How to unlock the power of the Internet Fundamentally change how Procurement

Professionals transact business today!

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Bettcher Industries, Inc.

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Definitions
Acronyms: B2B- Business to Business B2C- Business to Consumer B2G- Business to Government E - Electronic or using the Internet, (eProcurement, e-Commerce, e-marketplace) SCM- Supply Chain Management

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Terms:
Suppliers bid with no knowledge of other competing bids Open Bid: Suppliers see other bids before they bid Reverse Auction: Suppliers see each others bids and bid the price down in live bidding session Model: Business Model Exchange: Website that exists to bring buyers and sellers together (no slant) Buyercentric: Website model that has been deliberately constructed to assist buyers (i.e. reverse auctions) Suppliercentric: Website that has been designed to function in the suppliers favor -usually supplier owned Space: A particular e-marketplace (like Amazon.com and Barnes&Noble.com) 3/12/2003 Closed Bid:

Successful E-Procurement at Bettcher

Search info for last two years Visited, took demo, registered, RFQ's, orders
MaterialNet.com for Raw Materials &

SupplierOne.com for Custom Engineered parts Intuitive and friendly-rare for transactional sites Placed RFQs and received e-mail responses in a few days (located $250,000 savings in 6 weeks) Reduced standard RFQ time from 2 hrs to 15 m. Free Services to the buyer (Free Data-Base Software for Quoting History)
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What Make MaterialNet.com so Great for Buyers!

MaterialNet.com
Buyercentric (Free to Buyers)

Only site to use for Multi-Metal requirements

Break-through Customer Service

Reverse Auctions & Beat This Price Function

Other raw materials

-"Load your own suppliers" -Will become hub for all Purchasing Trasactions -Forward Auctions for surplus

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My MaterialNet.com Experience
December-Had tried 30 other metal

websites Good demo made it easy to understand Registered & sent in RFQ
First time no price reduction

Beat-This-Price e-mail, Saved $3,000 on

order (We standardized on MaterialNet) Told buddies that run Purchasing at larger companies-(Saved over $10,000 each)
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What Makes SupplierOne.com so Great for Buyers!

SupplierOne.com
Buyercentric (Free)

Only Outsourcing site that adequately matches part specifications with supplier's mfg capabilities Only Outsourcing site that hasn't lost a drawing I faxed or e-mailed them

Break-through Customer Service

Reverse Auctions & Classic Closed Bid Function

3 Options: -Only current approved suppliers bid -Only SupplierOne's suppliers bid -Both groups bid

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Contract Management (RFQ)

Raw Materials Engineered Components
FOB your dock Give Target Price (Reserve Price) All surcharges or extras must be on quote Certs required on RFQ Specify ISO9000 & QS9000 when appropriate Have Quality certificates faxed Specify only US bidders, regional (or existing suppliers) Specify packaging requirements Get D&B
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FOB your dock Give Target Price (Reserve Price) All surcharges or extras must be on quote Certs required on RFQ Specify only US material (when appropriate) Specify packaging requirements Specify only regional companies or existing suppliers Get D&B
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Hazards to Avoid
Sites whose management have little industry experience Sites that charge Buyers and Suppliers fees (double

dipping) Sites that charge Buyers fees (unless their value is unmistakable) Suppliercentric Models (look for suppliers to have large equity stakes in these sites) Sites with Unreasonable Terms and Conditions Such as Buyer will Pay commission to site if seller fails to Hidden costs to Buyer

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Fundamental Shift in Power

These two sites (Buyercentric) are prime examples Relationship selling is being replaced by

quantifiable results contracts Non-value added distribution is panicking & consolidating for greater buying power ERP & Consortiums allowing buyers to go direct to manufacturers (skip distribution) for big savings Purchasing salaries will start to displace the inflated Marketing and Sales salaries of the past
Look how MaterialNet & SupplierOne make marketing obsolete
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The Future (Sooner than we think)

MRP or ERP electronically transferred to

these sites We have auctioned or contract pricing returned in a couple of hours POs are one click away

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Points to Remember
Use Buyercentric sites Be thorough on RFQ (include all req. info) Set target prices for suppliers (Be realistic)

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