Denis Ford, International Leader EMEA at Cummins spoke at the CPO Event March 2014

1. Supplier Evaluation & Inclusion
Denis Ford MBA MCIPS – Cummins Indirect
Purchasing
International Leader EMEA, NE/SE Asia &
South Pacific

2. Agenda
• Introduction to Cummins
• Corporate Indirect Purchasing at Cummins
• e-Sourcing
• How Do Cummins Use e-Sourcing?
– Rapid Source
– Mega Source
• Supplier Response Evaluation
• Supplier Diversity & Inclusion at Cummins
• Questions?
• Appendix

3. •Aftermarket Support
•Heavy-Duty Engines
•High-Horsepower Engines
•Mid-Range Engines
•Alternators
•Automatic Transfer Switches
•Commercial Power Systems
•Consumer Systems
•Engines
•Paralleling Systems
•Emission Solutions
•Filtration
•Fuel Systems
•Turbo Technologies
•Engine and Power Generation Distribution
•Service and Parts
Cummins Inc., named from Clessie Cummins who helped pioneer the commercial use of diesel engine
technology in the United States, is a Fortune 500 company whose products are sold in more than 190
countries and territories around the world.
Cummins is a diverse, community-minded technical leader in the design, manufacture, sale and service of
diesel engines, power generation equipment and related components. We operate as four distinct, yet
complementary, lines of business.
Company name: Cummins Inc.
Corporate Headquarters: Columbus, Indiana
Founded: 1919
Stock Symbol: CMI (traded on NYSE)
2013 revenues: $17.3 billion
2013 Fortune 500 rank: 160
2013 earnings before interest and taxes: $2.16 billion
2013 net income: $1.48 billion
Employees: Approx. 46,000 worldwide; 16,000 United States
Business segments: Engines, Power Generation, Distribution and
Components.
Major products: diesel and natural gas engines for on- and off-
highway applications; power generating systems and standby
generators; engine filters, advanced exhaust after treatment products;
turbochargers; fuel systems
Major markets: Global heavy- and medium-duty truck markets; light-
duty truck markets in Asia; construction; oil, gas and mining;
agriculture; construction; government; commercial and consumer
power generation; parts and service; exclusive supplier of diesel engines
for the Dodge Ram pick-up truck
International presence: Operations in more than 190 countries and
territories worldwide, with more than 60 percent of our sales generated
outside the United States. A leading maker of diesel engines and related
products in China, India, Brazil, United Kingdom and Mexico
“Making people's lives better by unleashing the power of Cummins.”

4. Corporate Indirect Purchasing(CIP) Structure
A Global Corporate function organised in 10 Geographic Regions
– Led from HQ Indiana, US, with 2 International Sourcing Leaders
– 10 Regional Leaders cover Cummins Global presence
– Regionally centralised teams allowing variance to meet internal customer needs
– Use the same tools and processes globally to ensure consistency
– Source Indirect Goods and Services that are not used in Cummins end products
4 = CIP Office Locations (16)

5. What is e-Sourcing and Why Use it?
A Mix of Technology and Process for Competitive Tendering (bids)
A Web-based tool which complements traditional sourcing process to help Buyers identify,
evaluate, and negotiate, procurement decisions
Ariba suite of tools are used within Cummins (Ariba Sourcing, Analysis, Buyer, Category
Management, Contract Warehouse)
Ariba Sourcing tool supports multiple methods of bid submission (RFx)
RFI (Request For Information)
RFP (Request For Proposal)
RFQ (Request For Quote) Competitive Live Reverse Auction
RFB (Request For Buy)
Provides a platform to help enhance consistent practices across the globe . Promotes team
collaboration and is an effective way to capture information
Gives structure, repeatability & flexibility around sourcing activities - saves time! can
source for one plant/site, UK wide, Regional or Globally
Provides for Comprehensive evaluation based on pre defined criteria to obtain
lowest Total Cost of Ownership (TCO).

