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“The next level of savings will come from totally open and integrated supply chains, managed and
delivered via ASPs,” Mike Dixon, CEO, Virtual Supplychain.

Dateline: 14th May 2001 – Virtual Supplychain, formerly supply chain software house Systemcare,
today announced its new company and plans to create a global network of channel ASP (Applications Service Provider) partners dedicated to providing next generation supply chain management (SCM) systems. Partners in the UK, Europe, Australia, Asia Pacific, including Singapore, Malaysia and China, South Africa, and the USA have already been established (see attached backgrounder).

Through its direct experience as an early ASP addressing the needs of the supply industry, Virtual
Supplychain understands the criteria for mastery of the model and is now dedicated to enabling and supporting a global network of ASP partners for its virtualsupplychain solution.

The solution includes purpose-built supply chain ASP-ready applications, relationships with
infrastructure partners, first hand ASP know-how with practical guides and advice on topics spanning service level agreements, data centre configuration, pricing models, support and help desk services. Virtual Supplychain will assist traditional software houses, systems integrators and other IT re-sellers to find new markets and opportunities from ASP deployment of supply chain solutions.

Analyst Gartner, in describing the probable global evolution of ASPs, describes the services that
Virtual Supplychain is moving to as net-dynamic.

The early portals and market exchanges have given the supply industry a taster for cost reduction
in the supply chain, but as Mike Dixon, chief operating officer of Virtual Supplychain says: “Virtual Supplychain ASP partners will be well-equipped to deliver the b2b2b integration to attain the supply industry’s glass pipe holy grail of stock optimisation through greater transparency. Operating a managed online service, a Virtual Supplychain ASP can give all parties visibility into each others’ systems enabling the removal of stock gluts and allowing just-in-time delivery to be based on real end-user demand.

“The scale of savings is enormous in comparison to those provided by today’s e-procurement portals
and market exchanges. The ASP operating a centralised facility is well-placed to engineer the degree of collaboration and integration required between all the parties in the supply chain to create the next generation of cost savings.”

Mike Dixon, said: “ASP has been tarred with the brush of failure caused by too many companies
jumping onto the band wagon without ASP business know-how, proper backing, and startlingly without applications suited to deployment over the internet in a thin client model. Virtual Supplychain’s partners are already dedicated niche supply industry specialists – we provide them with everything else they need to become an ASP – out of the box. ASP is the deployment method of the future and our partners will have a head start.”

ASP applications available from Virtual Supplychain include supply chain management for products,
MRO (maintenance, repair and operations) and associated services, together with buy and sell-side
e-business solutions, planning, private exchange technology and integration products.


About Virtual Supplychain

Virtual Supplychain supplies next generation business-to-business supply chain management (SCM)
solutions through global channel partners who are focused on meeting the SCM needs of large- and medium-sized enterprises. Virtual Supplychain continually develops its leading edge supplychain management solution for rapid and cost effective deployment over the internet and assists its partners to become Application Service Providers (ASP). Virtual Supplychain’s products and services allow companies to create totally open and integrated supply chains, in which information is highly accessible and visible to all parties.

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Glossary

ASP – the true ASP manages and delivers application functionality to multiple organisations via a
data centre across a wide area network – private or public such as the internet and charges on a usage basis –e.g. per user per month. Performance, reliability and security are all guaranteed by service level agreements.

Glass Pipe – the term the supply industry uses to describe total transparency between the systems
of members of the chain. Every system can see all it needs to see to remove stock piles from the chain and achieve just-in-time delivery and be driven by real end-user customer demand.

Virtual Supplychain Group – includes Systemcare – the authors and on-going developers of ASP
solutions for the supply chain including Mfour, which also sells and maintains SCM solutions for direct customers; b2bsolutionsonline – the directly owned UK ASP operation; Virtual Supplychain in Australia and Singapore and a joint venture in South Africa.


Background information - Virtual Supplychain

Virtual Supplychain is a new company formed to build a global network of channel ASP partners, who
can help their customers remove cost and improve visibility in their supply chains, beyond that available from today’s e-procurement portals and market exchanges.

One thing that all the major analysts are agreed upon is that the ride for players in the ASP
market may have been turbulent so far, but for those that survive and successfully execute the model, the rewards will be great. IDC for example says the market in 2001 will generate revenues of $1 billion. Through its direct experience as an early ASP addressing the needs of the supply industry, Virtual Supplychain understands the criteria for mastery of the model and is now dedicated to creating and enabling a global network of ASP partners for its virtualsupplychain solution.

The solution includes purpose-built ASP-ready applications, relationships with infrastructure
partners, first hand ASP know-how with practical guides and advice on topics spanning SLAs, data centre configuration, pricing models, support and help desk services. Virtual Supplychain will assist the channel to find new markets and opportunites from ASP deployment of supply chain solutions.

Virtual Supplychain is not an ASP but an ASP-enabler.

Becoming a successful ASP in the supply chain.

The e-economy is the biggest challenge ever to face the channel. Resellers, ISVs and niche vertical
market specialists, and ERP vendors, must adapt in order to survive and prosper. The only option is to participate or be pushed aside by newcomers.

