EDI Future Environment Initiative Project Kickoff 12/15/2004 Corporate Information Technology

Presentation 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 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 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 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 Goals

Project 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 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 Overview  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

CIG EDI Transactions by Business Unit Camera 41% Video 42% Printer 85% ISG (B) 94% Current 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 Volumes EDI Transaction Volumes* (Based on Sell to Customer) Current 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 Utilization* (Based on Sell to Customer) Current EDI System * CIG and ISG Transactions

Current EDI System CIG 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%

Total Requests by Type Future (F)= 17 Manual (M)= 6 Requested (R) = 14 Development (D)= 18 Total Requests*= 55 Current EDI System Open CIG Transaction Requests *Total Current CIG Transaction Sets = 155

Current 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 System

Canon Order Processing Method Analysis  31%  31% of Customers Utilize Electronic Ordering  73%  73% of Sales Processed Electronically

Existing Architecture Trading Partner PO’s Trading Partner Invoice Trading Partner ASN Trading Partner Credits Trading Partner Receipts Canon EDI Mailbox (VAN) GENTRAN ESS Setup Warehouse (4 Systems) Mainframe S80 Order Processing Electronic Messaging Database Invoice POS ASN PO Current EDI System

New Trading Partner Setup Customer Setup Bill-to Customer Sell-to Customer Tax Information Credit Profile Invoice Recipient Delivery Data Payment Terms Product Restrictions Product Setup Global Product Data Packaging Data Customer Item Description Maintenance Codes Conversion Tables Trading Partner UOM Trading Partner Terms Trading Partner Ship-to Trading Partner Sell-to Trading Partner SKU Price List Setup Price List Definition Price Management Basic Setup Trading 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 System Purchase Order Process Flow PO extracted from Canon EDI Mailbox PO Translated by GENTRAN File Mapped to Canon’s Internal Format PO loaded into Canon EDI PO Database PO Data validated by ESS EDI Module The following steps represent system processes that must be completed in order to process a customer’s purchase order. Order Lines created in ESS

Current 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 System

Proposed 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 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 Platform Internal External

Trading Partner PO’s Trading Partner Invoice Trading Partner ASN Trading Partner Credits Trading Partner Receipts Oracle ERP Warehouse (4 Systems) Custom Applications Legacy EDI (VAN) XML (Internet) Web Portal Internet Future Architecture

EDI Future Environment Timeline 4Q 20041Q W2W3W4W1W2W3W4W Project Kickoff/ Contact Vendors 1W2W3W4W 2Q 2005 New Vendor Evaluations Define Functional Requirements/Future EDI Strategy 1W2W3W4W1W2W3W4W1W2W3W4W1W2W3W4W Go Live Complete existing 810 & 850 requests from Customers Vendor Selection New System Implementation Development/User Acceptance Testing Internal/Customer Training Proposed Timeline