Revision A - 23 January 2009

Supply Chain Collaboration viaiSupplier Portal & ERS (Evaluated Receipts Settlement)

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Table of Contents

• iSupplier Portal Purpose 3

• iSupplier Portal Capabilities 4

• ERS Defined 5

• Business Drivers 6

• ERS Process 7

• ERS Advantages & Disadvantages 12

• Key considerations for Suppliers 15

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Purpose: Supplier Collaboration

• Ingersoll Rand made an investment to implement a true partnership with our vendors through an Oracle product called the iSupplier Portal.

• At the end of this presentation, we will provide you with tools you need in order to take advantage of the portal and collaborate effectively with Climate Control Technologies.

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iSupplier Portal Capabilities• Suppliers can view:

– Forecast– Purchase Orders

Orders to be acknowledged Past Due Orders Purchase Order History

– Receipts– Delivery Performance– Invoices Logged & Payments– Defects & Returns– Product History

• Supplier actions:– Acknowledge Orders– Enter Advanced Ship Notices– Reschedule Orders– Cancel Orders

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• Evaluated Receipts Settlement (ERS) = business process in which invoices for supplier payments are auto-created based on goods received from supplier.

ERS: Defined

• ERS eliminates need for suppliers to send invoices – instead, relies on pre-negotiated price agreements between supplier and Ingersoll Rand (IR).

• With ERS, payment generated based on receipt transaction processed by IR.

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Traditional Transaction Process:

1. IR places a Purchase Order (PO) with supplier.

2. Supplier ships goods and bills IR by sending invoice to Accounts Payable (AP) department .

3. IR receives goods.

4. AP department then enters all invoice information into accounting system and matches invoice to goods received and/or the PO.

5. Payment is made to supplier based on the match.

Business Drivers

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The Traditional Procure-to-Pay Process

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• Disadvantages

Traditional Process

Manual Processing

• Invoice processing is largely manual. • Results in data entry errors that could be very costly, sometimes

resulting in unauthorized payment disbursements. • Results in inconsistent application of business rules resulting in an

increased risk of process non-compliance.

High Procure-to-Pay cycle time

• Much time lost when mailed invoices on the way from the supplier to the IR’s AP dept.

• Invoices entered into system in batch process.• By the time the invoices entered and approved in system, 1st

discount terms usually missed.• Invoices may be put on hold if issues arise in matching process –

can result in payment delays to suppliers.

High admin costs for IR and Supplier

• High cost inefficiencies.• Admin costs of manual processing are typically quite high,

particularly for IR, from activities related to the manual data entry. • For supplier, the costs associated with billing activities originate

from non-value added activities like mailing the invoices, etc.

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• The ERS Process – In the ERS process IR places a Purchase Order (PO) with

supplier.– The supplier ships the goods. – IR receives the goods.– The system automatically generates an invoice number based

on the receipt transaction and the actual delivery of goods/services.

– Payment is made to supplier based on the receipt transaction.

Business Drivers

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ERS in the Procure to Pay process

ERS Process In the ERS process, the invoice creation process gets automated. The receipt transactions are used as the basis for the creation of these auto-invoices.

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• The ERS process differs from the traditional process in that the supplier invoices no longer form the basis for payment in IR’s system.

• After goods or service delivered, the buying organization processes a receipt transaction which automatically generates an invoice number.

• The receipt transaction facilitates the payment.

ERS Process

Not equal to

Invoices

Basis for Payment

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ERS Advantages for Suppliers

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ERS Advantages for IR

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ERS Disadvantages for Suppliers

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Key considerations for Suppliers

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