# Presentation: 723790

## Gordon Smouther

- Manager – Strategic Commodities
- PSEG Services Corp.
- (973) 430-7689
- Gordon.smouther@pseg.com

*Introduction of*
*Internet B2B at PSEG*

- DOE Contractors Purchasing
- Managers Symposium
-  & Workshop
- October 26, 2000

## E-market Basics

- PSEG Experience
- Concluding Remarks

## Corporate Structure - 2000

***Power***

_**Delivery**_
**Customers**
**1.9M electric**
**1.5M gas**
**Revenues: $3.6B**
**Assets: $11.6B**
**Employees: 5,700**

_**Domestic Generation**_
**Capacity**
**11,000MW**
**Revenues: $2.1B**
**Assets: $3.1B**
**Employees: 3,200**

**Revenues: $800M**
**Assets: $4.4B**
**Employees: 2,000**

**Revenues: $6.5B**
**Assets: $19.0B**
**Employees: 12,000**

**Net income 12 mos. ended 6/30/00: $766M **

- International
- Generation/
- Distribution

- Energy
- Investments

- Energy
- Services

***Global***

***Resources***

***Energy Technologies***

***Energy Holdings***

## E-market  Basics

## E-commerce Growth ... it’s BIG

- Business-to-Consumer

**1999**
**$109B**

**2000**
**$251B**

**2001**
**$499B**

**2002**
**$843B**

**2003**
**$1.3**
**Trillion**

- Source:  Forrester Research, Inc.

## The Internet is not just another channel.

**X**

**X**

**X**

**X**

**X**

**X**

**X**

**X**

**X**

**X**

**X**

- Forresster Research

- Internet
- In Person
- Phone
- Mail
- EDI

- Instantaneous        Any -          Always           Standards
- 	            to any            on                based

## Concentrated Buyers Market 

- 	  Buyers dominate with B2B in lesser roles

- Sellers

- B2B Company

-   Buyers

- Big 3 Auto
-  Exchange

## Concentrated Sellers Market

-    Sellers dominate with B2B in lesser roles.

- Sellers

-    Buyers

- B2B

-     Chemdex

## Neutral Market

-    Many buyers and sellers  –   B2B dominate.

- EXCHANGE

- Suppliers

- B2B Company

-    Buyers

## PANTELLOS.COM

**PANTELLOS.COM**

*PSEG EXPERIENCE*

## Pantellos’ Vision

**Ontario Power**

**Carolina Power&Light**

**UNICOM**

**Become the leading e-supply chain solutions provider to the energy industry****.**

**Pantellos’ Vision**

## Pantellos eMarketplace

** **

**Pantellos eMarketplace**

- Engages both buyers and suppliers as customers
- to create value across supply chains
**      **

- Other Global Trading Webs

**GTW**

_**Buyers**_
**Generation**
**Elec. / Gas Deliv.**
**Gas Transmission**
**Munis**
**Distributors**
**Other Verticals**
**Horizontals**
**Others TBD**

## Value levers provide benefits to both buyers and suppliers

- Lower price & negotiation costs
- Expanded supplier access

**Purchase**
**Power**

- Lower negotiation costs
- Extended customer base

- Lower search costs
- Lower processing costs

**Process**
**Efficiency**

- Lower cust. acquisition cost
- Lower processing costs

- Reduce inventory costs
- Reduce time to market

**Supply Chain**
**Integration**

- Improved inventory management
- Improved demand forecasting

- Cost-effective research
- Faster competitive response

**Aggregated**
**Content & Community**

- Cost-effective research
- Faster competitive response

- Price & inventory transparency
- Reduced cost of spot buying
- Reduced excess inventory costs

**Market**
**Efficiency**

- Greater customer reach
- Reduced cost of sales
- Reduced excess inventory costs

***Value Lever***

***Buyers***

***Suppliers***

***Value levers provide benefits to both buyers and suppliers***

## The value proposition is built around core and value-added services

**Customized User Interface**

** ****Inventory**

**Content, News, Trends**

**Industry Specific**

**Logistics**

**Materials and Services**

**MRO**

**Corporate Expenditures**

**HR**

**Core Services**
**Basic e-enabled supply chain optimization**

**Value-Added Services**
** ****market analysis**
** ****hosted forums**
** ****eSettlement**
** ****eScorecard**

**Disposal**

**Transaction Management**

**Enabling Technology**

**Buying Community**

**Supplier Community**

**Illustrative**

## Emarket– Service Offerings

**Strategic Sourcing**

**eCompliance**

**Auction/Reverse****Auction**

**Hosted Contracts**

** ****Industry Forums**

**RFQ/RFI**

**New Services**

**Catalog Aggregation**

**Emarket– Service Offerings**

**New Services and Solutions for Supply Chain**

- Source: Pantellos

## Service offerings and adoption will drive operating value

**Service offerings and adoption will drive operating value**

_**Negotiable Spend**_

_**Adoption Rate**_

**Throughput**

**Value**
**Rate**

_**Value Levers**_
- Purchase Power
- Supply Chain Integration
- Market Efficiency
- Aggregated Content

_**Acquisition costs:**_
** ****- Commissions**
** ****- Fees**

**Net Total Cost **
**of Ownership**
**Reduction**

## Total Purchase Costs Will Be Reduced

**$**

**Benefit Source**

**Component Sources of Cost Reductions**

**Purchase Price**

**Activity Cost**

**Assets**

**Cost**
** ****Reductions**

**Total Purchase Costs Will Be Reduced**

**Total Cost of**
_**Purchases **_
- Price to Price
- Logistics
- Receiving
- Settlement
- Inventory

**Before**

**After**

## Purchasing Transactions

**Buyer**

**Supplier**

**2) Check Availability**

**1) Purchase Order**

**4) Receipt Acknowledgement**

**Purchase Order**

**5) Invoice**

**6) Invoice Approval**

**7) Settlement**

**PO through Receipt**

**Invoice through Settlement**

***Note that # of transactions per buy will vary with purchase channel used**

**Transactions per Buy**

**3) Order Acknowledgement**

**Buyer**

**Exchange**

**Exchange**

**Supplier**

## Concluding Remarks

##  Challenges to Developing eMarkets

-  Challenges to Developing eMarkets

***Industry***

***Buyers/Sellers***

***Technology***

**Identify “pain points” and issues**
**Facilitate industry discussions**
**Leverage best practices and benchmarks**

**Build relationships that enable supply chain improvements**
**Create liquidity in the marketplace through increased adoption**
**Identify areas of interest and opportunity to supply chain participants**

**Build and acquire tools to enable supply chain services **
**Build and provide rich content**
**Provide a secure and reliable environment in which to transact business**
**Create and manage a virtual network of technology partners**
**Push the boundaries for matching supply and demand**

**Develop category specific supply chain solutions **
**Establish and maintain channels for buyers and sellers to reach desired outcomes**
**Develop and acquire new content and value added services**

_**E-Market**_

***Supply Management***

- Source: Pantellos

## 5 Risk factors are shared by e-market initiatives

- Antitrust
- Lack of buyer Scale
- Competitor tensions
- Lack of supplier scale
- Wrong technology
- 			Lack of effective leadership

- Source: GIGA Information Group, August 28, 2000