e-Enabling an Efficient Supply Chain Robert Pyzdrowski President

e-Enabling an Efficient Supply Chain Robert Pyzdrowski President, Operations R. R. Donnelley

Agenda • • • papi. Net Goals Why Standards? The Need for Collaboration Other Industry Standards Intel and Rosetta. Net Benefits for the Print Supply Chain

papi. Net’s Goal is … • Improve the efficiency of the paper supply chain and remove cost by: - Enabling collaboration Documenting standard business processes Improving communications Reducing the cost of electronic communications

Why Standards? • 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-off”custom connections Standards enable collaboration

The Need for Collaboration • • Challenging economic and market conditions An inefficient supply chain Significant “muda” in the supply chain Our customers need and expect more from us

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

Other Industry Benefits From Standards Industry Standard • Electrical safety • UL (Underwriters Labs) • Quality systems • ISO • Internet • HTML • Electronics Supply Chain • Rosetta. Net • Paper Supply Chain • papi. Net

Intel Leverages Rosetta. Net Standards In 2002, Intel used Rosetta. Net standards for: • 10% of revenue ($3 billion) • 10% of supplier spend ($2 billion) • 30, 000 transactions/month • 90 customers and suppliers in 17 countries Intel’s objective 100% e-enabled corporation Source: Intel press release 12/10/02

Why Standards? Intel sees a $500 million long-term opportunity to reduce supply chain costs through collaboration and use of Rosetta. Net standards: • Collaborative demand forecasting • Order management • Shipping/receiving logistics • Invoicing • Payments • Elimination of EDI –Source: Information. Week 12/9/02

Our Choice Publishers/ Catalogers Standard or “one-off” custom interfaces? Printers/ Converters Paper Companies Agents Brokers Merchants dot coms Which is better for our supply chain?

Benefits for Our Supply Chain • Improved customer satisfaction • Reduced I. T. infrastructure investment • Reduced administrative costs • Faster communications • Better information for decision making A more efficient supply chain keeps print viable!

Defining papi. Net Sara Freund Executive Director, E-Business American Forest & Paper Association

Agenda • Defining papi. Net • papi. Net Organization and Membership • papi. Net Goals • How papi. Net automates the Supply Chain • Implementation Status • How to Become a Member

papi. Net Is… • An international paper and forest products industry ebusiness initiative. • A set of standard electronic documents that facilitates the flow of information among parties engaged in the buying, selling, and distribution of paper and forest products. • Enabler for collaborative electronic business using the internet.

papi. Net Executive Committee Board papi. Net NA Membership Board 2003 papi. Net Organization papi. Net Euro Membership Segment Implementatio n Groups Implementation Coordinating Council Central Work Group Convergence and Partnering Council Note: There is considerable collaboration between ALL the boxes in the papi. Net Organization model. Highest priority is Implementation!

papi. Net Europe Membership • • • Ahlström Assi. Domän Burgo ENCE Expresso Fedrigoni Holmen Paper International Paper Kappa Korsnäs Lecta Mayr-Melnhof • • • M-real Mondi Myllykoski Norske Skog Portucel/Soporcel Sappi SCA Smurfit Södra Stora Enso UPM-Kymmene

papi. Net NA Membership • • • Abitibi-Consolidated Advance Magazine Publishers Bowater America Brown Printing Dupont Forest. Express G+J USA Publishing International Paper Lands’ End Madison Paper Industries Mead. Westvaco Perry Judd’s • • • Quad Graphics Inc. Quebecor World R. R. Donnelley Sappi Fine Paper, NA Seeburger SP Newsprint Stora Enso NA Tembec Tietoenator Majiq Time Inc UPM-Kymmene Weyerhaeuser Company

papi. Net Goals • To increase efficiencies in transaction and marketplace activities through - documented business processes, with Supporting standard XML messages, and consistent data definitions, common terminology and formats “real-time” exchange of information through the internet • To ensure that the standards are interoperable - Between trading partners in the paper and forest products industry. Between trading partners in other industries eb. XML envelope Engage other standards initiatives • To provide standards that are open and freely available

papi. Net Standard • Set of common electronic formats and terminology for the paper and forest products industry - Designed to facilitate system-to-system real time exchange of information between buyers and sellers - Categories: • Basic Order Fulfillment • Supply Chain Management • Product Quality

