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EDI Future Environment InitiativeProject Kickoff
12/15/2004
Corporate Information Technology
Presentation ContentsPresentation Contents
Project Goals and Phases Review of Canon’s EDI System and Processes Customer and Market EDI Initiatives Proposed Future EDI System and Alternatives Review of Potential Vendor Solutions
Project Review
The purpose of this presentation is to (1) review the current architecture and processes involved with the processing of Electronic Data Information at Canon USA, (2) analyze B2B market trends and customer-driven initiatives, (3) and review potential future solutions for conducting EDI transactions.
Key Business GoalsKey Business Goals
Improve response time to customer EDI requests Expand EDI Transaction Types Reduce Manual Business Transactions Reduce EDI Processing Errors and Reduce EDI expenses and Manual Intervention Develop flexible and scalable B2B infrastructure
Project GoalsProject Goals
• Short Term Goals
• Complete existing 810 & 850 transaction requests from Customers
• Evaluate current EDI Business Processes and systems
• IT to work proactively with CIG Sales Administration to improve communications with customers
• Action Items
• Review current customer requests and schedule meetings with IT/SA
• Document current EDI business processes and designate areas for improvement
• Set goal of completing open 810 & 850 requests by March 31, 2005
• Establish new IT Liaison between for external communications with customers
Project GoalsProject Goals
• Long Term Goals
• Completely overhaul the existing EDI platform moving to a new streamlined solution that will allow for flexibility and scalability with B2B processes
• Provides opportunity to increase communication channels for EDI transactions and increase response to industry and customer initiatives
• Action Items:
• Develop new B2B strategy across the organization
• Consolidate two EDI platforms into one cohesive EDI platform
• Implement improved e-commerce B2B platform to better serve customer needs and reduce EDI operating expenses/increase cash flow
• Restructure EDI business processes to provide improved internal and external communication as well as reduction in time to complete customer transaction requests
Project GoalsProject Goals
Project PhasesProject Phases
Project Definition
Project Design
Project Pilot
Vendor Criteria/Proposals
Document Internal Processes
Survey Customer B2B Capabilities
Review Canon’s B2B capabilities
Develop B2B Alternatives
Current EDI Issue Resolution
Vendor Evaluation/Selection
EDI Process Reconstruction
Update EDI Documentation
Develop On-Boarding Kits
Installation of Test Environment
Construct Customer B2B Pilots
Project GoalsProject Goals
Installation of Production Environment
Develop Pilots in new environment
Configuration of B2B Environment
Conduct CRP/ Support Programs
Resolve Issues with new system(s)
Develop Go Live Plan/Cutover Strategy
EDI Market EDI Market OverviewOverview
EDI revenues forecasted to be $2.1 billion by 2006
US-based transaction value estimated to exceed $3.2 trillion
EDI transactions primarily utilize a VAN (Value Added Network)
EDI can now be transported over Internet-based communications (XML, etc.)
EDI Market Trends
EDI Transactions (% of Sales)
CIG EDI Transactions by Business UnitCIG EDI Transactions by Business Unit
Camera 41%
Video 42%
Printer 85%
ISG (B) 94%
Current EDI SystemCurrent EDI System
CIG Sales through EDI = $1.3B
Total Sales through EDI = $2.8B
CIG Sales processed via EDI = 47%
Total Sales processed via EDI = 48%
EDI Transaction VolumesEDI Transaction Volumes*
