edi future environment initiative project kickoff 12/15/2004 corporate information technology

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


• 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 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


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)


* 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)


* 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


Open CIG Transaction RequestsOpen CIG Transaction Requests

*Total Current CIG Transaction Sets = 155


Current CIG TP Analysis


TP Invoices = 50%

TP ASN = 20%





TP PO Change = 7%

TP PO Ack = 2%

TP EDI Advice = 2%

Potential CIG TP Analysis*


TP Invoices = 63%

TP ASN = 32%





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



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



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.


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


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


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


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

http://www.bea.com/framework.jsp?CNT=homepage_main.jsp&FP=/content

http://www.oracle.com/index.html

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

edi future environment initiative project kickoff 12/15/2004 corporate information technology

Documents

edi expenses

edi platforms

network edi

customer edi requests

market edi initiatives

cig edi transactions

edi market trends

edi transaction types