Virtual Supplychain enables and supports the channel to take advantage of the ASP model and the surge-market opportunity for greater integration in the supply chain. With a legacy of over two years’ experience as one of the UK’s most successful ASPs and over 20 years providing supply chain management solutions, Virtual Supplychain is establishing and supporting a network of global ASP partners dedicated to the supply chain.

ASP may not have exploded at the rate first predicted by the pundits – but if you believe
communications costs will continue to fall and IT costs will continue to rise and become more scarce, it is a compelling model for the deployment of applications.

ASP - the deployment method of the future.

According to Mark Armstrong, strategic development director for Virtual Supplychain: “ASP has been
held back by end-user concerns over security, performance, service levels, lack of ASP-enabled applications and a pricing structure that works for no-one. There’s also a tendency for the ASP to think they have to provide everything. What’s different about Virtual Supplychain is that we provide as much, through our own skills and third party relationships, or as little as is required to enable our ASP partners.”

The offering is virtualsupplychain - a complete set of ASP-enabled applications, IT infrastructure,
integration products, support and business know-how options to help partners become first class and
profitable ASPs.

Why focus on the supply chain?

The b2b e-procurement applications market is expected to top $9.7 billion by 2004, according to
IDC. That’s the tip of the supplychain iceberg. Leading analysts forecast a b2b e-commerce marketplace in Europe worth $1.3 trillion by 2004. AMR Research predicts that the supply chain management market is set to grow 40% worldwide and 45% in Europe.

The early portals and market exchanges have given the industry a taster for cost-reduction.
Although these savings can be significant, they are insufficient to allow companies to remain competitive on an ongoing basis. They are also inadequate to fuel prosperity for the largest exchange providers who now seek to deliver more complex supply chain transactions and integration.

Remaining inefficiencies are caused by lack of visibility and poor interactivity in the chains
which link businesses. Next generation savings will come from improved information flow, the removal of stock piles which pepper today’s supply chains and the creation of virtual supply chain managers. Greater visibility and more application-to-application (A2A) integration between the systems of all parties in the chain are required. It’s what the supply industry calls the Glass Pipe and it’s where the industry wants to go.

Virtual Supplychain ASP partners are well-equipped to deliver the b2b2b integration to attain the
Glass Pipe holy grail of transparency. Operating a managed online service, a Virtual Supplychain ASP can give all parties visibility into each others’ systems enabling the removal of stock gluts and allowing JIT delivery to be based on real end-user demand. The scale of savings is enormous in comparison to those provided by today’s e-procurement portals and market exchanges.

Improving supply chain efficiency

Existing supply chain managers, transport companies and distributors tend to be inefficient and
process-intensive. Virtual Supplychain’s ASP partners can provide them with the information flow to
optimise their supply chains to move from being a traditional supply chain master to a true virtual supply chain manager.

In the UK there are more businesses in the distribution sector than any other. And it’s a pattern
repeated in Europe, the US and Pacific rim. The trend towards manufacturer-direct-to-customer delivery is a threat to these businesses. They too must re-invent themselves to continue to add value to their customers.

The virtual supply chain manager

A new breed of supply chain player is emerging. These supply integrators are the first generation
of virtual supply chain managers. Companies like Si3 carry over 500,000 articles on sale yet hold stock of less than 10%. The virtual supply chain manager’s domain knowledge lies in its customers, products and the added value services on offer. Si3 does not want an IT department. They want their transport partners to be efficient, they want their suppliers and manufacturers to carry their inventory and own the responsibility to keep stock levels as low as possible. This pushing out of the processes onto other members in the supply chain is totally enabled through b2bsolutionsonline, a Virtual Supplychain ASP partner.


Applications designed for B2B and ASP deployment

One of the core components of the virtualsupplychain solution is the Mfour supply chain transaction
engine designed from the outset to work in an ASP thin client environment.

Mark Armstrong recalls: “Back in 1994-1995, we had already perceived the opportunity of the
Internet and the ability to provide greater visibility of transactions and supply chain information. It was decided that the 2-tier client server model would not be suitable and the solution was designed initially as a 3-tier model, which has now developed into an n-tier model. This allows for the interface to be chosen at will and for common business objects to be shared. The business and data objects also allow the selection of the most suitable database, whether it be Oracle, or Progress or SQL Server.”

The basic design principles of the virtualsupplychain solution were formed around the B2B model,
too. “Having established that we could provide added value by holding information for individual customers about their supply chains, which can co-exist securely within the same database environment, we ensured that the solution would support maximum efficiencies around the model. Separate business’s can co-exist, share common resources but have total security and visibility of their own transactions. In other words it enables our partners to meet the Glass Pipe need for seamless integration and reactive management solutions that enable planning in
the supply chain to become dynamic,” says Mark Armstrong.

Target markets

Virtual Supplychain expects its partners to address the mid-tier market (50-999 users) which is
crying out for functionally rich supply chain solutions that offer greater efficiencies and improvements.

