Our ebusiness Strategy

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COMPANY TO
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• June 19, 2003
• Wyndham Hotel
• Philadelphia, Pennsylvania

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Building a Diversified E-Procurement Strategy

• Timothy D. Tulio
• Manager, E-Procurement, Systems Support
• Air Products and Chemicals, Inc.

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At Air Products The Journey Continues.
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Who is Air Products?
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Fast Facts

• The worlds only combinedgases and
  chemicalscompany
  
• Fortune ranking 311
• Serving customers intechnology,
  energy,healthcare and industrialmarkets
  
• Chemical industry safety leader
• Geographically diversified, with more thanhalf
  of our sales outside of the U.S.
  
• Operations in more than 30 countries
• 17,200 employees worldwide
• Known for our innovative culture and operational
  excellence

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Air Products Consolidated FY02 Revenue 5.4
Billion
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What do ourproducts do?
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Current Markets for our Gases, Chemicals and
Equipment
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Major Focus at Air Products Today?
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Our e-business Strategy
Post SAP
Transformation - Supply chainoptimization-Ind
ustry-specificapp. engines- Customer
integration- Advanced personalization

2002
Transaction - E-Commerce- EDI/XML support- Auct
ions- Databases- Customer self-service-
Real-time accessto information
Business Value
2000
Interaction - Prod. Specifiers- Process-specific
applications- Catalogues- Personalization -
Communities
1996
On-Line Presence - Marketing Info- Brochures
New BusinessModels
Gartner Group
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Generational approach to strategy

• First Generation Catching the Internet
  Leaders
  
• Rapidly adopting the technology of others
• Building infrastructure
• Internet enabling existing processes in response
  to customers

• Second Generation - Creating Value
• Creating value
• Exploiting infrastructure
• Harnessing creativity to provide unasked for
  customer value

• Third Generation - Reinventing Air Products
• Rolling out a networked, new business model
• Supply Chain Optimization

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For more info http//www.airproducts.com/ebusiness
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Four Corners of Value
Showcase Sites
APDirectSM Customer Portal
A low-cost way of reaching new customers, telling
them what they need to know about our products
and services
Much more than ordering, APDirect lowers our
cost-to-serve by automating information sharing
with our customers
In FY'03 4 of value created for every 1 spent
Were strengthening our customer relationships by
lowering the overall supply chain costs via
ERP-to-ERP transaction processing
Driving benefits from our supply relationships
through transaction efficiency, contract
compliance and reduced cost of goods and services
B2Bi Connections
E-Procurement
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Air Products Spend Profile
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A
High Level RTP Work Process
Determine Sourcing
Purchase Goods And Services
Remit Payment
Receive Goods And Services
CompleteRequisitionSpecification
Goods Services Requirements
Supplier Payment
Approved Requisition Specifications
Verified Receipt
Shipped Goods/ Supplied Services Supplier Invoic
e
Qualified Sources
Plan and Produce Products and Services
Goods/Services
Purchase Requirements
Create and Improve Assets
Goods/Services
Purchase Requirements
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APDirectSM Procurement
EMPLOYEE SELF SERVICE
B TO B CONNECTIONS FOR PROCUREMENT
STRATEGIC SOURCING
KPIS
COLLABORATION
Buying Indirect Goods/Services such as, office
supplies, industrial supplies, temp services,

personal buying
Transacting for the Purchase of Direct Goods s
uch as, chemical feed stocks, spare parts, val
ves/instruments
Leveraged Sourcing Networks and Tools
Measuring Global Process
e-Enabling Buyer to Supplier Negotiating And Com
municating
Compliance Monitoring and Measurements
Elemica
Leveraged Sourcing Network (LSN)

• APDirect Buyer Portal
• APDirect Buyer
• Supplier Internet
• Ordering
• Ordering Information

• APDirect Sourcing
• (e-Sourcing/Reverse
• Auction)
• E-RFX
• Reverse Auctions

WebEC
APDirect Sourcing
Scorecard for Requisition toPay Process

• Project Workspace
• (Business Alliance)
• ERoom
• Placeware

APDirect Traveler Online Tool for Booking Busin
ess Travel
EDI
Global Supply Agreements
APDirect Supplier Web Online Tool for Booking B
usiness Travel
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Key Elements for Success

