3. Project Overview eLogistics Driver Inventory 29% Transport 56% Warehousing 8% Administration - 6% Other - 1% COST OF TRANSPORT & INVENTORY E-PROCUREMENT & E-COMMERCE IS DRIVING ADOPTION MAIN COMPONENTS OF U.S. LOGISTICS COST: 1998 Percent of Expenditure Source: U.S. Department of Commerce; CASS Logistics; AT Kearney
4. Project Overview Market Needs CUSTOMER NEEDS Actionable Shipment Visibility Global Shipping Capability Control Service Provider Costs Manage Shipments-in-transit Manage Service Providers Improvements In Logistics That Reap Shorter Cycle Times, Reduce Inventories And Result In More Accurate Deliveries
5. Project Overview Proposal LOGISTICSComplete Solution for EM Customers But GXS is in the position to also capitalize on anever growing need for online logistics applications in general through the development of Private Logistics MarketplacesAnalysts predict logistics trade exchanges will account for a market space of $2.5 to $3 billion annually (Cap Gemini Ernst & Young) Leveraging Information to Optimize the Flow of Goods, Thereby Reducing Cycle Times and Improving Capital Productivity
80. Project Overview Top Competitors Source: e-Global Logistics, Stephens, Inc. 11/00
81. Project Overview Benchmarks MARKET SIZE TMS Revenue/spending? Segmented by Company Size, Region Not the Best Measurement Not Integrated, Out-of-the-box, Limited Solution Traditional Logistics Market Spending? Segmented by Admin Costs, Carrier Charges Not the Best Measurement Cannot Extrapolate Software or Applications Spending From Admin Numbers Supply Chain Management By Logistics Application? More Accurate Measure of Revenue Available for Application Spending
82. Project Overview Customer Pricing SUBSCRIPTION FEE PRO: Buyer is Encouraged, Rather Than Discouraged, to Use the Service as Often As Possible CON: Buyer May Not Use Service Often Enough to Justify Subscription Fee Control Risk by Stipulating a Minimum Subscription Period and Up-front Cash Payment Credit: Stephens, Inc.
83. Project Overview Pricing Examples Competitor/Potential Partner #1 Hosted Solution Subscription and Set Up Charge Range between $500k to $1M Transaction Fees Range $2.00 to $2.20 Average # of Transactions Per Customer Range between 2500 to 250000 per mo Maintenance and Service Fees Range 18% Set Up or 20% per Competitor/Potential Partner #2 Hosted Solution Implementation Fee Based on number integrated $3000 per non-community supplier $.50 for every dollar of subscription fee Subscription Fee Based on forecast shipments & orders Monthly Minimum The average # of shipments (10,000 to 20,000, with 5,000 orders per)
87. Overlap of EDI Vendor Community with D&B Targeted Transportation SICs
88. Overlap of ECSC Community with D&B Targeted Transportation SICs
89.
90. Project Overview Immediate Action Customers THE <SNIP> HAS 13,557 REGISTERED VENDORS Provided by <SNIP>, <SNIP> Owner GSN Overlap with D&B SIC List Pull 41.39% of the GSN Vendors Fall Within the Logistics SIC D&B Criteria GSN Overlap with D&B Industry List Pull 31.00% of the GSN Vendors Fall Within the Logistics Industry D&B Criteria THE EDI SAMPLE LIST HAS 9,926 VENDORS EDI Sample List Provided by ECM Group 4,069 Vendors When Dupes & Int’l were Eliminated EDI Community Overlap with D&B SIC List Pull 42.58% of the EDI Vendor List Fall Within the Logistics SIC D&B Criteria EDI Community Overlap with D&B Industry List Pull 24.26% of the EDI Vendor List Fall Within the Logistics Industry D&B List
91. Project Overview Immediate Action THE <SNIP> HAS 13,557 REGISTERED VENDORS <SNIP> Overlap with Transportation SICs* Total of 1,486 Domestic Carriers Total of 142 International Vendors THE EDI LIST HAS 30K REGISTERED VENDORS EDI Overlap with Transportation SICs* Total of 3,113 Domestic Carriers Total of 4,785International Vendors THE ECSC LIST HAS 392 REGISTERED VENDORS EDI Overlap with Transportation SICs* Total of 7 Domestic Carriers No International Vendors Carriers * Overlap May Exist Between Int’l & Domestic
92. Project Overview Immediate Capacity Local Trucking no Storage Arrangement of Transportation Trucking except Local
93. Project Overview Immediate Capacity Local Trucking no Storage Trucking except Local Arrangement of Transportation
94. Project Overview Architecture How is it Done? Most Logistics Applications are Base on EDI Mailbox “Shadowing” Via Request or “Ease Dropping” (LTS) Maps / EDI Documents (ANSI & EDIFACT) Needed for Collection TMS Excel Sheets Admin - Fax Primary Provider S1 Carrier/Forwarder S2 User EDI S3 Occasional WEB Carrier Option Logistics Application Intelligence Option
95. Project Overview Option One BUILD / LEVERAGE LTS Con: Carrier by Carrier Planning -No Workflow Con: Aggregation of Information - No New Information Created (Ex. Contingency Plans) Con: No Content (Document Assistance) Con: Commitment to Build Every Additional App Feature Con: Intuitive Sense of Timing Pro: We Own <SNIP> Pro: We Control <SNIP> Completely Wasn’t Successful the First Time
96. Project Overview Option Two ADOPT / PROCURE PARTNER Con: May not Have Complete <SNIP> Control (May Be Possible through Equity Investment) Con: New BD Process Has No Time Estimate (Worst Case: Engineering Build Estimate) Pro: Partner Relationships with Carriers (Maps Already Built) Pro: Workflow Built In: Door-to-door Planning & Tracking Pro: New Information: Contingencies built in Pro: Content (ITL) already Included Control Over MGPP Must Be Determined Upfront
97. Project Overview Option Three LEVERAGE CIG / RECOMMENDATION PRO: Sister Companies Have Committed to <SNIP> GE Power Operational 2Q01 GE Plastics Operational 2Q01 PRO: <SNIP> Leverage Due Diligence Work to Shorten Acquisition Time PRO: <SNIP> Beginning Negotiations Potential Alliance PRO: <SNIP> PRO: Meets 4Q00 Preliminary Engineering Hosting Requirements PRO: Three-way Purchase Strengthens Buying Position CON: NPI Team Needed Prior to DP0 for Evaluation CON: <SNIP> Internet Speed Decision Necessary