projects
Data Review and Analysis
Data Aggregation
for enabling collaboration that will generate
value within the supply chain. Supply chain
partners can leverage data to drive improvement
and eliminate waste
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Collaboration Is The Key To Value Creation

• To achieve maximum ROI potential, data must be
• Collected
• Analyzed
• Used to inform and identify improvement
  opportunities

The opportunities must be acted upon to deliver
value!
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Project Example Increase Average Roll Diameter
To Reduce Total Cost
Increased roll diameter reduces waste, number of
SKUs, and material handling

1. Establish papiNet links between printer paper
   supplier
2. Co-develop scorecard and feedback metrics
3. Use data results to increase the average roll
   diameter and reduce total cost

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Project Example Lower Number Of Web Breaks To
Reduce Waste
Web breaks result in paper waste, delays and web
break penalty charges

1. Use scorecard and feedback metrics to measure
   paper performance on press
2. Paper supplier used data to change how paper was
   produced
3. Resulting paper ran better on press, reducing
   waste, delays and web break penalty charges

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The Opportunities Are Significant For All Parties
Within The Supply Chain

• A 20 reduction in inventories would cover the
  annual dividend payout for a major paper company
• Four large paper companies have a total of over
  5 billion tied up in inventory
• One large printer has approximately 15 of
  manufacturing floor space consumed by paper
  storage the equivalent of 3 large plants
• One large paper company reports recovering only a
  small portion of the millions of dollars of
  annual freight damage
• Merchandisers and publishers can free-up cash
  flow to startup or acquire new properties

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How Do I Get A papiNet Project Started?

• Use E-Business as an opportunity to review your
  entire supply chain
• Recognize that papiNet is an industry-wide
  opportunity to lower costs
• Position papiNet as a partnership with your key
  trading partners to improve the supply chain
• include suppliers, publishers, merchants,
  printers, component vendors
• Develop a vision of a papiNet-enhanced future
  business model that includes your trading
  partners
• Sell the project as essential to this future
  model of doing business

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There Must Be A Critical Mass Of Users To Improve
The Efficiency Of The Supply Chain

• Next Steps
• Mobilize the critical few major players
• The critical few establish timelines for
  implementation and expectations of their trading
  partners
• Confirm message selection and priority with major
  trading partners
• Focus on collaboration, not just implementing
  papiNet links

The IT cost of implementation will not be
justified by the transactional efficiency alone.
Participants will only generate significant ROI
through collaboration to improve supply chain
efficiency.
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Enabling Supply Chain Collaboration
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Appendix
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papiNet Mission Goals
papiNet is the global initiative to develop,
maintain and promote the implementation of
standard electronic transaction standards to
facilitate the flow of information and facilitate
computer to computer communications among all
parties engaged in the buying, selling, and
distribution of forest, paper and wood products.
The set of standards is referred to as the
papiNet standard. The standards include common
terminology and standard business documents (e.g.
purchase orders, shipping notices, and
invoices). The goals are to improve the reach
and richness of communication throughout the
supply chain, increase efficiencies in
transactions and marketplace activities, and to
support interoperability among trading partners.
The papiNet standards are open and freely
available. Source papiNet website
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Needs for and Benefits of Standards

• "The Internet offers new opportunities for
  efficient and cost-effective execution of
  transactions. It is a truly global infrastructure
  available to all. It is also more cost-effective
  than the value-added networks (VANs) that EDI is
  built upon.
• "The papiNet standard is open, free, and easy to
  adopt, providing common benefits to supply chain
  participants. With the papiNet standard,
  companies will no longer need to negotiate and
  agree on data definitions and formats with each
  trading partner, a costly and arduous task.
  Instead, papiNet provides a common messaging
  interface to enable supply chain partners to
  have
• a simplified process for dealing with multiple
  suppliers and customers through use of common
  business solutions.
• reduced manual work, resulting in fewer entry
  errors and improved supply chain management
  (e.g. replenishment, VMI).
• more "real-time" exchange of information and
  greater electronic information availability.
• the opportunity to participate in e-business
  transactions, irrespective of company size or
  technical expertise. "
• Source papiNet website

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The RosettaNet Value Proposition
A company's demand management, direct material
procurement, logistics, part management and order
fulfillment processes are closely linked to
supply chain partners. Value is created by close
integration of these processes among the
companys suppliers, logistics service
providers and customers. Collaborative processes
that provide visibility to forecasts, inventory
levels, order execution, and shipments between
trading partners achieve this. The collaborative
process is hampered by lack of industry-wide
processes and data standards that enable
system-to-system automation of core
processes.. In todays competitive world,
well-oiled and responsive extended supply chains
are increasingly becoming a foundation for
competitive advantage. No longer can companies
restrict their focus on increasing supply chain
efficiencies within the four walls of the
enterprise. The supply chain that extends beyond
a companys organizational boundaries
increasingly determines its effectiveness. There
is an increasing dependence on "collaboration" as
key to bridging the boundaries not only within
the enterprise, but also between enterprises and
across industry boundaries. Adoption of
RosettaNet standards could well be a critical
factor in bringing the high technology dream of
dynamic value chain management to
fruition. Source RosettaNet website,
Implementing RosettaNet E- Business Standards for
Greater Supply Chain Collaboration and Efficiency
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The Print Supply Chain Improvement Opportunities
Mill
Warehouse
Train/Truck
Warehouse
W,C,Q,H
W,Q
I,W,C,H
I,W,C,H
Warehouse
Press
Warehouse
Printer Dock
I,W,C,H
W,C,Q
I,W,H
W,H
Distribution Center
Truck
Warehouse
Bind
I,C,H
I,C,H
Q,H
C,Q
Improvement Opportunities I Inventory/Working
Capital W Waste C Cycle-time Q Quality H
Multiple handling
Customer/ Consumer
C
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The Need for Collaboration

• "90 of enterprises that fail to provide
  visibility and supply chain automation by 2004
  will lose their status as preferred suppliers."
• Karen Peterson,
• Director, Gartner Inc.,
• August 2002

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Implementation Status

• Status
• Implementation benchmark survey completed
  November 2002
• 80 trading partners engaged in implementation
• 2003 goal
• All 80 in production
• 50 more in testing
• Quarterly surveys throughout 2003
• Comments
• Basic messages are used most frequently including
  Delivery Message, Purchase Order, Invoice, Order
  Confirmation, Business Acknowledgement and Goods
  Receipt
• There is still a long way to go on Basic messages
  before other messages will be implemented
• Europe is moving faster than North America

Total papiNet Trading Partner Implementations
In Production Short Term Plans


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Population and paper consumption per capita in
2001
Market Size
201
303
2456
1285
242
340
31
392
29
Other Europe
China
Western Europe
Japan
316
127
15
807
North America
Other Asian countries
148
Latin America
6
527
Africa
35
Oceania
30
Worldwide
Paper consumption, kg per capita 52
Populations, millions 6,090
Source PPI Annual Review 2002
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Getting a Project Started

• Use E-Business as an opportunity to review your
  entire supply chain
• Recognize that papiNet is an industry-wide
  opportunity to lower costs
• Position papiNet as a partnership with key
  trading partners to improve the supply chain
• Include suppliers, publishers, merchants,
  printers, component vendors
• Develop a vision of a papiNet-enhanced future
  business model that includes your trading
  partners
• Sell the project as essential to this future
  model of doing business
• Partner with Solution Providers

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Other Industry Benefits From Standards
Industry
Standard
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Message Priorities
Top Priority Next Priority