OracleTransportationManagement

OTM Business Plan

Greater China

Table of Contents

Market Analysis China Logistics IT Spending on China Logistics TMS Market Opportunity Taiwan Logistics Market

OTM Product Product Definition Key Functions/Features Key Strengths / Weaknesses

Customer Analysis Customer Segmentation Business Type Value Propositions Potential Customers

Table of Contents

Competition Direct Competitors

Competition Landscape

Where is OTS?

• Implementation Implementation Strategy

Action Plan

Channel/Partner Development

Sales Forecast

Appendix: LSP List

Market Analysis

China Logistics

Logistics spending represents about 20% of PRC GDP while it is about 10% in US

PRC logistics costY2001 US$ 230 billionY2003 US$ 300 billionY2010 US$ 500 billion (projected)

Third parties logistics market was around RMB 40 billion in 2001 and over 70% of the existing logistics companies had recorded a 30% annual growth in the last 3 years

The China logistics industry is expecting an average annual growth of 25%

* From McKinsey Co & HKGCC

IT Spending on China Logistics

IT spending growth in China logistics sector has been

strong, and is projected to grow almost 22% CAGR

from 2005 to 2009

Growth in 2004 was over 25%

Where hardware spend is takes up the largest share, its

relative growth will be the slowest; conversely, IT

services, a small share, will growth the fastest

By 2009, software spend will be half of hardware spend

* From CCID Advisory

TMS Market Opportunity

Global: TMS market from US$860 million in 2002 to US$1.6 billion in 2007

China: Assume 10% of the global market, based on its percentage of total

logistics market

US$120 million in 2005 to US$160 million in 2007

Taiwan Logistics Market

From US$37.1 billion in 2000 to US$61.6 billion in 2011

Advantage in air/sea transportation due to superior location

High-tech industries have well adopted global supply chain

management initiatives

OTM Product

High PerformanceTransportationOptimization

Global TransportationCollaborationand Execution

Logistics Automationwith ExceptionManagement

Complete LogisticsNetwork Visibility*

Global, Local, andCentral Logistics

Management

*Currently re-implementing analytic capabilities using Oracle technology

Product Definition

Procurement Collaboration & Optimization

Performance & Financial Analysis*

Logistics Order Management

Shipment Planning & Optimization

Service Provider & Asset Management

Shipment Execution

Freight Payment, Billing, Claims

Global Logistics Visibility

Supply Chain Event Management

Operational Reporting & Document Generation

Forwarding & Brokerage Operations

*Currently re-implementing analytic capabilities using Oracle technology

Key Functions / Features

Key Strengths & Weaknesses

Strength Manage international and domestic shipment legs in a

single integrated solution

Competitors: Most 3PL/TMS systems are focusing either on

international or domestics leg.

History Background: International and domestics logistics departments

are two different teams in most companies.

Market Trend: Companies are combining international and logistics

departments and looking for integrated solution.

Key Strengths & Weaknesses Strength

Optimization / decision-making support based on a complex combination of factors for each shipment

Competitors: Most 3PL/TMS systems are competitive at order management and track & trace capability. But only a few can really do the optimization, especially under the context of from point of receipt right up to domestic DCs or even point of sales.

History Background: Track & trace has been regarded by customer as higher priority than optimization. Track & trace gives customer the control of running it business. It is the solid ground for building optimization.

Market Trend: After track & trace, customers are demanding more of the optimization capabilities to further save logistics cost.

Key Strengths & Weaknesses Strength

Business Process Management Engine and Auto Re-planning capability while freight is in motion

Competitors: Most 3PL/TMS systems claim to have milestone, event and exception management. However, more than often it stops at the level of providing alerts to the stakeholders and leaves the re-planning work to be conducted manually.

History Background: A highly configurable central business process management engine is a quite advanced concept.

Market Trend: With the new technology of SOA, BPEL, and webservices, etc., having a flexible business process engine that could change the internal process and trigger the action externally would be highly desired and achievable.

