Web-Ordering Project ORMS Carolyn De Palmo Program Manager

Web-Ordering Project ORMS Carolyn De. Palmo Program Manager (408) 527 -0639 cdepalmo@cisco. com

Electronic Commerce Goal: Reduce the Cost of Buying and Selling Buying Costs Make up 2 -10% of Product Cost Selling Costs Make up 14 -40% of Product Cost

CCO Cisco Connection Online Networked Commerce for Cisco’s Customers

Cisco Commerce Agents - Growth in Use Tool Oct Jan April %² • Status 47, 439 59, 401 103, 170 +74% • Pricing 28, 587 33, 194 52, 046 +57% • Config 14, 386 14, 536 40, 902 +181%

Cisco Networked Commerce: Ordering

Next: Automate the “Buy” Side Networked Commerce for Cisco’s Suppliers

Corporate Procurement Profile: Spend handled by Procurement Programs: $403 M Number of Transactions through Procurement: 90 K $4, 500 _____________________ Overall Average Transaction Value: Breakdown: Dollars Volume Purchase Orders ($17 K Avg Tx Value) $375 M (93%) 22, 500 (25%) Direct Orders ($485 Avg Tx Value) $24 M (6%) 49, 500 (55%) Procurement Card ($222 Avg Tx Value) $4 M (1%) 18, 000 (20%)

Transaction Types Appropriate and Affordable Solutions for Every Buying Scenario $ D O L L A R S $ Value Add, RFP, Contracts, Negotiations HIGH LOW Purchase Order Procurement Card Program Purchase Order Direct Order Programs LOW HIGH VOLUME C a t a l o g s

Supplier Alignment First Phase Catalog Suppliers - Include: Boise Cascade - Office Supplies Comkyl - Mfg Tools GE/Compucom - Desktop HW US Tech - phones/telecom Anixter - Cabling/Networking Andataco - HW/Terminals BT Redwood - Forms Sun Micro - HW Electro. Rent - Rentals BRG - Furniture Pagenet - Pagers Metricom - Modems Telepress - Bus Cards Wood Associates - promo

Why Change? Feed Forward Loop Process “Suppliers”: Inputs: Cisco Employees Vendors - quotes, specs P/R’s P/R Process Feed Back Loop Outputs: Process “Customers”: P. O. ’s P. O. Cisco Employees Vendors - POs/COs Feed Back Loop Input Issues: Process Issues: Customer Issues: • Incomplete Data • Cumbersome • “Black Hole” • Inaccurate Data • Highly Manual/Paper • Cycle Time • Illegible Data • Manual Data Entry • Routing Cycle Time • Backlogs+Faxing POs • Total Process • Lost Paper • Status Inquiry Replies • PO’s to Vendors Late

One Stop Web “Order” Entry Universal Interface 55% Reques ters Direct Order True Reqs A R I B A O R M S Visa Procurement Card D. O. Suppliers 25% Buyer Supplie Autocreate PO in Oracle 20% r Population

Transacting Transforming Purch R Old Model: How Purchasing got into the transaction business Tools R Tools: Visa, Web-Req (D. O. ) with “intelligent agents”, wizards, public and private catalogs

Web-Ordering Project Goals Cost Reduction Control Improvement • Process Cost ($100+) • Automatic Enforcement of Cisco Policy • Product Cost • Via System Enforced (invisible) Controls • Transaction Processing to Negotiating • Accuracy in Data via up front audits • Sales Offset Formula • Visibility Customer Satisfaction Cycle Time Reduction • User Friendly Interface • Error Reduction - quick picks, etc. . • One Stop Shopping • Requisition Creation Time - Catalogs • Better Status and Communication • Approval Routing (immediate e-mail) • Better Supplier Communication • PO Creation - ERP Integration • Enhance Purchasing Jobs • Supplier Receipt of Order - EC

Cost Savings Sales Offset Formula If Purchase $400 Million/Year If negotiate extra 3% off prices = $12 Million Savings If Corporate Profit Margin = 10% Then: $12 M/10% = $120 Million in Sales you DON’T need for the same bottom line. Conversely, in a 10% gross margin business, you’d need an extra $120 M in sales to generate the same bottom line as a 3% decrease in payments.

Requisition & PO Cycle Time Analysis Overall Average Weighted by Distribution: Total: 12. 84 Days; Signature 4. 75 = 37% of Time

Electronic Commerce - Purchasing Critical Components Catalog Management Requisition Management • Supplier Web Site up to date but user must know where to go on crowded internet • Automate Process; manual nightmare of lost paper and bad data • Custom Reformat of supplier catalogs but suppliers resistant • Minimize keystrokes: user profile info, pick and populate from catalog, quick picks, account codes auto assign, etc. • Keep frequently ordered items on local, high speed database on intranet with searching and links to internet • Approval Routing - accommodate business rules through existing tool (email, intranet) Transaction Management Interprocess Management • Place orders directly with Suppliers • Between Processes • No need to re-key into other systems • Between Systems • Information - status and visibility • Link and Leverage existing Applications • Reporting - value of knowledge • Cross Functional Communication

Paperless Interprocess Solution Purchasing - A/P - Receiving Payment Requestors Catalogs Receiving EC Approvers Buyers Distribution Suppliers

Cisco EC Projects Universal Interface Catalogs Direct Order Cisco Request EDI 862 E-Mail Ordering Approving Supplier Status Req ARIBA ORMS O r a c le * Yellow = Ariba P u r c h a s i n g Shipment Confirm. ERS Invoice Cisco EDI 810 Accounts Purchase Order EDI 850 Cisco Receiving Single Ent. Payable Population Payment EDI 820

Process - How We Got Here 1. Business Process Analysis (As-Is) 2. Interview Stakeholders (Desired To-Be) 3. Requirements Document 4. Analyze Industry (Bus, Functional, Technical) 5. Make Vs. Buy 6. Award Contract 7. Implementation

Implementation Key Functional Activities 1. Business Rules Definition 2. Supplier Alignment Policy/Operating “Practices” Kickoff/Education/Bene’s Renew Requirements Follow-up/CIF Content Ariba Document for Coding EC Agreement 3. Catalog Organization 4. Adapter Interfaces CIF integration into Ariba Sources (Accts, Depts…) Map items-SPSC-Com-Structure Filters/Data Validation 5. Product Knowledge Familiarization - Detailed 6. Cheerleader Promotion /Excitement Usability/Unit Testing Change Management Conference Room Pilots Corporate Support

Timeline - Planned Phases May Introduction Planning Installation Implementation Deployment Roll-out Phase 1 June July Aug Oct Sept Nov • Assess Project Scope Phase 2 • Finalize Work Plan / Map Requirements Phase 3 • Install Software / Adapters / Catalogs Phase 4 • Customize & Test Phase 5 • Acceptance & Feedback Phase 6 • Upgrade/Production Roll-out System ‘Live’