Virtual Supplychain’s origins rest in the mid-tier market. The applications have been designed for
ease of parameterisation which allows the solutions to be provided at a relatively low entry price, a necessity for the medium-to-large enterprise. Mark Armstrong explains: “Low price is a barrier to entry for most of our competitors who are firmly entrenched in the large corporate market with heavy clunky applications that take a long time to configure. They are high price solutions. Most demand that customers incur upfront capital expenditure and high consultancy fees to install successfully. A virtualsupplychain solution can be implemented very rapidly, normally 6-8 weeks for the initial implementation, at a low cost. That differentiates our partners clearly from the nearest competition.”

In addition, the ASP rental model has an effect on revenue. Costs are spread over 3 or 5 years. For
traditional competitors to adopt the model, their income would drop significantly compared to
existing revenue streams, which would be infeasible. Virtual Supplychain has developed it’s business around the rental model and understands the impact on its partners.


What makes a Virtual Supplychain partner?

Virtual Supplychain is currently recruiting partners in the UK, Asia Pacific, South Africa and the
USA, drawing upon Independent Software Vendors, niche specialists such as an ERP vendors or systems
integrators, software and hardware resellers and portals requiring more back-end functionality.

ASP OUT OF THE BOX

Virtual Supplychain has removed the obstacles to ASP especially by adopting a pricing model that
assists not hampers. Payment to Virtual Supplychain and its infrastructure partners, including IBM, Cable & Wireless, Progress and others, is based on a percentage of the end user seat rental or income. The annuity based revenue model offers sustainable revenues and profits There is no up front investment save in training and knowledge-transfer. The solution is either total – everything a partner needs to become an ASP ‘out of the box’ or partners can pick and mix the elements missing from their current capabilities to complete their ASP picture.

Virtual Supplychain partners

In the UK - b2bsolutionsonline

Founder member of the Virtual Supplychain, b2bsolutionsonline has several thousand ASP end-user
seats delivering a steady monthly income from three, but mostly, five year contracts. Customers range from traditional industries seeking to engage their customers in b2b and e-trading, to the new breed of supply integrator or virtual supply chain manager. A total of 22 end user companies operating from 27 end user company sites, including Si3, Bond International, Waddies, Baker Oil Tools and British Airways Engineering fuel e-procurement and supply chain management with b2bsolutionsonline ASP service.

Si3 – the Integrated Supply Solution Division of Monks and Crane Industrial Group – is the
embodiment of a virtual supply chain manager. Core competencies rest in the domain knowledge of the vast range of MRO (maintenance, repair and operational) products and customer services supplied. Its business solution model includes the strategy to out-source IT requirements. By utilising the expertise provided by Virtual Supplychain’s, b2bsolutions-online partner and with the efficient flow of information between customers, manufacturers and Si3, the company is able to stock less than 10 % of the 500,000 products it supplies.

In Australia – TTH with esupplychain

Early this year Virtual Supplychain opened its Asia Pacific headquarters in Brisbane, Australia and
a regional office in Singapore. Soon after, Technology Trading House (TTH) became Virtual Supply Chain’s first ASP partner in Australia and was given exclusivity for operating in Queensland.

TTH has formed a new division, esupplychain to exploit the delivery of sophisticated supply chain
solutions to the mid-market with its ASP offering, which is empowered totally by the virtualsupplychain.

In Malaysia – Galsoft

Kuala Lumpur and Atlanta-based, Galsoft, the ASP for the airline and catering industry, has become
a Virtual Supplychain partner to add complementary supply chain management and e-procurement to its airline portal. The addition of the virtualsupplychain Mfour application to GALSOFT provides airline customers, such as Malaysian Airlines and Air Seychelles, with web access to applications covering galley loading, catering
management, e-supply chain, e-procurement maintenance, HR and financials.

In South Africa – a joint venture in South Africa represents the Virtual Supplychain company and
is also a virtualsupplychain channel partner.

In the USA/China – AABN

Virtual Supplychain has signed a virtual distributor agreement with US company, Asian-American
Business Network Inc (AABN) in order to address demand in China and Asia for the virtualsupplychain ASP solution. Virtual Supplychain expects to announce its first Chinese partner which is establishing an e-commerce exchange portal and supply chain ASP service.

Mike Dixon, CEO Virtual Supplychain said: “One of the key reasons for the success of Virtual
Supplychain and its partners is the suitability of the underlying Mfour supply chain management application for the b2b and ASP models and its depth of functionality which has developed over 20 years. When the going gets complex, as it does when you are trying to plan supplies and respond to just-in-time supply and demand across multiple companies, you need an application that can handle it. Together with our past experience operating as an ASP, we know that both Virtual Supplychain and its partners have a head start on succeeding in the ASP market.”

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Executives:

Mike Dixon - chief executive officer
Tom Raynor - chief operating officer
Mark Armstrong - strategic development director

Tel: 01642 370326 or 01482 626350
Email: info@virtualsupplychain.com
http://www.virtualsupplychain.com

Press contact:

Salli Roskilly Saffron Communications – Tel: 01763 208708
Email: salli@saffroncoms.com


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