papinet_Value_Proposition

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Published on January 9, 2009

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Slide 1: Realizing the Value of an e-Enabled Supply Chain Robert Pyzdrowski RR Donnelley October, 2003 Generating Value And ROI From papiNet : 2 Generating Value And ROI From papiNet papiNet offers the opportunity to improve the entire supply chain papiNet is an enabler for collaboration, information sharing, process improvement and shared decision making A critical mass of participants across the value chain is needed in order to generate significant value Collaboration Across The Supply Chain Benefits All Parties : 3 Collaboration Across The Supply Chain Benefits All Parties The Network Effect: the payoff and benefit of using a system increases exponentially as the number of users increases The Merchandiser/Publishing, Paper & Print Supply Chain Is Not Optimized Today : 4 Too many supply chain managers Poorly coordinated and non-standardized communications and work flows Excessive inventory at printer and/or manufacturer Mediocre returns on invested capital in paper and printing Investor pessimism results in low stock prices and P/E ratio Third party intervention: Paper brokers, dot-com’s Customer distrust of mills and printers Slow adoption of XML and e-business links Declining pace of technological innovations compared to 1970’s and 1980’s Growth rate at 1% and declining Lack of collaboration and shared decision making These problems will not be solved through further industry consolidation The Merchandiser/Publishing, Paper & Print Supply Chain Is Not Optimized Today Slide 5: 5 Product Attributes Planning Request For Quotation Availability Purchase Order Order Confirmation Call-Off Order Status Inventory Status Product Quality Usage Inventory Change Product Performance Delivery Message Goods Receipt Invoice Credit/Debit Note Business Acknowledgement Information Request Complaint Complaint Request Plan Make Deliver Source Utility papiNet Provides Standards For Communication Between Partners 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 The Supply Chain “Iceberg” : 6 Transactional Efficiency Trim waste Web breaks Process delays Yield Excess freight Late Deliveries Transit damage Multiple handling End-to-end cycle-time Warehouse fees Data Critical to Making Improvements: Press delays Delays Press damage Inventory turns Strip waste Damage Perceived Value Intrinsic Value The Supply Chain “Iceberg” Different Perspectives Lead To Different Viewpoints Of The Value Of papiNet : 7 Different Perspectives Lead To Different Viewpoints Of The Value Of papiNet papiNet Is An Enabler For Collaboration And Creating Value : 8 Data Collection: Merchandisers & publishers Printers Paper Companies papiNet is the Foundation… papiNet Is An Enabler For Collaboration And Creating Value … for enabling collaboration that will generate value within the supply chain. Supply chain partners can leverage data to drive improvement and eliminate waste Data Transmission (XML) Specifications: PapiNet Messages Common Definitions Standards Implement improvement projects Identify improvement opportunities and select improvement projects Data Review and Analysis Data Aggregation Slide 9: 9 To achieve maximum ROI potential, data must be: Collected Analyzed Used to inform and identify improvement opportunities Collaboration Is The Key To Value Creation The opportunities must be acted upon to deliver value! Project Example: Increase Average Roll Diameter To Reduce Total Cost : 10 Project Example: Increase Average Roll Diameter To Reduce Total Cost Increased roll diameter reduces waste, number of SKU’s, and material handling Establish papiNet links between printer & paper supplier Co-develop scorecard and feedback metrics Use data results to increase the average roll diameter and reduce total cost Slide 11: 11 11 Project Example: Lower Number Of Web Breaks To Reduce Waste Use scorecard and feedback metrics to measure paper performance on press Paper supplier used data to change how paper was produced Resulting paper ran better on press, reducing waste, delays and web break penalty charges Web breaks result in paper waste, delays and web break penalty charges The Opportunities Are Significant For All Parties Within The Supply Chain : 12 A 20% reduction in inventories would cover the annual dividend payout for a major paper company Four large paper companies have a total of over $5 billion tied up in inventory One large printer has approximately 15% of manufacturing floor space consumed by paper storage – the equivalent of 3 large plants One large paper company reports recovering only a small portion of the millions of dollars of annual freight damage Merchandisers and publishers can free-up cash flow to startup or acquire new properties The Opportunities Are Significant For All Parties Within The Supply Chain Slide 13: 13 Use E-Business as an opportunity to review your entire supply chain Recognize that papiNet is an industry-wide opportunity to lower costs Position papiNet 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 papiNet-enhanced future business model that includes your trading partners Sell the project as essential to this future model of doing business How Do I Get A papiNet Project Started? There Must Be A Critical Mass Of Users To Improve The Efficiency Of The Supply Chain : 14 Next Steps: Mobilize the “critical few” major players The “critical few” establish timelines for implementation and expectations of their trading partners Confirm message selection and priority with major trading partners Focus on collaboration, not just implementing papiNet links There Must Be A