Key Strengths & Weaknesses Strength

Total Logistics Cost Reporting down to item level

Competitors: A lot of 3PL/TMS systems have built the landed cost or logistics cost reporting module. However, without handling international and domestics leg by one system, the cost calculated will always be only a portion of the total logistics cost.

History Background: The information of total logistics cost down to SKU is very critical to the buyers. It could fundamentally change the sourcing decisions.

Market Trend: Cost control & saving has been the number 1 objective of logistics.

Key Strengths & Weaknesses

Weakness

Looks complicated to use (quote from the market)

Pricy for the middle market (quote from the market)

Lack of documentation functions, which is one of keys

for the international logistics and distribution business

FCR / HBL

Proof of Delivery

Export/import documents collection

Customer Analysis

Customer Segmentation

1. LSP (main target)4 type of players in China logistics market

Large sized state-owned enterprises (SOE)Local private companiesLogistics arm of international ocean carriersInternational professional logistics companies

Nearly 730,000 logistics-related organizations>30,000 3PL companies

Customer Segmentation

2. China Importers and ExportersChina importers

Source large quantities of goods (e.g. raw materials) from different countries into ChinaFOB basedIndustry

Retail / Chemical / Commodity / Automotive

China exportersSell large quantities of goods to different countriesCIF based (not the mainstream in China)Industry

FMCG / Apparel / Electronics

International Trading / Sourcing Agents

Customer Segmentation

3. Large Enterprises Doing Business Nationwide

IndustryAll Industries Except

Dangerous GoodsReefer Cargo

Ideal ProfileHave a large number of manufacturing plants or retail shops across the nationComplex process involving DCsCentralized transportation planning department

Business Type

InternationalFully integrated international supply chain management- Sourcing into China, not fromExport / Import forwarding

- freight forwarder/NVOCCParcel

DomesticNational transportation management / multi-mode- Truck, rail, barge, air, etc.Local distribution (integrated with WMS)

Value Proposition for LSP

Provides competitive edge in the logistics marketIT is the key for logistics business

Quicker implementation than inhouse developmentSoftware development cycle time normally take yearsOptimization algorithm is difficult to define

Lower cost than inhouse developmentOutsource to the professionalDevelopment cost is usually much higher

One platform for both international and domestic business

Value Proposition for Importers/Exporters & Domestic Shippers

Gain the tremendous control of supply chain

Significant logistics cost saving through control and optimization

Rigid freight and total logistics cost management

Quicker implementation than inhouse development

Lower costs than inhouse development

One platform for both international and domestic business

Potential LSP Customers in China

Potential LSP Customers in China

International 3PL Players in China

Potential Import/Export Customers in China

Potential LSP Customers in Taiwan

Global Optimal Inc

Local 3PL Players

Potential Import/Export Customers in Taiwan

Potential LSP Customers in HKG

Local 3PL Players

Competition

Direct Competitors

TMS Category I2

Manugistics

3PL Category Log-Net

GT-Nexus

Velocity

Competition Landscape

Whole Business Application Suite Vs. Niche Players

Oracle, SAP

I2, Manugistics

High-end Vs. Middle Market Vs. Low End

International Software Vendors Vs. Local Vendors

Software License Model Vs. ASP (On-Demand) Model

Where is OTS?

Price

High

Low

FunctionalitiesNiche Broad

Target

Customer

International

Local

Implementation

Implementation Strategy

Position as a high-end product

Tied offering Track and trace as basic offering Optimization as premium offering

Lock anchor customer Be able to use as reference Customer testimony More resources to make sure the successful roll-out

Pricing flexibility Partnership deal for the anchor customers Volume discount Bundling with other Oracle products Pay when you go, on-demand option for middle market?

