Daily Archives: November 2, 2007

Networks are ok. Catalogs are Good. Punch-outs are Better. But Agents are King!

Let’s start with some clarifications.

A Supplier Network is simply a single point of integration that provides a many-to-many connection between buyers and suppliers, allowing them to transact in real-time. The major selling points are large numbers of pre-enabled suppliers and the ability to find new suppliers quickly for a given product or service. However, the reality is that unless most of your competitors are already using the network, most of your suppliers will not be enabled when you join up. Furthermore, despite hype to the contrary, if you ask purchasing, they know who they’re doing business with for the majority of products and services, even if its not captured in the system.

An online catalogue is simply the electronic equivalent of the old Sears catalogue that used to come in the mail. It contains a complete listing of all of the products a supplier has for sale as well as list prices and, in a good electronic catalogue, any discounts offered by the supplier or negotiated by the buyer. If it’s maintained by the supplier, it’s good for the buyer, but only if the catalogue is compatible with the system that the supplier uses to maintain the catalogue in house. Otherwise, they would have to maintain dozens or hundreds of copies, one for every buyer, and this is prohibitive.

A punch-out is a technology (based in XML) that allows a buyer to shop on the supplier’s e-commerce site but add the products to the shopping cart in their e-Procurement system. It’s better than a catalogue because it allows a supplier to maintain one version of a master catalogue for all of their buyers (as the buyer’s system can store discounts), but falls short in that a buyer cannot compare products across suppliers side by side.

A software agent is a mini-program used by a larger program to accomplish a specific task subject to a particular request. The agent is capable of acting autonomously and the controlling program can deploy multiple copies of the agent simultaneously in a distributed fashion if required. An example is a search agent. Search engines like Google will employ multiple agents simultaneously when a multi-part query is entered to find all pages that each satisfy a part of the search, and then use an intersection agent to find all pages that satisfy all parts of the query. Index agents are another example, one instance is deployed on each page being indexed for future search.

Agents are critical as the right set of agents can be used to overcome the shortcomings of traditional supplier networks, electronic catalogues, and punch-outs to build a Product Catalogue Management (PCM) system that enables an organization to achieve total control over its general purpose indirect, MRO, services, and commodity spend.

With the right set of agents, you can build a Product Catalogue Management (PCM) system that allows a buyer to access up-to-date catalogue and pricing information from any supplier in real-time over the internet from the supplier’s site – regardless of what technology or in-house system the supplier uses. This can be augmented with buyer pricing rules and audit engines to make sure you always see, and pay, the agreed upon price. Furthermore, the right set of agents can even support various “pass through” levels to the supplier’s e-commerce site even if punch-out is not enabled.

This why Vinimaya – and not Ariba – is the next generation of Product Catalogue Management (PCM). It’s based on a distributed agent platform that allows it to integrate content from traditional ERP APIs (Enterprise Resource Planning / Application Programming Interfaces), EDI (Electronic Data Interchange), XML (eXtensible Markup Language), and various web-site APIs into a single, consistent, coherent view in real-time using the basic internet technology that has been working fine for the last ten years or so.

Let’s face it – with agent technology, any company can enable hundreds of suppliers in a matter of days, especially if the provider has already customized agents for all of the common suppliers. Furthermore, if a supplier has agreed to custom pricing, it can integrate directly into that feed and, worst case scenario, a buyer only buys so many products and services from a supplier and it will not take very long to hand enter the agreed upon price for each relevant SKU in an audit engine. (Just like a knowledgeable purchaser can hand classify 95% of the transactions in even the largest of transaction stores for spend analysis in at most two days by hand with a good rules engine, and not the two months some providers would have you believe). (The average time for Vinimaya to enable a new supplier for a buyer is a few hours. It generally only takes them fifteen (15) minutes to one (1) hour to customize an agent and an hour or two to test and deploy the agent.)

I’ll be blogging more on Vinimaya in the weeks for come, but for now you can always check out their website.