Critical Mass Of Users To Improve The Efficiency Of The Supply Chain The IT cost of implementation will not be justified by the transactional efficiency alone. Participants will only generate significant ROI through collaboration to improve supply chain efficiency. Slide 15: Enabling Supply Chain Collaboration Slide 16: 16 Appendix papiNet Mission & Goals : 17 “papiNet is the global initiative to develop, maintain and promote the implementation of standard electronic transaction standards to facilitate the flow of information and facilitate computer to computer communications among all parties engaged in the buying, selling, and distribution of forest, paper and wood products. The set of standards is referred to as the papiNet standard. The standards include common terminology and standard business documents (e.g. purchase orders, shipping notices, and invoices). The goals are to improve the reach and richness of communication throughout the supply chain, increase efficiencies in transactions and marketplace activities, and to support interoperability among trading partners. The papiNet standards are open and freely available.” Source: papiNet website papiNet Mission & Goals Needs for and Benefits of Standards : 18 Needs for and Benefits of Standards "The Internet offers new opportunities for efficient and cost-effective execution of transactions. It is a truly global infrastructure available to all. It is also more cost-effective than the value-added networks (VANs) that EDI is built upon. “ "The papiNet standard is open, free, and easy to adopt, providing common benefits to supply chain participants. With the papiNet standard, companies will no longer need to negotiate and agree on data definitions and formats with each trading partner, a costly and arduous task. Instead, papiNet provides a common messaging interface to enable supply chain partners to have: a simplified process for dealing with multiple suppliers and customers through use of common business solutions. reduced manual work, resulting in fewer entry errors and improved supply chain management (e.g. replenishment, VMI). more "real-time" exchange of information and greater electronic information availability. the opportunity to participate in e-business transactions, irrespective of company size or technical expertise. " Source: papiNet website The RosettaNet Value Proposition : 19 “A company's demand management, direct material procurement, logistics, part management and order fulfillment processes are closely linked to supply chain partners. Value is created by close integration of these processes among the company’s suppliers, logistics & service providers and customers. Collaborative processes that provide visibility to forecasts, inventory levels, order execution, and shipments between trading partners achieve this. The collaborative process is hampered by lack of industry-wide processes and data standards that enable system-to-system automation of core processes…..” “In today’s competitive world, well-oiled and responsive extended supply chains are increasingly becoming a foundation for competitive advantage. No longer can companies restrict their focus on increasing supply chain efficiencies within the four walls of the enterprise. The supply chain that extends beyond a company’s organizational boundaries increasingly determines its effectiveness. There is an increasing dependence on "collaboration" as key to bridging the boundaries – not only within the enterprise, but also between enterprises and across industry boundaries.” “Adoption of RosettaNet standards could well be a critical factor in bringing the high technology dream of dynamic value chain management to fruition.” Source: RosettaNet website, Implementing RosettaNet E- Business Standards for Greater Supply Chain Collaboration and Efficiency The RosettaNet Value Proposition The Print Supply Chain – Improvement Opportunities : 20 Mill Warehouse Train/Truck Warehouse Warehouse Press Warehouse Printer Dock Distribution Center Truck Warehouse Bind Customer/ Consumer W,Q I,W,C,H W,C,Q,H I,W,C,H I,W,C,H W,C,Q I,C,H I,W,H W,H C,Q I,C,H Q,H C Improvement Opportunities: I: Inventory/Working Capital W: Waste C: Cycle-time Q: Quality H: Multiple handling The Print Supply Chain – Improvement Opportunities Slide 21: 21 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 Slide 22: 22 Total papiNet Trading Partner Implementations: In Production & Short Term Plans 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 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 Implementation Status Population and paper consumption per capita in 2001 : 23 Population and paper consumption per capita in 2001 Source: PPI Annual Review 2002 Western Europe China Other Asian countries Japan Latin America Africa Oceania Worldwide North America Paper consumption, kg per capita: 52 Other Europe 303 527 316 340 31 392 201 15 2456 127 242 148 30 35 1285 807 29 6 Populations, millions: 6,090 Market Size Slide 24: 24 Getting a Project Started Use E-Business as an opportunity to review your entire supply chain Recognize that papiNet is an industry-wide opportunity to lower costs Position papiNet as a partnership with key trading partners to improve the supply chain Include suppliers, publishers, merchants, printers, component vendors Develop a vision of a papiNet-enhanced future business model that includes your trading partners Sell the project as essential to this future model of doing business Partner with Solution Providers Slide 25: 25 Other Industry Benefits From Standards Industry Standard Message Priorities : 26 Message Priorities Top Priority Next Priority

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