(Based on Sell to Customer)
Current EDI SystemCurrent EDI System
* CIG and ISG Transactions
Camera Customers utilizing EDI = 1%
Video Customers utilizing EDI = 2%
Printer Customers utilizing EDI = 16%
Overall Customers utilizing EDI = 2%
EDI Customer UtilizationEDI Customer Utilization**(Based on Sell to Customer)
Current EDI SystemCurrent EDI System
* CIG and ISG Transactions
Trading PartnerTransaction
Types
J & R MUSIC WORLD 1JCPEN 5KMART 4LAGUNA 3Lord & Taylor 0Meijer 2Merrill Lynch 1MICRO ELECTRONICS, INC. 3NAVY EXCHANGE 1NEMF 1New England Audio 0NFM 1NIPPON 3NPME 1Ocean USA 1OFFICE DEPOT 5OFFICEMAX, INC. 4PC CONNECTION, INC. 3Philips Petroleum 1Pitney Bowes 1PRTY 2PSI 3PTAT 1QUILL CORPORATION 1Radio Shack 2REI 0Robinson May 3SEARS 4SEFL 2SERJ 2SP RICHARDS COMPANY 1STAPLES, INC. 8SUPPLIES NETWORK, INC. 4SVBA 2TARGET STORES 6TECH DATA 5TRANSAMERICA 1UNITED STATIONERS 5UPSN 2Veterans Administration 1WALMART 9West Marine 0WWAT 1YFSY 1
Trading PartnerTransaction
Types
AAFES 4ABFS 1ACCESS BUSINESS GROUP LLC 1AIG 1AMAZON 2APL 1BANK ONE 2BANKONELOCK 1Best Buy 6BJ'S WHOLESALE CLUB, INC. 2BOISE 2BrandSmart 0Cabela's 0CBS 2CDW 5CIRCUIT CITY STORES, INC. 6CITI Group 2CLJ 1COMPUSA 4COSTCO COMPANIES, INC. 4D & H DISTRIBUTING CO. 4DANKA 2De Lage Landen 1DEER 1DEUTSCHE FINANCIAL 1DUCKWALL-ALCO STORES INC 1EXNN 1EXPEDITORS 2EXPRESS COMPUTER SUPPLY 2Exxon 1Famous Barr 3FED EX 2FILENE 3FMEYER 2FOLEY 3FRY's 0Hecht 3HEIDEL 1HP 3IBM 4IKON 5INGRAM MICRO D INC. 5
Current EDI SystemCurrent EDI SystemCIG Trading Partner
Analysis
TP Purchase Orders = 60%
TP Invoices = 50%
TP ASN = 20%
TP Point of Sale = 15%
TP Sales Advice = 12%
TP Inventory Advice = 8%
TP Payment Advice = 8%
TP PO Change = 7%
TP PO Ack = 2%
TP EDI Advice = 2%
AAFES A130 AAFES Y Y Y Y Y Y
ACCESS BUSINESS GROUP LLC AAD9 AMWAY Y Y Y
AMAZON.COM A97E AMAZON Y Y Y Y Y Y
BEST BUY PURCHASING LLC B20S BESTB Y Y Y Y Y Y
BJ 'S WHOLESALE CLUB, INC. B15I BJ Y Y Y Y
BOISE CASCADE B453AA BOISE D D Y Y
BRANDSMART (potential for 2005)
CABELA'S (live J anuary 2005) D
CARLSON MARKETING GROUP C17F CMG Y Y Y Y
C LLOYD J OHNSON J 038 CLJ Y Y
CDW COMPUTER CENTERS, INC. C87B CDW Y Y Y Y Y Y
CIRCUIT CITY STORES, INC. W10U CIRCTY Y Y Y Y Y Y
COMP USA S65D COMPU Y Y Y Y Y Y
COSTCO COMPANIES, INC. P49D PRICOS Y Y Y Y Y Y
D & H DISTRIBUTING CO. DH01 DH F F Y F F F Y F
DEERFIELD DISTRIBUTING D42M DEER Y
DISTRIBUTION MANAGEMENT(D/B/A SUPPLIES NETWORK)
A064 DMI Y Y Y Y
DUCKWALL-ALCO STORES INC D492 DUCKWAL Y M M
EXPRESS COMPUTER SUPPLY E33X EXCOMP Y Y Y Y
ECKERD E297 ECKERD Y Y
FAMOUS BARR F574 FMSBARR Y Y
FINGERHUT F55D FNGHUT Y Y Y Y
FILENE'S (May Co. account) F53K FILENE Y Y
FOLEY'S (May Co. account) F539 FOLEY Y Y
FRED MEYER R198 FMEYER M M Y M M Y
FRY'S (2005 POTENTIAL NEW) F170 F F F
HECHT'S (May Co. account) H37D HECHT Y Y
INGRAM MICRO D INC. I415 INGRAM Y Y Y Y Y Y Y Y
INGRAM MICRO D INC. (Dell business) 1987 INGRAM2 Y Y F F Y Y F F
INGRAM MICRO D INC. (Buy.com) I24M INGRAM3 Y Y F F Y Y F F
INGRAM MICRO D INC. (Gateway) I25M INGRAM4 Y Y F Y Y F
J & R MUSIC/COMPUTER WORLD J 677 J RDIST F F F F Y Y Y Y
J CPEN P14E J CPEN Y Y
KMART K36T KMART Y Y
LAGUNA CORPORATION L26Z LAGUNA M M Y Y
Lord & Taylor (May Co. account) L38T LRDTLR Y Y
Meijer W309 MEIJ ER Y Y Y Y Y Y
MICRO ELECTRONICS, INC. M19T MICROCN M M Y M M Y
NAVY EXCHANGE SERVICE COMMAND N060 NAVY Y Y Y Y
NEBRASKA FURNITURE MART N11L NFM Y Y Y
New England Audio (2005 target) R R R R
OFFICE DEPOT, INC. O112 OFFDEP Y Y
OFFICEMAX, INC. O377 OMAX Y Y
PC CONNECTION, INC. P35G PCCONN R R Y R R Y
QUILL CORPORATION QUILL R Y
RADIOSHACK T39N RDSHACK Y Y