Implementation Strategy

Marketing campaign Publish white paper in industry magazines

Attend trade shows

Deliver key note speech at industry seminars/conferences

Advertise

Cross sale/ up sale Opportunities Current Oracle install base

Joint sales force

Local sales team together with product expert

Action PlanStep 1: Define Sales Organization, Structure & Responsibility

Regional Sales / Pre-Sales / Product Team Dedicated OTM Sales and Cross-Sale/Up Sale Project Team Structure Role & Responsibility Communication Protocol

Step 2: Arrange Sales Training Product Training with Business Cases Value Proposition Target Customer Edge Over the Competitors Pricing

Action PlanStep 3: Get Chinese/English Sales Kit Ready

Sales Letter Not Ready

Brochure Not Ready

Data Sheet Ready

Case Study / Success Story International Case Only

Tips for Sales Not Ready

Customer FAQ Not Ready

Pre-Sale Checklist Not Ready

Presentation Need to be Refined

Demo for different customer Need to be Refined, Chinese

segments & business scenarios Environment not ready

Action PlanStep 4: Sales Campaign by Sales and Pre-Sales

Identify potential customer list LSP List (See Appendix 1)

China Importer & Exporter List

Large Enterprise List

Meet with sales team to discuss how to approach

those customers and generate more leads

Cold call and visit some prospects

Attend industry conferences

Step 5: Setup Customer Help Desk

Channel/Partner Development

Channels / Partners Oracle Regional Sales Force

Consulting Firms

IBM, HP

Bearing Point

Big Four

Local consulting firms

Other Software Vendors

Knowledge Buildup Product Training

Sales Kit

Demo Environment Setup

Sales Forecast

License: US$300K-500K

Number of Customer Targets for FY2006

Mainland China: 2

Hong Kong: 1

Taiwan: 1

Total Revenue Target: US$1 - 2 million

Appendix: LSP List Global Players

Air China - China Eastern - China Southern Airlines - Dragonair (Hong Kong) -

China Airlines - Cathay Pacific - COSCO Group - China Shipping - Evergreen

(Taiwan) - OOCL (Hong Kong) - APL - Maersk - P & O Nedlloyd - Hutchison

Whampoa - PSA - P & O Ports - APM Terminals - Annto Logistics - China Resources

Enterprise - Haier Logistics - Changˇan Minsheng Logistics - Anji Automotive

Logistics - Sinotrans - China Shipping Logistics (Zhonghai Logistics) - PG Logistics -

Cosco Logistics - Shenzhen Gongsuda Logistics - Jiuchuan Logistics - China Post

Logistics - EAS International - Da Tian W Group (DTW) - China Merchants

Logistics/ST Anda - Nippon Express - Kintetsu World Express - Semblog - TNT

Logistics (Anji-TNT) - DHL (Danzas) - Kuehne & Nagel (K&N) - Exel Expeditors -

Bax Global - Gefco - NYK Logistics - APL Logistics - GeoLogistics - Panalpina -

Schenker - Tibbett & Britten - Maersk Logistics - BLG - BALtrans - Fedex - TNT

Express - UPS - DHL - Express Mail Service (China Post) - China Air Express - EAS

- COSCO - DTW

Appendix: LSP List China Players

中国远洋物流有限公司 北京 中邮物流有限责任公司 北京 中远国际货运有限公司 北京 招商局物流集团有限公司 深圳 锦程国际物流集团股份有限公司 大连 天津大田集团有限公司 天津 广东邮政物流配送服务有限公司 广州 中国物资储运总公司 北京 中铁集装箱运输有限责任公司 北京 山东海丰国际航运集团有限公司 青岛 中铁行包快递有限责任公司 北京 黑龙江省华宇物流集团有限公司 佳木斯 青岛海尔物流有限公司 青岛 中铁现代物流科技股份有限公司 北京 中铁快运股份有限公司 北京 中海集团物流有限公司 上海 南方物流企业集团有限公司 广州 宝供物流企业集团有限公司 广州