6. How Do Cummins Use e-Sourcing?
Two Main Methods:
Rapid Source
Mega Source

7. e-Sourcing:Cummins RapidSource Process
Process Improvement
Buyer Supplier
Collect
product
specification &
supplier group
Communicate to
pre-enabled
suppliers
RFx Launch
Bid/Prebid
collection &
evaluation
Live event
(Reverse
Auction)
Bid award PO
Issued
RFx and bid
calculator
creation
RFx review,
testing & Launch
Manage Q&A
board
RapidSource
No source selection required, only pricing!
Constant price fluctuations, no long term contract
Take advantage of excess supplier capacity
Agreement based on Purchase Order T&C’s
Generally takes 1-2 days
Low bid value/Low Risk in comparison to Mega Source

8. e-Sourcing : Cummins MegaSource RFx Process
Process Improvement
Buyer Supplier
Pre Kickoff
meeting
Kickoff
meeting
RFx Launch
Bid/Prebid
collection &
evaluation
RFx creation
RFx review,
testing &
Launch
Manage Q&A
board
Project overview
Business requirement
RFx questions
Cost model/Pricing Worksheet
Live event
Contract
establishment
10 days
4-7 days
7-14 daysMegaSource
Source selection, pricing and supplier capability evaluated
Agreement based on MSA, long term contract
Generally takes 4-12 weeks
High bid value/complex
RFI, RFP, & RFQs
Closed bid and reverse auction
Selection based on lowest Total Cost of Ownership (TCO)

9. Project Overview
PROJECT OVERVIEW
<RFX TITLE>
INTRODUCTION / SCOPE
<Cummins Inc.> is seeking bids from qualified <provider type> to …
Include a high level description of what services, to whom, and where the vendor will be
required to provide services
CURRENT PROCESS FLOW
Provide a description of the existing process for the service/product including location, hours
of coverage, customers, and performance metrics, if any.
OBJECTIVES
Functional Requirements:
 What does the vendor need to provide – provide a high level list of all services and/or
products, support required, any hardware or software requirements, performance
metrics and any reporting requirements
 Describe who the customer will be
 How much (volume or time) and when (if it is a service, then provide exact hours of
coverage)
Selection Criteria
All proposals will be evaluated by Cummins. Each proposal will be evaluated according to a
number of criteria within the following categories:
 Describe the criteria for selection. Each criterion must have questions relating to it in
the RFX worksheet in order to evaluate vendor accurately
The RFQ questions are designed to address your capabilities while providing the opportunity
for you to demonstrate your firm’s strengths in these areas.
Translates to Business
Requirements
Each criteria should correspond to a
set of RFx Questions
First document the supplier gets to see when RFx
is launched
Defines the scope of the project, project schedule,
functional requirements and questions
Every Business Requirement and Question will be
linked to a selection criterion in the project
overview
Requirements will read “Supplier must”
Project overview must be written with the SOW in
mind
Project overview feeds into the SOW at time of
contract with input from the responses to the
requirements and questions in the RFx

10. Business Requirements and Questions Evaluation
Requirement
“MUSTHAVES”
Supplier BSupplier A Supplier CCriteria
DifferentiatingFeatures
“GOODTOHAVE”

11. Evaluation completed using scores from Qualitative and Quantitative supplier
responses collected from Ariba Sourcing tool
Section
Weightage
RFX
Seri
al #
40% Section 1: Qualitative Questionnaire
% Weightage
of question
R at ing of
R esponse
Overall
W eight a
ge
R at ing of
R esponse
Overall
W eight ag
e
R at ing of
R esponse
Overall
W eight ag
e
5.2
Do you agree to comply with the terms stated in the document attached
as section 5.1?
H
13% 9 0.47 9 0.47 1 0.05
7.8 Are you ISO registered? L 4% 9 0.16 0 0.00 9 0.16
7.11
Does your Company contract with a third party to deliver any in scope
service?
M
9% 1 0.03 1 0.03 1 0.03
7.12
If yes to the above question, please specify the service(s) and the
subcontracted entity.
M
9% 1 0.03 1 0.03 1 0.03
7.13
Can you supply an annual inspection/maintenance service for the
products to be installed?
L
4% 9 0.16 0 0.00 0 0.00
7.14
If yes to the above, will this be included in the first 3yrs or the warranted
period?
M
9% 0 0.00 0 0.00 0 0.00
7.15 If no to the above, what will be the cost of this service? L 4% 5 0.09 1 0.02 1 0.02
7.16 How many years warranty is included for supplied equipment? H 13% 5 0.26 5 0.26 1 0.05
7.17 What is the average delivery lead-time (days) for the required product? M 9% 1 0.03 1 0.03 9 0.31
7.18
What is the maximum period of time (months) that the submitted pricing
will be valid for? This could be used for future warehouse expansion
decisions.
M
9% 0 0.00 9 0.31 0 0.00
7.19
If selected you would be required to present your proposal and project
plan at short notice before contract award. Are there any issues with
this or dates which would be unacceptable to you?
H
13% 9 0.47 9 0.47 9 0.47
9.1
Please describe any value added services you may have, including the
cost and related benefit to Cummins?
L
4% 0 0.00 5 0.09 0 0.00
Section 1 Subtotal 100% 170% 172% 113%
60% Section 2: Pricing
% Weightage
of question
R at ing of
R esponse
Overall
W eight a
ge
R at ing of
R esponse
Overall
W eight ag
e
R at ing of
R esponse
Overall
W eight ag
e
Total Bid Value 1 H 100% 5 3.00 9 5.40 1 0.60
Section 2 Subtotal 100% 3.0 5.4 0.6
100% Supplier Total 4.70 7.12 1.73
Supplier CSupplier BSupplier A
Section
Weight
Question
Rank
H/M/L
Supplier
Response
Rating
Supplier Overall Score
Evaluation of Supplier Responses