REI Outfitters (live J anuary 2005) D D
ROBINSON-MAY (May Co. account) R36M RBSMAY Y Y
SEARS ROEBUCK & CO SAL5 SEARS Y Y Y Y
SP RICHARDS COMPANY R661 SPRICH Y Y
STAPLES, INC. S35V STAPLE Y Y
SYNEXX S2NX SYNEXX Y Y Y Y
TARGET STORES T417 TARGET Y Y Y Y Y Y
TECH DATA T22T TECHD Y Y Y Y Y Y Y Y
UNITED STATIONERS U402 US Y Y Y Y Y Y
WEST MARINE WSTMAR D D
WALMART W385 WALMA Y Y Y Y Y Y Y Y
SAM'S CLUB SAMS Y Y Y Y Y Y
Total Requests by TypeTotal Requests by Type
Future (F) = 17
Manual (M) = 6
Requested (R) = 14
Development (D) = 18
Total Requests* = 55
Current EDI SystemCurrent EDI System
Open CIG Transaction RequestsOpen CIG Transaction Requests
*Total Current CIG Transaction Sets = 155
Current EDI SystemCurrent EDI System
Current CIG TP Analysis
TP Purchase Orders = 60%
TP Invoices = 50%
TP ASN = 20%
TP Point of Sale = 15%
TP Sales Advice = 12%
TP Payment Advice = 8%
TP Inventory Advice = 8%
TP PO Change = 7%
TP PO Ack = 2%
TP EDI Advice = 2%
Potential CIG TP Analysis*
TP Purchase Orders = 68%
TP Invoices = 63%
TP ASN = 32%
TP Point of Sale = 15%
TP Sales Advice = 15%
TP Payment Advice = 18%
TP Inventory Advice = 12%
TP PO Change = 12%
TP PO Ackn = 8%
TP EDI Advice = 2%*Including Open Requests
Purchase Orders a Year = 170,000
Average Time to Process a PO Manually = 15 minutes
Average Labor Rate per manual PO = $6.25
Savings from EDI PO Transactions
PO EDI Transactions = 170,000
Manual Processing Costs = $6.25
Total $1,062,500
Canon ROI for EDI
Current EDI SystemCurrent EDI System
Current EDI SystemCurrent EDI System
Canon Order Processing Method AnalysisCanon Order Processing Method Analysis
EDI Processed 119 2% 170,911 42% 656,229 39% 2,757,965,902.58 48%
Extranet Processed 1,806 29% 128,701 31% 547,328 33% 1,444,597,412.42 25%
Manually Processed 4,380 69% 111,817 27% 464,267 28% 1,501,821,610.39 26%
GRAND TOTAL 6,305 100% 411,429 100% 1,667,824 100% 5,704,384,925.39 100%
METHOD % % % Dollar Volume %Customers Orders Order Lines
EDI Processed 119 2% 170,911 42% 656,229 39% 2,757,965,902.58 48%
Extranet Processed 1,806 29% 128,701 31% 547,328 33% 1,444,597,412.42 25%
Manually Processed 4,380 69% 111,817 27% 464,267 28% 1,501,821,610.39 26%
GRAND TOTAL 6,305 100% 411,429 100% 1,667,824 100% 5,704,384,925.39 100%
METHOD % % % Dollar Volume %Customers Orders Order Lines
31% of Customers Utilize Electronic 31% of Customers Utilize Electronic OrderingOrdering
73% of Sales Processed Electronically73% of Sales Processed Electronically
Existing ArchitectureExisting Architecture
Trading Partner
PO’s
Trading Partner Invoice
Trading Partner
ASN
Trading Partner Credits
Trading Partner Receipts
Canon EDI
Mailbox (VAN)GENTRANESS
Setup Warehouse (4 Systems)
Mainframe S80
Order Processing
Electronic
Messaging
Database
•Invoice
•POS
•ASN
•PO
Current EDI SystemCurrent EDI System
Current EDI SystemCurrent EDI System
New Trading Partner SetupNew Trading Partner Setup
Customer Customer SetupSetupBill-to Customer Sell-to Customer
Tax Information Credit
Profile Invoice Recipient Delivery Data Payment Terms Product
Restrictions
Product SetupProduct SetupGlobal Product Data Packaging Data
Customer Item Description
Maintenance Codes
Conversion Conversion Tables Tables
Trading Partner UOM Trading Partner Terms Trading Partner Ship-to Trading Partner Sell-to
Trading Partner SKU
Price List Price List Setup Setup Price List Definition Price Management
Basic SetupBasic SetupTrading Partner Code File Format Payment Terms Active Flag
Output File Path
The following data fields must be properly setup and continually maintained in order to prevent EDI processing errors with Trading Partners Purchase Orders.
