Trading Partner Enablement

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

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Agenda

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

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EDI Motivators
Cycle Time Reduction
Inventory Reduction
EDI
Administrative Cost Reduction
Customer Mandate
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30 years of EDIAll 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.
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eProcurementIn the beginning, the message was..

• "Nowhere in business is there greater potential
  for benefit than the interdependence between
  customer firms and their suppliers.
• This is the largest remaining frontier for
  ongoing competitive advantage and nowhere has
  such a frontier been more neglected"
• Peter Drucker
• Professor Management Guru

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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
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Buyers eProcurement DriversReduce Total Cost
of Procurement

• Reduce
• Cost of generating POs
• Number of active suppliers (Supplier
  Rationalization)
• Purchase price
• Off-contract (Rogue) buying
• Cycle time
• Non-conforming invoicing errors

• Improve
• Internal productivity
• Focus on high-value activities
• Supplier performance and client satisfaction
• Overall business controls

Enterprise Buyers
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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.

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UCCnet Motivators3.5 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 its
  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.
• Lowes target is the end of the year.
• After January 2004, Wal-Mart will only accept
  item data electronically.

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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

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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. Its 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
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Supplier Investment DriversPublic/Private
Some suppliers are experimenting, getting
proactive, and seeing results.
All your key customers are on this exchange

• Self driven -Want to Increase revenue and reduce
  costs by entering new markets, increasing
  transaction volume, and reducing error rates.

eMarketplace
Want to continue business with me, then hook on

• Pressure is increasing
• Technology is improving
• Opportunities are appearing

Supplier
Major Buyer
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Doing Business Over the InternetWhat does it
mean??
In-house or hosted solution?
How will this help my overall business and
support the people we count on to make us
successful?
How many exchanges, eBuyers and Marketplaces do
I need to connect to?
Where to start?
What impact will this have on my customers and
sales revenue?
What technology decisions do we have to make?
How much it will cost?
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Suppliers ObjectivesMaintain Customer Base,
Increase Sales Margins!

• 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.)

Enterprise Suppliers
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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
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Manage Content
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 purchase additional syndication
points for additional buyers
Supplier can publish unlimited catalogs to one
syndication point (buyer)
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Manage Content
ECB UCCnet Solution
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Process Automation Work Flow
Seamless Integration
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
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Lessons LearnedNot a single answer, its 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

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The savings are in the PROCESSnot the
TECHNOLOGY!
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Traditional Approach V.S.Re-engineered Processes
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How many Fs do you see?

• FINISHED FILES ARE THE RESULT OF YEARS OF
  SCIENTIFIC STUDY COMBINED WITH THE EXPERIENCE OF
  MANY YEARS OF EXPERTS.

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Contacts

• Paul Gonyea, Senior Account Executive
• Paul.gonyea_at_enterworks.com
• [phone]

• Steve Perkins, Director of Business Development
• Steve.perkins_at_enterworks.com
• [phone]