Purchasing Made Easy: Oracle and the Penn Marketplace NAEB Annual Meeting April 5, 2002 University of Pennsylvania Ralph Maier

Presentation Agenda Procurement Overview Our Vision Business Objectives Business Partners Benefits of eProcurement Supplier Recruitment Catalog Content Development Critical Success Factors Lessons Learned How Are We Doing What’s Next eProcurement Demonstration Contact Information

Procurement Overview Annual purchase order activity of $415 Million & 148,000 transactions Decentralized point-of-demand procurement environment Oracle Financials (Release 11i of Purchasing, Payables & General Ledger) –1,500 system users as of January 2 –2,500 to 3,000 system users projected by June 2002 MasterCard Procurement/Fleet Fuel Credit Card Program –1,400 current cardholders –$18 Million & 105,000 transactions Procurement staff of 12 (10 professional & 2 non-professional)

Our Vision Integrated university-wide solution from requisition creation to supplier payment Delegate authority and responsibility for item selection and purchase requisition creation to the employee desktop Provide multi-supplier searching and product selection in a single shopping session Facilitate finding the desired item quickly and easily from “preferred contract suppliers” Shift procurement activity to suppliers that support Penn’s strategic procurement direction Enhance internal electronic marketing of procurement information, initiatives and “preferred contract suppliers”

Business Objectives Reduce time & effort related to creating purchase transactions Provide online access to “preferred contract supplier” catalog content and Penn contract pricing in a private exchange Create at least 75% of purchase transactions from online contract suppliers Leverage University buying power, consolidate supplier base and identify new cost savings opportunities Reduce maverick buying Increase use of Electronic Data Interchange (EDI) Streamline payment process by eliminating paper (invoices & checks) Maximize prompt pay discount opportunities

Business Partners Oracle Corporation - The backbone of Penn’s financial management systems (Oracle’s Release 11i and Internet Procurement Electronic Requisition IP 5.0 for seamless integration with the Penn Marketplace) TPN (subsidiary of GE Global Exchange) - Standardizes catalog content and provides management and hosting services for Penn specific supplier catalog content in the Penn Marketplace GE Global Exchange Services - Provides Electronic Data Interchange (EDI) translation and mailbox services for Penn Marketplace suppliers (Standard method of sending purchase and change orders to designated suppliers and receiving invoices)

Benefits to Penn Faculty and Staff Reduction in time and effort related to creating and approving purchase transactions Point-of-demand access to an electronic requisition via a web browser Online access to Penn specific supplier catalog content and contract pricing Delegated online purchase order approval for transactions less than $5,000 Elimination of competitive bidding requirement for purchases from “preferred contract suppliers” Online access to procurement related policies, procedures and suppliers

Benefits to Penn Suppliers Low cost annual subscription fee based business model –One time catalog content transformation fee –No transaction fees New “Preferred Contract Supplier” status Opportunity to significantly increase market share Direct access to all University faculty and staff involved in procurement Reduction in administrative effort for order processing Improved cash flow due to timely payment of invoices Opportunity for internal electronic marketing Participation in Penn sponsored “Preferred Supplier” trade shows

Supplier Database Analysis Approximately 25,200 suppliers in approved supplier database 5,252 suppliers received a purchase order during 12 month period 1,871 suppliers (36%) received only 1 purchase order 484 suppliers (9%) received more than 25 purchase orders (87% of annual purchase order transaction volume) Supplier management and recruitment focused on strategic suppliers

Supplier Recruitment Strategy Identify potential suppliers for participation in the Penn Marketplace Identify appropriate supplier contacts for eProcurement initiative, contracting, catalog content development, and ongoing content management Identify opportunities for supplier consolidation –Based on customer focus on product, not supplier Establish EDI trading partner relationships wherever possible Negotiate new or renegotiate existing “Penn pricing” contracts –Identify and track all negotiated product cost savings –New supplier pricing agreements have resulted in cost savings of $2.9 million.

Supplier Participation (as of March 29, 2002) Participating suppliers include but are not limited to: - Beckman Coulter-Bio-Rad Laboratories - BOC Gases-Fisher Scientific - Graybar Electronic-IKON Office Solutions - Newark Electronics-New England Biolabs - Perkin Elmer -Sigma Aldrich - Staples -Thermo Forma - VWR Scientific (through -Unique Advantage minority business partner)- Xerox (copier paper) -Contract Furniture Dealers (Steelcase, KI, Hayworth & Knoll) Marketplace content (325,000 products), available from 52 participating suppliers and approximately 1,800 manufacturers, represents 49% of Penn’s annual purchase order activity

Catalog Content Development Partnership between supplier representatives, Penn Procurement Specialists and eProcurement Manager Complete supplier catalog or limited product offering based on: –Penn purchase activity –Cost to supplier –Impact on content management Single supplier catalog for all University departments University-wide Penn contract pricing for all supplier products Penn and Supplier representatives use TPN’s online catalog content management tools to review and approve production catalogs Requires formal process, timeline and responsibilities (Supplier & Penn) for ongoing management of catalog content

Critical Success Factors Consistent and on-going Senior Management support for business initiatives School and Center support for, involvement in the development and implementation of enhanced business processes Customer focus group sessions to identify Penn business requirements Customer advisory groups to test proposed functionality, assess impact on processes, policies and procedures, and provide insight on user training requirements Collaborative effort among business units, IT organization, and Financial Training Department Support and participation from Penn’s targeted suppliers

Lessons Learned Impact on Staff Resources –Participation in project teams and advisory groups –Supplier recruitment –Catalog contact development and management –Contract negotiations Supplier Involvement –Overestimated supplier capabilities –Conflicts between corporate and local supplier representatives during supplier recruitment and content development –Effort required for initial content development and management Impact on the Department –Enhances our image and credibility with internal customers and senior management

How Are We Doing? Customer and supplier feedback has exceeded expectations Training Department is adding 40 to 50 new users per week Participating suppliers are realizing significant growth in business Suppliers are now approaching Penn for possible participation in the Penn Marketplace

What’s Next Integrated punch-out solution for configurable products and large volume/high product turnover supplier catalogs “Favorite Lists” for most commonly ordered items Electronic payment for Penn Marketplace suppliers

eProcurement Demonstration Welcome to BEN Buys & the Penn Marketplace

University of Pennsylvania Project Leader: Ralph Maier, Associate Director Supplier Recruitment: Vira Homick, eProcurement Manager Web Site:

Oracle Corporation Marketing:Theo Bosnak Phone #: (703) Web Site:

GE Global Exchange Services Marketing:Lou Ciccone Phone #: (856) Web Site: