THE GLOBAL eMARKETPLACE

Quadrem: eOTD and releasing Supply Chain value

ECCMA Annual Conference

October, 2006

Agenda

A little about Quadrem

Buyer & Supplier Pain points

How have we approached this Standards

– Education, Development, Management

Systems Integration

Some “Requirements”

Benefits and Lessons learned

Launched in 2000 by global natural resources leaders to streamline procurement and reduce supply chain costs

Global Supply chain solutions leader with: Global MRO-Centric Supplier Network XML Messaging Hub Sourcing Solutions Financial Solutions Data Management Solutions

Company Overview

$12.5 billionannualized transaction

volume

$12.5 billionannualized transaction

volume

XMLTransaction

Hub

XMLTransaction

Hub

46,00046,000SuppliersSuppliers

35,00035,000P2P Supplier UsersP2P Supplier Users

356356Integrated Integrated

ConnectionsConnections

The Community as at September 2006

3434Active BuyersActive Buyers

635635Buyer Sites Buyer Sites

516516Integrated Integrated

ConnectionsConnections

2002 2003 2004 2005 2006Transaction and Throughput Record

Throughput Transactions

$0

$100,000,000

$200,000,000

$300,000,000

$400,000,000

$500,000,000

$600,000,000

$700,000,000

$800,000,000

$900,000,000

$1,000,000,000

$1,100,000,000

$1,200,000,000

$1,300,000,000

Jan 02

Apr 02

Jul 0

2

Oct 02

Jan 03

Apr 03

Jul 0

3

Oct 03

Jan 04

Apr 04

Jul 0

4

Oct 04

Jan 05

Apr 05

Jul 0

5

Oct 05

Jan 06

Apr 06

Jul 0

6

Oct 06

0

25,000

50,000

75,000

100,000

125,000

150,000

175,000

200,000

225,000

250,000

275,000

300,000

325,000

350,000

375,000

400,000

425,000

450,000

475,000

500,000

525,000

2003-2006 Projected Order Value

Actual Order Value

Actual 'Procure-to-Pay' Transactions

Global footprint – Global customers

Worldwide Quadrem Offices and Partners

Santiago, Chile

Lima, Peru

Johannesburg, South Africa

Dubai, UAE

Riyadh, Saudi Arabia

Perth, Australia

Brisbane, Australia

Sydney, Australia

Rio de Janeiro, Brasil

Mexico City, Mexico

Dallas, USA

Toronto, CanadaMontréal, Canada

Houston, USA

Seoul, Korea

Jakarta, Indonesia

SingaporeParis, France Amsterdam, The Netherlands

250+250+ employees and associates worldwide employees and associates worldwide250+250+ employees and associates worldwide employees and associates worldwide

San Jose, Costa Rica

Key Strength - MRO Supply

Largest community of industrial MRO suppliers Assets stand idle without these mission critical suppliers Leveragability - MRO suppliers cover many industries

Standardized eOTD industry dictionary for more than 6,000 MRO categories Becoming the de facto standard for the mining, minerals and metals industries Platform for expansion to related industries where technical descriptions are

key

19 business process documents designed for MRO materials and services procurement Appreciates the criticality of timing and availability of supply Need for machine to machine integration

Pain Points

Buying Organizations – Pain Points

Landscape Results and Effects

Use different ERP applications (many times within the same company)

Each ERP requires content structured differently Segregated spend – requiring manual intervention

Use different catalogue schemas / standards

More than one schema within the same group Often inappropriate for business needs

Seldom have a well defined catalogue strategy

Find it difficult to pin down the business case and ROI for content projects

Decentralized buying and inventory functions have led to decentralized content creation and maintenance functions

Seldom pool content initiatives to take advantage of efficiencies of scale that content

Don’t view catalogue creation and maintenance as a core discipline

No quality training and change management plans No clear understanding of the value of good content Data not being maintained ~ creating a perpetual cycle of data

cleansing projects

Carry legacy content data

No structured approach to create and maintain content Does not unambiguously differentiate a material or service Duplicate content creates uncertainty ~ master to select Spend profiles and analytics are impossible or difficult

Landscape Results and Effects

Don’t understand complexities associated with creating content correctly

Poor quality content, Content never in a state of readiness Create content to differentiate not to standardize

Suppliers supply same materials to more than one buyer organization

Those that have created catalogues to a schema often unwilling to change or redevelop this content to a new schema

Vary in size and capability

Limited use of technology adding to the complexity of content creation

Limited resources or budget to pay for content to be created according to numerous standards laid down by different buying organizations

Supplying Organizations – Pain Points

How have we approached this?