12. Evaluation Summary
• Comprehensive evaluation of Qualitative and
Quantitative data /supplier responses to questions
within the tools
• Different weighting and ranking of questions
depending on commodity or stakeholder requirement
• Historically, the evaluation process would not have
consider Supplier Diversity
• Diversity questions added to sections in each RFx
• Relative weighting given to Diversity section in RFx
• Scoring of elements of Diversity and Supplier
programs now included in overall evaluation. Why?.....

13. Supplier Diversity & Inclusion at Cummins
• Cummins is a Multi cultural company and we want our employees and suppliers
to be diverse like the people who use our products.
• Support businesses & not discriminate by race, gender, religion, ethnicity etc.
• Cummins wants to give opportunities to all suppliers to ensure we have the best
suppliers
• Supplier Diversity & Inclusion Program efforts include such activities as:
– Surveying supply base to identify any that are diverse suppliers,
– Including Certified diverse suppliers in sourcing events, where possible
– Asking Diversity and Inclusion questions of potential suppliers in all RFx
– Identifying which diverse suppliers have the best potential to do business
with Cummins – aligning values and capabilities
– Introducing diverse suppliers to Cummins functional owners
– Educating functional owners within Cummins about supplier diversity
– Helping diverse suppliers improve their capability(feedback/training)
– Participating in diverse supplier organization events. (Meet the
buyer/Supplier, Networking round tables, House of Commons visits, Awards
Dinner etc)

14. Supplier Diversity & Inclusion at Cummins
• Cummins are aligned to two non-profit organisations. Use
MSDUK & WeConnect databases to search for Certified
suppliers before all sourcing events
• Also use MSDUK & WeConnect Supplier Referral Process
(Wider network/commodity specific)
• Meet the Buyer/Supplier days and networking roundtables
• One to one introductions to increase supplier development
& engagement
• Diverse suppliers given an opportunity to be considered
and included in sourcing – still need to be the best supplier
for Cummins!

15. Introducing MSDUK…

16. MSDUK Organisation
Formed in
2006
MSDUK
was.. A not for
profit
company
limited by
guarantee
MSDUK
is..
A UK affiliate
of NMSDC
MSDUK
is..
A Board of
Directors from:
MSD, Enterprise
Rent-A-Car, IBM,
ExxonMobil,
GSK, Cummins,
BT
MSDUK
has.. An
experienced
programme
management
team
MSDUK
has Head
Offices in
Leicester.
strong
presence in
London
MSDUK
has.. Generated
more than
£25m worth
of business
for suppliers
MSDUK
has..

