Case Study

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Electronic CommerceE-Procurement System

• Case Study
• Pilot as of 11/99

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Warner-LambertCompany Background

• OUR VISION at Warner-Lambert is to be the best
  by offering the most innovative, highest quality
  products to advance the health and well-being of
  people around the world. Toward this vision we
  will provide an environment where people can
  innovate and excel.

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Warner-Lambert CompanyBackground

• Warner-Lambert is the company behind many of the
  worlds best known and most respected consumer
  and health care products
• Parke-Davis Pharmaceuticals
• Lipitor, Rezulin, etc.
• Shaving Products
• Schick Products
• Consumer Health Care
• Benadryl, Listerine Products, Lubriderm, Sudafed,
  Zantac, etc.
• Confectionery
• Halls, Certs, Trident, Bubblicious, etc.

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Warner-Lambert CompanyBackground

• Warner-Lambert Statistics
• Products are sold in approximately 150 different
  countries
• Approximately 42,000 Colleagues Worldwide
• 62 Production Plants Worldwide

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Warner-Lambert Company Global Sourcing

• Two Key Focus Areas
• Strategic Sourcing Strategies and a Holistic
  Approach to Procurement
• Procurement Process Technology Solutions

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Global Sourcing Mission Statement

• Create and develop an internal network of W-L
  colleagues involved in harnessing the power of
  W-L through a team based sourcing and process
  improvement approach to procurement, utilizing a
  central strategy, a proven strategic sourcing
  process and innovative tools that optimize
  performance

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Global Sourcing Key Success Factors

• Executive Sponsorship
• Active Participation of all Global Sourcing and
  Procurement Colleagues
• Strong Process Focus enabled by Technology
• Strategies Implemented by Colleagues maintained
  by a Stewardship/Ownership Model

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Global SourcingProcess Design Effort

• PACT II - Procurement Activity Change Team
• Recommendations (1999 Priorities)
• E-Commerce front-end to SAP for MOPS and Ann
  Arbor
• Process and Technology to address Processing of
  Services
• Additional Supplier and Transaction Reduction
  Initiatives
• Enhancement/Growth of PCARD Program

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Electronic Commerce Vision

• To provide ONE front-end system to colleagues
  that would allow end-users to transact all
  Procurement Transactions (Purchasing, Receiving,
  Payments, etc.) in a common user-friendly system

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E-Commerce Project Goals and Related Objectives

• Simplify the Procurement Process (Ease of Use)
• Eliminate non-value added activities
• Capture and Enhance Visibility to Warner Lambert
  spend data for use within the Strategic Sourcing
  Process

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E-Commerce Project Goals and Related Objectives
(cont.)

• Enable suppliers and commodities that have been
  identified by Global Sourcing Teams - Assists in
  goals to Reduce Supplier Base to the level
  appropriate to support W-L business needs and
  support Preferred Supplier Selection and
  Contracts established for the Company
• Enable preferred Procurement Methods by commodity
  - Assists W-L in processing transactions in the
  least cost/most efficient manner

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E-Commerce ProjectProduct Selection Process

• Looked at eight E-procurement product providers
  in the Market as of January 1999
• Met with providers and conducted Market Research.
  Narrowed selection to Ariba and CommerceOne
• Main vendor selection criteria
• Access to a common marketplace where buyers and
  suppliers meet for procurement transactions
• Content management features
• Reduction of administrative overhead
• Distribution channel management
• Selected CommerceOne

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E-Commerce ProjectLocations

• Ann Arbor
• Morris Plains
• Lititz (non-Inventory only)
• Remaining Roll-out Schedule - To Be Determined

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Project Timeline for E-Procurement System
DATE STAGE 3/99 - 4/99 5/99 - 6/99 7/99
- 8/99 9/99 10/99 - 3/00 10/99 - TBD 05/01
2001
Phase I Analysis Phase I Design Phase
I Construct Test Phase I Go Live Y2K
Freeze Phase II Activities Begin Phase II Go
Live
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E-Procurement Project Phase I

• Currently in Progress
• Implemented on 09/13/99
• Involves
• Morris Plains and Ann Arbor
• 18 Colleagues
• 2 Suppliers - Office Depot and VWR
• Payments to be made via PCARD ONLY
• Creation of Automated PCARD Reconciliation
• Training and Support to be provided by E-Commerce
  and USFP Procurement Project Teams

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E-Procurement Project Phase I (cont.)