• Enabling Applications
• APDirect Buyer
• APDirect Sourcing
• APDirect Traveler
• B2Bi Connections (Elemica, EDI, Web EC)
• KPIs
• Compliance Metrics
• Accountability/Responsibility
• Management Support

Without one leg the stool collapses!
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Air Products Spend Profile Strategic
Categorization
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Enabling Applications

• APDirect Buyer
• Powered by Ariba Buyer
• Non-Technical MRO
• Catalog Driven Model
• Supplier Card Payment Model
• Cost Savings Realized on Transactions and
  Leverage Procurement
  
• Hosted Application
• Live in 7 Countries

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What Have We Been Doing?APDirect Buyer

• Jan 02
• of Active Users-1300
• of Catalogs--15
• of Transactions2200/Month
• Dollars--275M/Month
• Savings 4MM/year

• Today
• of Active Users-2100
• of Catalogs--30
• of Transactions3300/Month
• Dollars--500M/Month
• Savings 9MM/year

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APDirect BuyerNext Steps

• Continue Global Expansion
• Increase Types and Number of Catalogs
• Drive More Non Technical Purchases to APDirect
  Buyer
  
• Expand Use of Non-Catalog Purchases
• Enhanced Searching (Search Punchout, internet and
  Internal)
  
• E-Invoicing

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Enabling Applications

• APDirect Sourcing
• Powered By Ariba Enterprise Sourcing
• RFx, Dynamic Bidding Events
• Primary use by Professional Buyer
• Standardized Methodology for Sourcing Goods and
  Services
  
• Historical Repository of Sourcing Data

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What Have We Been Doing?APDirect Sourcing

• Jan 02
• of Events--0
• Total Spend--0
• Total Savings--0

• Today
• of Events--20
• Total Spend--40MM
• Total Savings--4MM

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APDirect Sourcing Next Steps

• Expand Usage of Tool Globally (Asia, Europe)
• Standardized Sourcing Process Globally
• Dedicate Resource To Project
• Expand Use to Additional Material/Service
  Segments
  
• Shift threshold to lower dollar events

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Total Leveraged SavingsE-Procurement
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Enabling Applications

• B2Bi Connections
• ASNAriba Supplier Network for Purchases of
  Non-Technical MRO Items not in SAP
  
• ElemicaFocused on Sell Side and Buy Side
  transactions to Chemical Partners
  
• Web EC/EDIFor suppliers who do not fall into the
  other two categories

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Success Requires Scalable Supplier Enablement and
Connectivity
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Direct ConnectionExternal Partners
Machine to machine connection, either directly or
through a third party. Includes ERP to ERP
connection as well as system to remote sensor
connection.
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What Have We Been Doing?B2Bi Connections

• Jan 02
• Transactions 24,000/yr
• Dollars 4MM/yr
• of Partners 22
• E-Enabled Transactions 17

• Today
• Transactions 50,000YTD
• Dollars 89MM/YTD
• of Partners 120
• E-Enabled Transactions 50

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B2Bi ConnectionsNext Steps

• Expand B2Bi Connections Globally (Europe)
• Drive More Suppliers to One of the B2Bi
  Connections Methods
  
• Expand Number of Elemica Connections
• Expand use of ASN (Ariba Network)

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Total E-Enabled Procurement
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Enabling Applications

• APDirect Traveler (Launched Oct 02)
• On Line Travel Booking Application
• Mandatory for All Simple Roundtrip Travel
• Cost Savings Realized Exceeds 400M
• Compliance Over 71 (May 03)
• Planned Roll out to UK in July 03

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Metrics Tied to IncentivesSuccess
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Without Top Level Management Support and
Commitment None of This would be Possible
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So When Will The Journey End?

• I Will Let You Know When We Get There

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Presentation will be available at
www.airproducts.com/ebusiness
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Thank you
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Tell Me More
www.airproducts.com