THE VISION AND THE VISION AND REALITY REALITY

COVISINT includes an analysis tool to help the COVISINT includes an analysis tool to help the manufacturers weigh competing bids from manufacturers weigh competing bids from suppliers using attributes such as quality, price suppliers using attributes such as quality, price and delivery date.and delivery date.

COVISINT enables companies of any size, location COVISINT enables companies of any size, location or technical sophistication to securely share or technical sophistication to securely share vital business information, applications and vital business information, applications and processes across their trading partner network. processes across their trading partner network. Covisint helps businesses accelerate decision Covisint helps businesses accelerate decision making, reduce cost and improve making, reduce cost and improve responsivenesses in serving customersresponsivenesses in serving customers

WHAT ARE THE STRENGTHS AND WHAT ARE THE STRENGTHS AND WEAKNESSES OF COVISINT WEAKNESSES OF COVISINT BUSINESS MODEL?BUSINESS MODEL?

STRENGHTS OF COVISINTSTRENGHTS OF COVISINT

LINKS AUTOMAKERS TO THE ENTIRE LINKS AUTOMAKERS TO THE ENTIRE SUPPLY CHAIN.SUPPLY CHAIN.

COVISINT HELPS TO REDUCE TIMECOVISINT HELPS TO REDUCE TIME COVISINT ACTS AS A SINGLE ENTRY COVISINT ACTS AS A SINGLE ENTRY

POINTPOINT REDUCES COSTSREDUCES COSTS

WEAKNESSESWEAKNESSES

COMPANIES BUILD THEIR OWN COMPANIES BUILD THEIR OWN SUPPLY NETWORK CONSIDERING SUPPLY NETWORK CONSIDERING THEY WOULD LOOSE MONEYTHEY WOULD LOOSE MONEY

LOSS OF CONTROL WHILE ONE LOSS OF CONTROL WHILE ONE APPROACHES COVISINTAPPROACHES COVISINT

How could it How could it provideprovide

value to its value to its users?users?

Covisint sets high standards in the way

companies do business…

Benefits to buyersBenefits to buyers

Buyers can usually obtain better prices from it than Buyers can usually obtain better prices from it than they could on their own, since Covisint obtains they could on their own, since Covisint obtains discounts from suppliers by aggregating demand.discounts from suppliers by aggregating demand.

It provides the convenience of one-stop shopping for It provides the convenience of one-stop shopping for a wide range of products, from processed materials a wide range of products, from processed materials to finished goods—a virtue that is especially valuable to finished goods—a virtue that is especially valuable to buyers in fragmented markets.to buyers in fragmented markets.

Once buyers know what they want, the same search Once buyers know what they want, the same search engine that located the product can facilitate the engine that located the product can facilitate the transaction by trimming its costs.transaction by trimming its costs.

Benefits to sellersBenefits to sellers

Covisint give sellers an opportunity to retain Covisint give sellers an opportunity to retain some control over their sales channels while some control over their sales channels while minimizing service costs. minimizing service costs.

It can take over a part of the value-added It can take over a part of the value-added processing—arranging logistics, breaking bulk processing—arranging logistics, breaking bulk quantities into smaller lots,capacity quantities into smaller lots,capacity planning,demand forecasting and even planning,demand forecasting and even customizing products.customizing products.

It would assemble sellers' products into It would assemble sellers' products into packages.packages.

SOME APPLICATIONSSOME APPLICATIONS

OF COVISINTOF COVISINT

Covisint E-Business Portal Covisint E-Business Portal Expands Into Health Care Expands Into Health Care

The portal will let health-care professionals, The portal will let health-care professionals, hospital networks, and group members automate hospital networks, and group members automate business transactions and share access to business transactions and share access to information via the Internetinformation via the Internet

That includes real-time claims processing and That includes real-time claims processing and insurance eligibility authorization, as well as insurance eligibility authorization, as well as access to research, data on health-care and access to research, data on health-care and benefits programs, and electronic medical benefits programs, and electronic medical records. records.