• Why we chose
• Office Depot VWR
• To reach a large number of colleagues in both Ann
  Arbor and Morris Plains
• Both are GOOD Suppliers who are currently on
  common market places
• Both accept the Purchasing Card

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E-Procurement Project Phase I (cont.)

• Next Steps
• Identify additional users of Office Depot and VWR
• Refine Supplier Adoption Process
• Develop and Implement Strategies for Training and
  On-going Support (help desk, etc.)
• Identify additional Suppliers and Colleagues who
  use those suppliers
• Determine Reporting Needs

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E-Procurement Project Phase II

• To begin in parallel with Phase l
• To be implemented in conjunction with USFP SAP
  Implementation
• Involves
• ALL items procured
• Many colleagues and Many Suppliers
• Payments to be made via PCARD and SAP
• Training and Support Strategy will support User
  Community needs

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E-Procurement Project Phase II (cont.)

• Design Work Flow
• Determine Integration Points between
  E-procurement system and SAP
• Design and Implement new Business Process Flows
  within E-procurement system and SAP

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E-Commerce ProjectKey Lessons Learned (to date)

• Implementation of an E-Commerce effort is more
  like an EDI implementation than an ERP Package
  implementation
• Internal and External Roles must be formally
  identified and clearly understood
• (ie. Between technical resources of all parties
  and regarding supplier relationship management by
  Procurement Professionals)
• Agreement to timelines is critical
• The boundaries of an E-Commerce effort extend
  outside of your organization (and your control)
  so strong relationship management skills are a
  must

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Commerce One Business-to-Business Portal
MarketSite-Based Trading Communities
Buyers
Suppliers

• Complete ElectronicCommerce Solution
• Automates the Entire Buying Selling Process
• Real Time Interactivity

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Commerce One Procurement Solution
INTRANET Application - Automates Internal
Processes

Supplier
Supplier
Direct
Supplier
EXTRANET Automates Supplier Catalog Content and
Order Transactions
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Commerce One Provides a Total Solution
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BuySite - for Enterprise Procurement

• Manages Spending
• Real Time Price, Availability Status
• Complete Functionality
• Implements Exact Business Process - Work Flow
  Business Rules Architecture
• ERP Integration (SAP)

• Goods
• Services

Multi-Supplier Catalog to EVERY Desktop
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BuySite - for Enterprise Procurement

• Managed Content Model
• The Content You Want
• Instant Updates
• Real Time Interactivity
• Price, Availability, Status More
• Complete Functionality
• Desktop Requisitioning
• Approval Routing
• Tracking Receiving
• Business Intelligence for Strategic Procurement

Multi-Supplier Catalog to EVERY Desktop
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Supplier Services Deliver Value

• Superior Content Management
• Publish Once Model with Instant Updates
• Reduced Cost
• Real Time Transactions Lower Processing
  Personnel Costs
• Enhanced Distribution Channel
• Access to a Large Growing Group of Ready Buyers
• Significantly Accelerates Time to Market

• Complete Support for Small Suppliers
• Hosted Catalog Order Management
• Content in Any Format

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Managed Content Model Lowers Cost
S U B S C R I B E
P U B L I S H
C A T E G O R I Z E
N O R M A L I Z E
UPDATES
Delivered to Buyer
Disparate Supplier Formats
Categorized Managed
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MarketSite.net - The PremiereBusiness-to-Busines
s Commerce Portal
Transacting Today

• Real-Time E-Commerce for Business Buyers
  Suppliers
• Built on MarketSite Platform with All Services
  Available
• Content Available from 5,000 Suppliers in Any
  Format
• Run by Commerce One with North American Target
  Market
• Interoperable with All Other MarketSite Markets

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Commerce Ones Next Generation Trading Web
Solution
Parke-Davis Geodecke AG Freiburg, Germany
Parke-Davis Neuroscience Cambridge, England
MarketSite.net
Vertical Market
Jouveinal Parke-Davis France
Sellers
The Internet
Buyers
Warner Lambert Morris Plains, USA Ann Arbor, USA
Trading Community
Future Marketplaces