Supply Models papi. Net messages can be categorized according to the Supply-Chain Council’s, Supply-Chain Operations Reference (SCOR) model • • Product Attributes Planning • • Request For Quotation Availability Purchase Order Confirmation Call-Off Order Status Inventory Status • • Product Quality Usage Inventory Change Product Performance • • • Delivery Message Goods Receipt Invoice • • • Credit/Debit Note Business Ack Information Request Complaint Request

Implementation 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

Total Live and Planned Implementations

Implementation 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

Segment Implementation Groups (SIGs) • Groups Already Formed: - XBITS (NA Book Manufacturers) Publication Papers (Europe) Fine Papers (Europe) Packaging (Europe) • Groups To Be Formed in 2003: - Publication Papers (NA) Fine Papers (NA) Packaging - Containerboard and Paperboard (NA) Label Stock (Global) Recovered Paper (Global)

Segment Implementation Group (SIG) Activities • • Enhancements to the papi. Net Standard Understand benefits of integration and use of the standard Develop ROI information Develop typical business cases Document best practices for use of the standard in this channel Network and share implementation information Collaborative web site

papi. Net NA Membership Categories • Corporate Members ($10, 000 for new members, $5, 000 current members) - Seat on papi. Net NA Board; official member Seat on One Segment’s SIG Oversight Council Participation in One Segment’s Implementation Group Support for Ongoing papi. Net Operations • Membership in an Implementation Group Only ($2, 500)

Contact Us • www. papinet. org • papi. Net NA - David Steinhardt, 703 837 -1066 or dsteinhardt@idealliance. org

Implementing papi. Net Al Ivan Executive Director, E-Business Mead. Westvaco Corporation Paul Reid Manager, Paper Systems Time Inc.

Agenda • What are the papi. Net Messages? • How do I get a papi. Net project started? • How can I improve my chances of success? • What are the benefits?

papi. Net automates the complete supply chain Purchase Order RFQ Usage Availability Order Confirmation RFQ Response Order Status Planning Call Off Goods Receipt Inventory Status Product Performance Delivery Message Credit Debit Note Inventory Change Product Quality Invoice Business Ack Information Request Complaint Product Attributes Complaint Response V 2. 0 V 2. 1 V 1. 0 V 1. 1 a m che S June 2001 Feb 2002 August 2002 January 2003 Release Industry Review

How Do I Get a papi. Net project started? • Use E-Business as an opportunity to review your entire supply chain • Recognize that papi. Net is an industry-wide opportunity to lower costs • Position papi. Net 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 papi. Net-enhanced future business model that includes your trading partners • Sell the project as essential to this future model of doing business

How can I improve my chances of success? • Dedicate key IT and business people to becoming knowledgeable about papi. Net • Recognize the learning curve of new technologies in trading XML over the internet • Be realistic about the timeframe of an initial implementation - 6 -9 months based on how papi. Net fits with your existing systems - Services of 3 rd party marketplace vendors may aid implementation • Leverage experiences from other implementers • Use the papi. Net Implementation Guide

How can I improve my chances of success? • Consider using papi. Net messages as a key component to retool your core systems • Target simpler, logical message combinations first - Purchase Order, Order Confirmation - Delivery Message, Invoice • Then build from these implementations to more complex messages like Planning • Develop a comprehensive test plan that involves key trading partners

What are some Benefits? • Mutually supportive engagement with your trading partners • Modest cost savings in handling paper • Cost savings due to Value Added Network elimination if migrating from EDI • Decline in errors • Reduced Paper Inventory

What are some Benefits? • • Motivated, XML-knowledgeable staff XML is the directional “language of the Internet” XML can open the door to smaller and medium size customers papi. Net is gaining traction in the entire paper and forest products industry (Book, Wood, Label Stock, Pulp, Recovered Paper)

Questions? ? ?