Motorola implemented Emptoris' internet negotiation tool (MINT) to reinvent its supplier negotiation process during a period of market collapse and internal complications. Using MINT, Motorola was able to conduct more efficient online negotiations with suppliers across multiple commodities. This allowed Motorola to reduce costs and realize over $600 million in savings. MINT helped shift Motorola's negotiations to be more transparent, collaborative, and driven by total cost of ownership optimization.

1. An Emptoris Case Study
Motorola Reinvents its Supplier
Negotiation Process Using
Emptoris and Saves $600 Million
Emptoris, Inc.
www.emptoris.com

2. - - © 2001 - 2008 Emptoris, Inc.
Sales contracts dictate virtually every aspect of a business relationship, including payment terms,
service levels, pricing, and customer obligations.These contracts play a critical role throughout the
Quote-to-Cash process, from the initial proposal through final payment. Unfortunately, most companies
do not take a structured approach to managing their sales contracts, and, as a result, often suffer from
extended sales cycles, eroded deal quality, missed obligations, or squandered opportunities to renew
and expand existing relationships.
Emptoris Contracts, a leading enterprise contract management solution, enables companies to improve
sales effectiveness by managing the Quote-to-Cash process throughout the entire customer lifecycle.
Using diCarta Contracts, companies can shorten sales cycles, reduce revenue recognition issues, and
structure more profitable deals through better control of underlying contract language and terms.
Improving the Quote-to-Cash Process: Managing Complexity
The process of managing deals from initial sales proposal through contract creation, negotiation, and
acceptance, typically involves numerous resources across an organization. It is not unusual for sales
operations, field sales, planning, finance, legal, product management, and consulting to be involved
in the process. Coordinating the process across all resources, while ensuring that deals contain only
accurate product, pricing, and terms, and that proper review and approval procedures are enforced
can be challenging.With increasing deal size, more complex negotiations, and higher sales volume,
maintaining an efficient, effective process can become unattainable. For most companies, simply
applying more people.
Proposals
Contract
Amendments
Renewal
Management
Deliverables
Management
Receivables
Contract Creation
Negotiation
Field
Sales
Product
Team
Contract
Mgrs
Inside
Sales
Legal
Proposal
Team
Service
Delivery
Sales
Opps
Pricing
New Deals
Ammendments/
Change Orders
Proposal Requests
New Business
Prospects,
Customers
and Partners
$
Proposals
Contract
Amendments
Renewal
Management
Deliverables
Management
Receivables
Contract Creation
Negotiation
Field
Sales
Product
Team
Contract
Mgrs
Inside
Sales
Legal
Proposal
Team
Service
Delivery
Sales
Opps
Pricing
New Deals
Ammendments/
Change Orders
Proposal Requests
New Business
Prospects,
Customers
and Partners
$
Executive Summary

3. - - © 2001 - 2008 Emptoris, Inc.
One of the greatest challenges Motorola has ever faced was the disastrous telecommunication
downturn of 2001. No one tells this story better than Mike Zafirovski, Motorola’s President. “Flash back
for a moment to 2001. In the wake of the dot-com and telecommunications bust, Motorola faced new,
hungry competitors and an uncertain marketplace nervously confronting its own threats- terrorism,
economic upheaval, and public trust shaken by corporate scandal. We were not facing your garden
variety downturn in the telecom industry!” As figure 1 illustrates, Motorola faced multiple challenges in
this downturn, which it now refers to as the“Perfect Storm.”
First, the market for telecommunications equipment collapsed with demand in the cellular phone
industry falling by one-third. Second, Motorola discovered that some of its products were not
competitive. Third, Motorola struggled with internal complications driven by inefficient processes
and resource reductions, which meant there were fewer people to negotiate with suppliers. As
Theresa Metty, Motorola Vice President and Chief Procurement Officer, comments,“Any one of these
forces would have been a challenge, but all happening at the same time was devastating. We knew
we needed to act quickly if we were to navigate our way out. We knew if we could find a way to
leverage our purchasing power more efficiently and effectively, we could have an enormous impact
on profitability and market share. The question was how.” To help answer this question, Motorola
launched the Motorola Internet Negotiation Tool (MINT), Motorola’s internal name for Emptoris’web-
based strategic sourcing application.
Market Collapse
 Demand dropped
sharply
 Revenues tumbled
 Extreme overcapacity
Internal complications
 Supplier negotiation
processes inefficient
 Limited resources
Products not competetive
 Lacked key features
 Aging portfolio
 Too expensive
Emptoris Contracts Spans the Quote-to-Cash Process
Figure 1 - Motorola’s Perfect Storm