17. Corporate MembersCharter Members
Regular Members
Associate Members

18. Services to Members
Outreach events(Buyer/Supplier) -6 a year inclusive in membership fees
Online Certified supplier database
Certification programme of Ethnic Minority Businesses
Supplier Referrals
Access to industry best practices for Diversity & Inclusion
Dedicated account management
Potential recognition at the Awards Dinner
Peer-to-peer networking and learning

19. Global Supplier Diversity & Inclusion
Corporate Program Overview

20. About WEConnect International
Corporate members established WEConnect International to
provide WBE certification outside the US
• Represents over US$700 billion in annual purchasing power
• Connects non-US women-owned businesses to global value chains
• Offers certification and training in Africa, Asia, Australia, Canada, the
Caribbean, Europe and Latin America
• Provides an exclusive global database of women-owned businesses
(certified and self-registered)
• Supports corporate members in the development and
implementation of global inclusive sourcing programs

21. WEConnect International Corporate Leadership

22. Summary & Conclusion
• Gave Introduction to Cummins & Corporate Indirect
Purchasing at Cummins
• Explained e-Sourcing & How Cummins Use e-Sourcing
– Rapid Source
– Mega Source
• Covered Supplier Evaluation & How Cummins includes
Diversity Questions
• Introduced MSDUK & WeConnect – Explained Supplier
Diversity & Inclusion at Cummins
• In Conclusion, We Can See How Supplier
Evaluation/Diversity & Inclusion Can Be Applied in the Day
to Day Work of Procurement...Its Not Hard Work, If We
Really Want To Be Inclusive!

24. Appendix

25. WeConnect Website: www.WEConnectInternational.org
Maggie Berry Email: mberry@WEConnectInternational.org
Contacts
MSDUK Website: www.msduk.org.uk

26. Private and Confidential
Ethnic
Minority
Businesses
A for profit enterprise
registered and physically
located
in the UK
At least 51% owned,
managed and
controlled by people
of Ethnic Minority
origin
Ethnic Minority
* Asian
* Black African
* Black Caribbean
* Chinese
* Mixed Race
Owners to be either British
Citizen or Permanent
Resident
Defining Ethnic Minorities
The MSDUK certification programme, through verification of relevant documents and site visits,
establishes that the businesses fulfil MSDUK’s definition of an ethnic minority business. It assures
MSDUK corporate members that the ethnic minority businesses (EMBs) they seek to contract with are
majority owned as well as managed and controlled by people of ethnic minority origin.

27. Private and Confidential
Website: www.msduk.org.uk
MSDUK Contacts
Name Job Title Email Tel Mobile
Mayank Shah Director mshah@msduk.org.uk +44 (0) 116 2532520 +44 (0) 7779254414
Raj Pattani Business Development Manager raj@msduk.org.uk +44 (0) 116 2532520 +44 (0) 7961945161
Malvika Patel Certification Officer malvika@msduk.org.uk +44 (0) 7791443833
Rebecca Dunkley Events & Office Manager rebecca@msduk.org.uk +44 (0) 116 2532520

28. Main Plant Locations EMEA
Manufacturing
Office
Warehouse
Other
Engines
BU Plant location
EBU Darlington, UK
EBU Daventry, UK
CES Darlington, UK
CTT Huddersfield, UK
CGT Stamford, UK
CGT Ingolstadt, Germany
CGT Craiova, Romania
CPG Ramsgate, Kent
CF Quimper, France
CES Rosslyn, South Africa
CF Port Elizabeth, South
Africa
CF Turkey
CF Rugby, UK

29. Supplier Diversity Program
What is it?
Sourcing initiative designed to significantly
increase spend from QUALIFIED suppliers
representing the following groups:
1. Minority Owned Business (MBE)
2. Women Owned Business (WBE)
3. Veteran & Service Disabled Veteran Owned Business
4. Lesbian, Gay, Bisexual, Transgender (LGBT) Owned Business
5. Disabled (Non-Profit Organizations)
6. Small Business(SME)

30. What counts as diverse supplier spend?
• At Cummins, diverse suppliers are defined as:
– Minority owned, Women owned, Veteran owned, and LGBT owned
companies.
• Ownership – at least 51% ownership of the company is held by one or more
people from the diverse group
• Management – the company is led / managed by the diverse owner(s)
• Control – the key business decisions regarding the company’s finances,
operations, personnel and strategy are made by the diverse owner(s)
– Small and medium-sized enterprises (SMEs) is made up of enterprises which
fall under European definition:
• employ fewer than 250 persons and
• have an annual turnover not exceeding 50 million euro, and/or
• an annual balance sheet total not exceeding 43 million euro.
– Non-Profit Organizations that help provide jobs to the disabled