Standards System Integration

Plan

Design

Build

Test

Deploy

1 + 1 = 3

Quadrem and Standards

Wherever possible Quadrem bases its services and products on open, international standards

The philosophy being that it lowers the change management effort and rework over time

Quadrem facilitates two standards groups for its customers Integration Standards Council

– XML, document choreography coordination Content Standards Council

– Classification, Codification and industry templates

eOTD Management Methodology

Close liaison with customer (and their data) to develop and extend the eOTD to meet industry context

Focus on “minimal” requirements to find, describe and buy in a commercial perspective

Put in place robust standards maintenance processes to ensure adoption, consistency and reuse

Once stabilized move relevant structure to public domain Lowers cost over time, increases adoption

System Integration Methodology

Plan Design Build Test Deploy

SummarySummaryTasksTasks

StagesStages

Prioritize integration project based on business needs, benefits, & targets

Define Scope & Implementation Phases

Define Business Process & Workflow

Define Connection Architecture

Gather Data Mapping Requirements

Decide Catalogue strategy & requirements

Establish Team & Timeline

Set Up Integrated DDID

Conduct Connection/ Document Training for Trading Partner Tech

Exchange Connection Info – IDs, Passwords, e-mails, URLs

Provide Document Standards & Samples, Connection User Guides & Test Script

Specify Data Mappings -transformation rules & values

Collect Catalogue Data

Create detailed Project Plan

Populate catalogue for Quadrem catalogue and/or Buyer ERP catalogue

Supplier or Quadrem builds Document Mappings in Dev environment

Migrate Mappings to UAT environment

Install & Configure UAT environment (routing rules, certs)

Test Connectivity to Quadrem in Test environment

Conduct end-to-end integration and catalogue test with Buyer & Supplier

Migrate Mappings to Production environment

Install & Configure Prod environment (routing rules, certs)

Test Connectivity to Quadrem in Production environment

Assist as needed with End-User Training & Communications

Quadrem monitors initial production transmissions through marketplace

Gather feedback & resolve issues

Some “Requirements” Classification - UNSPSC / Material Groups / Other Codification – eOTD / Other

Use as is? Customize internally? Leverage existing process and customized templates? (QTAG)

Business Rules required Special Characters Units of Measure (Imperial and / or metric) Valid Values (or free text) Cleansing and standardization rules

– OEM Items– Generic Items– Mnemonics and Part Numbers

QA guidelines and rules

Descriptions Patterns leverage existing or develop / customize internally Short Text (40 Characters) Long Text PO Text

KPI Potential Typical

Duplicates ID 5 - 20% 12%

Inventory Reduction 5 - 20% 8%

Deleted / Obsolete Materials 5 - 15% 11%

BOM Duplication / Rationalization 10 - 35% 15%

Poor Mnemonic Part Numbers 5 - 20% 3%

Some real benefits delivered

Lessons

Get the strategy right, set expectations early and clearly

Pick a standard and stick to it “All models are wrong some are useful” eOTD is useful !!!

Interlocking “systems integration” and “catalogue” standards saves time and plants seeds for long term success

Maintenance is just as important as creation

In Conclusion

Recommend taking “baby steps” and understand catalog in relation to larger Procurement strategy Need to decide on some standards!!

There is no simple solution for some sourcing groups i.e. OEM catalogs

Some Phases to consider: Phase 1

– Focus on small key group of Suppliers– Use common tool to maintain catalogue and pricing– Define simple load format / process for ERP Material Master– Put in place process to have items distributed from Supplier Buyer

Phase 2– Catalogue management services for other spend groups or integrate as part of

Strategic Sourcing initiatives Phase 3

– Re-analysis of Content strategy in light of value released

THE GLOBAL eMARKETPLACE

Quadrem: eOTD and releasing Supply Chain value

ECCMA Annual Conference

October, 2006