Phelps DodgeCorporation

Quadrem Progress and Next Steps

Jens BrownSourcing Process Leader

Quadrem Progress and Next Steps

•Discuss Quadrem activities and targets.

•Keys to Progress•Quadrem Value Proposition• ‘Site X’ – Real World Spend Analysis•Tools for Progress

•Realization of Quadrem Benefits•Roadmap•Assumed Receipt & Catalog Integration

•Tool Kit

Progress on Throughput and Transactions

Throughput and Transactions

$0.00

$2,000,000.00

$4,000,000.00

$6,000,000.00

$8,000,000.00

$10,000,000.00

$12,000,000.00

2001 Total 2002 Total 2003, Oct 1Year

USD

0.00

5000.00

10000.00

15000.00

20000.00

25000.00

30000.00

35000.00

40000.00

45000.00

50000.00

Trans

actio

ns

Total Dollars Total Count

Progress on Key Suppliers Catalogs

2002 – Q1

39%

2003 – Q1

80%

2003 – Q3

88%

2002 – Q3

55%

•Significant progress on key suppliers – e.g. BOISE.

•88% of Office Sup. spend now with BOISE. About 50% from eCatalog.

•Leverages savings and relationship

HistoricPrice

Volume Or

CBEPrice

Sliding Scale Pricing

Integrated ElectronicProcesses

Product Standards

Build Opportunities into the Supplier Relationship

Market Basket Price

Key to Progress – Quadrem Value Proposition

Getting to the next level is key!•Usable Application + Knowledgeable Users is

only part of the Equation!•Site Manager commitment•Consistent message•Commodity Mgr determined savings by Supplier.

Case in point – •Let’s use a ‘Site X’ Example of general spend

analysis.•Simple exercise of mapping ProCard Spend on

Quadremable items & suppliers to Quadrem

Department #1

•Dept. of 12 people - Five Pro Card users in Department

•Average Spend $12,000 per employee on Pro Card•Used 20 different Suppliers

•$10,000 Quadremable dollars•$10,000 x 10% = $1,000 Average Savings per

Pro Card User over 9 Months.

‘Site X’ Example -Breakdown

‘Site X’ Example -Breakdown

Department #2

•Dept. of 12 people - Six Pro Card users in Department

•Average Spend - $70,000 per employee on Pro Card•Used 40 different Suppliers

•$60,000 Quadremable dollars•$60,000 x 4%= $2,400 Average Savings per Pro

Card User over 9 Months.

‘Site X’ - Lost Opportunity

Immediate Lost Opportunity$1,000 Avg. Savings/Pro Card User Dept. #1$2,400 Avg. Savings/Pro Card User Dept. #2$3,400

Average Savings over period•$1,700 Average savings per Pro Card User •$1,700 x 120 ProCard Users = $204,000 Lost

Opportunity for Savings for first 9 months.

Savings Potential is Real•$189 x 120 Pro Card users = $22,680/MO•$22,680 x 12 = $272,160 per year Savings Potential•$22,680 x 3 = $68,040 4th Qtr. Savings Potential

‘Site X’ - Challenge

Throughput and Saturation• Direct relevant and appropriate spend• Continue with saturation success across all eCatalogs.• Engage local & national suppliers

Savings Opportunity• Realize broader and measurable savings by driving ProCard users to

Quadrem for appropriate suppliers.• ‘Site X’ Pro Card Spend (9 Month) = $2,515,000• Quadrem Spend (9 Month) -- $88,000• Area for improve within Delta $2,427,000

Tools for further progress

•Use a formula approach similar to this – Fill in the blanks.

•Know the suppliers and their offering.•eCatalogs can mean implemented savings for

CBE awards.•Analyze ProCard spend, make relationship

between current ProCard usage and those suppliers within Quadrem eCatalog.

Future of eCatalogs & transactions

Time, Complexity, (Risk) Cost

Inte

ract

ive

Soph

isti

cati

on

TradingTradingImprovemenImprovementt

FullyFullyTransactionTransactionalal

Brochureware:Brochureware:(Informational (Informational only)only)

Web Interaction:Web Interaction:Relevant & SecureRelevant & Secure

InformationInformation

Future of eCatalogs & transactions

Time, Complexity, (Risk) Cost

Inte

ract

ive

Soph

isti

cati

on

TradingTradingImprovemenImprovementt

FullyFullyTransactionTransactionalal

Web Interaction:Web Interaction:Relevant & SecureRelevant & Secure

InformationInformation

Brochureware:Brochureware:(Informational (Informational only)only)

5%

60% ofQuadremeCatalogSuppliers

25%

10%

Realization of Quadrem Benefits

•How PD utilizes Quadrem today is the ‘Tip of the Ice Berg’.•Beginning of savings and compliance based on eCatalog sup.•Other Buying Organizations are paving the way

•Quadrem Hosted BuyerQuadrem Hosted Buyer•Low $, High Transaction VolumeLow $, High Transaction Volume•eCatalog expertise is growingeCatalog expertise is growing

Realization of Quadrem Benefits

•How PD utilizes Quadrem today is the ‘Tip of the Ice Berg’.•Beginning of savings and compliance based on eCatalog sup.•Other Buying Organizations are paving the way

•Quadrem Hosted BuyerQuadrem Hosted Buyer•Low $, High Transaction VolumeLow $, High Transaction Volume•eCatalog expertise is growingeCatalog expertise is growing

•Extending capabilities, trackingExtending capabilities, tracking•Experience, Buying Org. tractionExperience, Buying Org. traction

Realization of Quadrem BenefitsAssumed Receipt and Payment via MIMS

•Anticipate the future incorporation of automatic / assumed receipt and streamlined payment methods – Reduce User Reconciliation.

•Concepts include leveraging ‘ERS’-type processes to pay suppliers in a more automated fashion - Enhance process efficiency.

MIMS MIMS QuadremQuadremeCatalogeCatalog

QuadremQuadremBuying App.Buying App.

Realization of Quadrem BenefitsCatalog and Content Integration with MIMS

•Anticipate the future incorporation of eCatalogs into the MIMS Environment – LinkOne, Quadrem or other options are available.

•Convergence of process and systems to be MIMS centered.

•Broad opportunities exists with integration

MIMS MIMS QuadremQuadremeCatalogeCatalog

QuadremQuadremBuying App.Buying App.

Realization of Quadrem Benefits

•How PD utilizes Quadrem today is the ‘Tip of the Ice Berg’.•Beginning of savings and compliance based on eCatalog sup.•Other Buying Organizations are paving the way

•Quadrem Hosted BuyerQuadrem Hosted Buyer•Low $, High Transaction VolumeLow $, High Transaction Volume•eCatalog expertise is growingeCatalog expertise is growing

•Extending capabilities, trackingExtending capabilities, tracking•Experience, Buying Org. tractionExperience, Buying Org. traction

•Move process closer to suppliers Move process closer to suppliers (VHS, ASN, PO Change)(VHS, ASN, PO Change)

•Leverage Leverage Quadrem HUBQuadrem HUB - Broad, - Broad, e-enabled supply-basee-enabled supply-base

•Transaction efficiency/improvedTransaction efficiency/improved•Standardized method to transact Standardized method to transact

with preferred suppliers.with preferred suppliers.

Quadrem Road Map and Approach

•Continue with an approach that addresses both Global Supply Chain & Supplier oriented Values.

•Understand where Quadrem, MIMS and other tools can be driven to maximize process opportunities.

•Early supplier involvement – [Tool Kit Item]•Supplier Profile Form

Questions