4. - - © 2001 - 2008 Emptoris, Inc.
Cost Reduction- the Course to Navigate
With falling revenues, Motorola sought to improve earnings by cutting costs and improving margins.
As Metty explains,“Since the top line was not growing, we needed to achieve our earnings per share
goals by reducing costs. The equation was simple. Every dollar saved equaled $12 in new revenue.
So, for Motorola to deliver the same earnings to the bottom line that it achieved using MINT ($600
million), Motorola would need to increase sales by over $7 billion.”
In the process of implementing MINT, Motorola had to re-invent the sourcing and supplier
negotiation process. The objective was to take advantage of market over-capacity to reduce costs
quickly. However, this required overcoming the complexities in the sourcing process and improving
the supplier collaboration and negotiations to make these processes more effective and efficient,
all with a drastically reduced workforce. In the words of Rob Harlan, the Director of Global E-
Procurement at Motorola and the leader of the initiative to implement MINT,“We had to do more
with less, and do it now!”
Selecting the Solution to Weather the Storm
As figure 2 shows, managing the strategic sourcing process at Motorola is extremely complex. With
all of the complexity in parts, people, suppliers and locations, Motorola needed a solution that would
not only optimize the selection of suppliers based on the total cost of ownership (TCO)1 , but also
would enhance the supplier collaboration and negotiation processes. The solution needed to handle
every type of sourcing project from very large and complex semiconductor negotiations to very
small one-time prototype purchases. This large and complex problem required a robust solution
with global capabilities. A Motorola team unanimously selected Emptoris to provide this solution
after an exhaustive evaluation process.
Motorola Complexity
•250 commodity managers
•51 direct material
commodities
•26 indirect commodities
•300,000 active parts
•Dozens of manufacturing
locations
•Complex cost-quality
tradeoffs
Supplier Complexity
•44,000 suppliers
•Complex pricing
structures
•Many cultures and
languages
Total cost
of ownership
(TCO)
1
Total cost of ownership incorporates all elements of cost related to a supplier’s offer. This includes not just pricing but additional out-of-pocket costs
related to shipping, taxes, tariffs, financing, warranty and maintenance. It also includes soft costs and opportunity costs related to delivery, availability,
quality and performance.
Figure 2 - Strategic Sourcing Complexity at Motorola

5. - - © 2001 - 2008 Emptoris, Inc.
When designing a solution to weather this perfect storm, it is important that each component works
together as part of an integrated solution. One of the unique capabilities of Emptoris’solution is its
ability to enable each step of Motorola’s internet negotiation process (figure 3).
Key components Emptoris provides to support each step of the process include the following:
In step 1, using Emptoris’flexible data model, the commodity team can build the TCO formula on
the fly through the user interface. The model captures both data elements and the formulas that
define the inter-relationships of these elements. This model incorporates all elements of total cost.
In step 2, Emptoris provides the commodity team with the ability to select the best negotiation
approach, which can be an electronic reverse auction, an electronic sealed bid request for quote
(eRFQ), or both. For each direct material commodity area at Motorola, close to 100% of the spend
is sent through an eRFQ initially.
In step 3, using Emptoris’embedded workflow and communication, the commodity team
collaborates with suppliers, iteratively exploring options for how the supplier can meet Motorola’s
needs at the lowest TCO.These options may include modifications to the quantities, delivery
requirements, delivery dates or item specifications.
Confirm suppliers
understand
Step 1
Communicate
Requirements
Step 2
Develop Sourcing
Strategy
Step 3
Collaborate with
Suppliers
Step 4
Supplier
Negotiation
Step 4
Analyze scenarios
(optimization bid
analysis)
Step 4
Award the
business
Multiple price and
non-price factors
Reverse auction or
Request for Quote
(RFQ)
All elements of
total cost of
ownership (TCO)
Powering Motorola’s Internet Negotiation Process
Figure 3 - The Internet Negotiation Process