DaimlerChryslerDaimlerChrysler

More than 8,000 DaimlerChrysler suppliers worldwide More than 8,000 DaimlerChrysler suppliers worldwide conduct day-to-day business functions via a secure, conduct day-to-day business functions via a secure, single point of entry the single point of entry the Covisint Communicate portal portal service. First announced in January 2002, service. First announced in January 2002, DaimlerChrysler has branded its portal the "Global DaimlerChrysler has branded its portal the "Global Supplier Portal" and has fulfilled its expectations. Supplier Portal" and has fulfilled its expectations.

Designed to standardize and increase Designed to standardize and increase communication between DaimlerChrysler and its communication between DaimlerChrysler and its suppliers, the portal uses a common framework and suppliers, the portal uses a common framework and interface, and provides suppliers with access to more interface, and provides suppliers with access to more than 160 applications and a library of documents.than 160 applications and a library of documents.

OTHERS USING COVISINT OTHERS USING COVISINT

Automotive OEM DaimlerChrysler Ford Motor Company General Motors Hyundai motors Johnson Controls Mitsubishi Motors

Why has it been so Why has it been so difficult for Covisint to difficult for Covisint to

realize its original realize its original vision?vision?

The Original VisionThe Original Vision

To create an e-marketplace where automotive To create an e-marketplace where automotive companies could buy suppliescompanies could buy supplies

As orders would be bundled together, costs As orders would be bundled together, costs would be lower than normalwould be lower than normal

The electronic nature of the system would The electronic nature of the system would ensure lowest possible costs of each purchase ensure lowest possible costs of each purchase order transactionorder transaction

Supply chains would never be drySupply chains would never be dry No cost of setting up own procurement platformNo cost of setting up own procurement platform Low-cost point of entry for suppliers tooLow-cost point of entry for suppliers too Reduced build-time of an automobileReduced build-time of an automobile

The RealityThe Reality Auto industry suppliers reluctant to Auto industry suppliers reluctant to

participate fully in Covisintparticipate fully in Covisint Tier 1 suppliers already have own private Tier 1 suppliers already have own private

networks – fear they could lose money and networks – fear they could lose money and control over their own supply chainscontrol over their own supply chains

The main point being stressed by Covisint, The main point being stressed by Covisint, of of “reducing costs”“reducing costs” on supplies also on supplies also scaring off suppliersscaring off suppliers

Suppliers also worried about their products Suppliers also worried about their products being turned into commodities being turned into commodities reducing the visible difference and advantages reducing the visible difference and advantages

of their productsof their products reducing brand loyalty of manufacturersreducing brand loyalty of manufacturers

The RealityThe Reality

Covisint suffered from a lack of clear leadershipCovisint suffered from a lack of clear leadership Even basic decisions spawned lengthy debates, Even basic decisions spawned lengthy debates,

due to fierce rivalry between CEOs due to fierce rivalry between CEOs Peter Weiss Peter Weiss from Daimlerfrom Daimler, , Alice Miles from FordAlice Miles from Ford, and , and GM's GM's A. Alan TurfeA. Alan Turfe

Indecision on software to be usedIndecision on software to be used The Federal Trade Commission of America The Federal Trade Commission of America

worried that the combined clout of the auto worried that the combined clout of the auto makers could be anti-competitive for suppliersmakers could be anti-competitive for suppliers

The Final OutcomeThe Final Outcome On June 28, 2002, Covisint installed a new team On June 28, 2002, Covisint installed a new team

of managersof managers Less than a year later, the new CEO stepped Less than a year later, the new CEO stepped

downdown Covisint’s core supply chain management Covisint’s core supply chain management

business – business – eliminatedeliminated Now Covisint focuses on supply chain planning Now Covisint focuses on supply chain planning

software that can be shared by automakers and software that can be shared by automakers and their business partners over the Internet their business partners over the Internet

Covisint still helps inCovisint still helps in Managing Contracts with suppliersManaging Contracts with suppliers Requesting proposals to build specific partsRequesting proposals to build specific parts Assisting small suppliersAssisting small suppliers

TEAM MEMBERSTEAM MEMBERS

QUESTIONSQUESTIONSCOMMENTSCOMMENTSIDEASIDEASCONCERNCONCERN