Current EDI SystemCurrent EDI System
Purchase Order Process FlowPurchase Order Process Flow
PO extracted PO extracted from Canon from Canon
EDI EDI MailboxMailbox
PO Translated PO Translated by GENTRANby GENTRAN
File Mapped to File Mapped to Canon’s Internal Canon’s Internal FormatFormat
PO loaded into PO loaded into Canon EDI PO Canon EDI PO
DatabaseDatabase
PO Data PO Data validated by validated by
ESS EDI ESS EDI ModuleModule
The following steps represent system processes that must be completed in order to process a customer’s purchase order.
Order Lines Order Lines created in ESScreated in ESS
Current EDI System/Process LimitationsCurrent EDI System/Process Limitations
Time to complete customer EDI requests unknown Open 810 & 850 customer EDI requests Issue Tracking and IT Response Current Platform does not provide seamless integration
with customer driven initiatives (UCCnet, etc.) Data Maintenance/EDI Errors Inefficient Business Processes related to EDI Inadequate Communication with Customers
Current EDI SystemCurrent EDI System
Proposed Benefits of New B2B SystemProposed Benefits of New B2B System
Decrease time required to complete transaction requests by utilizing new data mapping technologies and software
Expand types of EDI transactions to allow for increased electronic transactions with customers and exchanges
Reduce transaction costs and labor required to process traditional EDI mappings and transactions
Create B2B environment that will accommodate future changes in legacy systems and applications
Streamline Trading Partner Management processes
Future ArchitectureFuture Architecture
Future ArchitectureFuture Architecture
Oracle ERP
Warehouse (4
Systems)
Mercury
Legacy Systems
EDI (VAN)
Trading Exchange
Business Process Management
Web Service Integration
Trading Partner Management
B2B Integration
Enterprise Application Integration
XML (Internet)
Web Portal
Extranet
Trading Partners
Trading Exchange
VAN/ Service
Providers
B2B PlatformB2B PlatformInternalInternal ExternalExternal
Trading Partner
PO’s
Trading Partner Invoice
Trading Partner
ASN
Trading Partner Credits
Trading Partner Receipts
Oracle ERP
Warehouse (4
Systems)
Custom Application
s
Legacy
EDI (VAN)
XML (Internet)
E-MailWeb Portal
Internet
Future ArchitectureFuture Architecture
EDI Future Environment TimelineEDI Future Environment TimelineEDI Future Environment TimelineEDI Future Environment Timeline
4Q 20044Q 2004
1Q 20051Q 2005
1W 2W 3W 4W 1W 2W 3W 4W
Project Kickoff/ Contact Vendors
1W 2W 3W 4W
2Q 20052Q 2005
New Vendor Evaluations
Define Functional Requirements/Futu
re EDI Strategy
1W 2W 3W 4W 1W 2W 3W 4W 1W 2W 3W 4W 1W 2W 3W 4W
Go Live
Complete existing 810 & 850 requests from
Customers
Vendor Selection
New System Implementation
Development/User Acceptance Testing
Internal/CustomerTraining
Proposed TimelineProposed Timeline
Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05
Vendor Evaluation/PresentationsBEAOracleIBMwebMethodsTIBCOSterlingDevelop Vendor Selection CriteriaVendor SelectionContract Negotiations
Detailed Functional Requirements
Back-End DevelopmentCommerce Software SelectionHardware AssessmentOrder ManagementTransaction Processing/ReconciliationWarehouse AssessmentPhone Rep SupportCustomer Database (commerce only)Application DevelopmentProduct Information Database Alignment
Cost Structure Analysis/Posting
Process DevelopmentDetailed Functional RequirementsDevelop EDI StrategySite Update/EnhancementsOngoing Operations
February System Requirments
Complete
Wed Dec 15Project Kickoff
Proposed TimelineProposed Timeline