6. - - © 2001 - 2008 Emptoris, Inc.
In step 4, suppliers use online bidding functionality to offer innovative options for the commodity
team to evaluate. This is important because the supplier often knows multiple ways to meet the
commodity team’s needs based on the supplier’s capabilities. Using Emptoris’solution, suppliers
can submit any number of bids that can include rebates, volume discounts, bundling, and
substitutions, for example.
In step 5, leveraging Emptoris’embedded optimization-based bid analysis, the commodity team
evaluates different sourcing strategies to see the effect of various purchasing policies on the total
cost of ownership and supplier award distribution.The team can run and compare an unlimited
number of“what if”scenarios against all bids in the system. The system recommends line-by-line
what supplier to buy from and provides the reasoning analysis identifying the contributing factors
to this decision.The optimization bid analysis is tightly integrated into the negotiation platform, so
the buyer can quickly modify the requirements and re-open the negotiation with minimal effort.
In the final step, the commodity team selects the scenario that best meets their needs based on
the total cost of ownership and chosen purchasing policies.
Avner Schneur, the CEO of Emptoris notes,“While Emptoris’internet negotiation solution offers
sophisticated functionality, to drive adoption, it is important to shield the user from the underlying
complexity. Therefore, the system was designed to provide an extremely easy-to-use environment.
Thus, the power of optimization is exposed to the commodity team without requiring them to
understand how it works.”
Charting the Right Course with Optimization-based Bid Analysis
When selecting suppliers, the goal is to identify the best mix of suppliers to meet Motorola’s needs
at the lowest total cost of ownership subject to a set of purchasing policies. As figure 4 shows, often
in purchasing situations, there are many items, suppliers, pricing strategies and business constraints
that make this problem quite complex.
To highlight how these factors contribute to a difficult decision process, consider the following. In
a single negotiation, the commodity team may flexibly specify requirements on thousands of items,
each with different quantities and delivery locations. Suppliers may respond with multiple bids on
all items simultaneously, employing complex pricing strategies that incorporate price breaks, rebates,
substitutions and discounts for groupings of items. Because the focus is on total cost of ownership
and not just price, the commodity team that values the long term performance of strategic suppliers
then incorporates supplier performance criteria measuring quality, delivery and service. Finally, the
commodity team may need to enforce purchasing policies in the decision. A purchasing policy can
be, for example, splitting items between two suppliers to hedge risk or allocating a certain portion
of the business to a minority supplier. Emptoris’optimization-based bid analysis easily handles
this complexity, identifying in minutes what could take up to one month using more traditional
spreadsheet analysis.

7. - - © 2001 - 2008 Emptoris, Inc.
Highlighting the importance of supplier relationships in the selection process and MINT’s
ability to factor them in using optimization-based bid analysis, Zafirovski points out,“Excellence
in procurement, like most aspects of business, is about cultivating successful relationships.
Motorola can’t afford to damage supplier relationships as it chases low-cost solutions. Pricing is
only one consideration. Quality of product, timely delivery, volume and flexibility, they all factor
into the supplier equation. Early on, our supply chain partners learned that MINT went well
beyond electronic bidding.”
Driving Adoption- Getting All Hands on Deck
“We basically took a‘faster, wider, deeper’approach to institutionalize and optimize the supplier
negotiation process at Motorola,”says Harlan. This included creating a high impact team with deep
sourcing and system implementation experience to rollout the MINT system quickly and teach our
commodity teams how to use it. Motorola implemented an extensive change management program
and focused intensively on training at the user, executive, and supplier levels. Motorola also took
careful steps to build trust with suppliers by training them on the MINT solution and process while
also integrating key demand aggregation systems to build a foundation for conducting online
sourcing using more in-depth analysis. Finally, early on Motorola conducted high profile sourcing
negotiations and communicated the process and results to the rest of the procurement community
Minimize total
cost of ownership
(TCO)
Flexible Requirements
•Item
•Specification
•Quantity
•Due date
•Proprietary attributes
(bid fields)
•Total cost formulas
Supplier Bids
•Bundling
•Multiple price breaks
•Rebates
•Substitutions
•Quality and quantity ranges
•Multiple delivery locations
and times
Purchasing Policies
•Budget limits
•Award splits
•Switching costs
•Contractual obligations
•Preferred suppliers
Supplier Ratings
•Supplier, category and item
level
- Qualification
- Quality
- On-time delivery
- Item attributes (e.g.,
tolerance)
Figure 4 - The Role of Optimization-based Bid Analysis

8. - - © 2001 - 2008 Emptoris, Inc.
at Motorola. All of these factors contributed to the rapid adoption and the substantial increase in
the percent of spend negotiated online via MINT as seen in figure 5.
Successfully Navigating Out of the Storm
The MINT solution not only helped Motorola survive the Perfect Storm, it also facilitated a change in
the negotiation paradigm both for Motorola and its suppliers as shown in figure 6 below.
As Metty notes,“We have shortened our collaboration and negotiation cycle significantly. We have
empowered our suppliers to respond more creatively to our needs, going far beyond price. And, we
have equipped our buyers with strong optimization and analytical tools enabling them to explore
more options to achieve maximum value.”Old Paradigm
•Manual part-by-part
•Price-based only
•Face-to-face, one-to-one
•Imperfect information
•Gut feel
New Paradigm
•Automated and
aggregated
•Base on TCO
•Internet-based,
many-to-many
•Transparent
•Quantifiable trade-offs
Figure 6 - Negotiation Paradigm Shift at Motorola
Figure 5 - MINT’s Adoption at Motorola
Drive eSourcing to 90% of
Motorola's eligible spend...
30%
15% 20%
10%
40%
90%
58%
70%
2002 2003 2004
(proj)
2005
(proj)
e-RFQ
e-Auction
…with rapid
global adoption.
725
598
1200
271 311
600
Number of
events
(cumulative)
Number of
internal
users
Number of
suppliers
2002
2003

9. - - © 2001 - 2008 Emptoris, Inc.
As of April 2004, Motorola has negotiated over $16 billion of purchases online, saving well over $600
million (figure 7 below). Motorola has steadily increased the percentage of its spend sourced online
using MINT. In 2003, the figure was 80% of Motorola’s direct materials, and 50% of total overall
purchases, and it continues to grow. In addition, the number of categories of spend negotiated
using MINT is significant. Nearly every category has been sourced using MINT. In 2003, it was used in
sourcing events from under $2,000 to over $2 Billion. 600 Motorola employees and 1,000 suppliers
utilized MINT in nearly 500 sourcing events.
Zafirovski says,“Procurement is one of three vital few areas we are targeting at Motorola to realize
cost savings of $3 billion or more by next year. MINT plays an important role in reaching that goal.
With it, we brought aggressive cost-competitiveness and cost analysis to Motorola’s sourcing process.
We applied the power and efficiency of the internet to deliver a new level of compliance across the
corporation. Thanks to our procurement team and the MINT system, Motorola navigated its way out of
telecom’s‘Perfect Storm’and today is charting a course to success.”
Dave Devonshire, Motorola’s Chief Financial Officer adds,“By any measure, the impact of this innovation
is huge. Motorola’s annual expenses for materials and services total about $17 billion. Our MINT
system currently processes about $9 billion of it electronically. And that figure is growing. Over the
past three years, we’ve saved more than $600 million. Savings are realized not only in pricing, but
also in reduced travel, improved cycle time and significantly higher operating efficiency. Every
aspect of our procurement process is optimized as never before thanks to the MINT system.”
Motorola’s Future with MINT
Although the success to date has been phenomenal, Motorola will continue to utilize MINT to drive
additional costs out of the system. Motorola plans to deploy MINT to commodities that are not fully
leveraged today as an immediate area of opportunity. Says Metty,“We believe it is imperative and
possible to use MINT for 100% of our purchases for both existing and new products.” Motorola also
Savings($million)
The Impact of MINT
Figure 7 - MINT’s Adoption at Motorola
…across 50% of total
spend ($ millions).
$6,800
$2,400$1,600
$9,800
2002 2003
e-RFQ
e-Auction
Over $600 million
in savings...
$0
$250
$500
2002 2003
Savings($million)

10. - 10 - © 2001 - 2008 Emptoris, Inc.
plans to utilize MINT to manage changes in the supply base which are driven by new technologies
and geographical shifts in business. Finally, MINT will enable commodity managers to re-evaluate
quickly previous sourcing decisions that were optimal at one time but because of changes in market
conditions or in Motorola’s demand, may no longer be optimal. As Metty states,“We are very proud
of our accomplishments, and we are excited about the future prospects of MINT. The numbers are
big now, and we will drive them even higher!”

11. - 11 - © 2001 - 2008 Emptoris, Inc.
Emptoris is a world leader in innovative supply and contract management software solutions that
empower enterprises to realize best value and accelerate profitable growth. Emptoris solutions are
used by successful Global 2000 companies in every industry. Customers include American Express,
Boeing, ConocoPhillips, GlaxoSmithKline, Kraft, Motorola, Owens Corning, Syngenta, and Vodafone
About Emptoris

12. For more information
about Emptoris, visit:
www.emptoris.com,
call 1.781.993.9212, or
email sales@emptoris.com.
Emptoris, Inc.
200 Wheeler Road, Burlington, MA 01803
tel 781-993-9212 • fax 781-993-9213 • www.emptoris.com
© 2001 - 2008 Emptoris, Inc.