Daily Archives: October 1, 2009

Sourcing Innovation Welcomes Vinimaya as New Lead Sponsor

Sourcing Innovation is pleased to welcome Vinimaya, an innovative provider of e-procurement catalog and marketplace solutions, as its newest lead sponsor. Vinimaya, which represents The Next Wave in Product Catalogue Management (PCM), has been adding new functions, new offerings, and new clients since I first blogged about them back in 2007 (shortly after they were named a Cool Vendor by Gartner).

Unlike other providers, who only support catalogs, marketplaces, punch-out, or punch-out 2.0 (where the vendor maintains a cached copy of the supplier catalogs to simulate simultaneous searching and comparison of supplier products), Vinimaya‘s Virtual Internet Supplier Network solution (VISN, as in “vision”), supports simultaneous, or federated search directly from whatever catalog format your suppliers have in place — be it punch-out, on-line catalog, storefront, marketplace, database, or flat-file. Whereas most solutions force your supplier to adapt to the vendor’s format, Vinimaya‘s agent-based architecture adapts to your suppliers, which is why it’s a low-cost solution for you and for them.

The proof that Vinimaya‘s offering, which revolves around their SmartSearch Catalog software product, actually works is in the adoption level. Vinimaya‘s client base, which includes mostly well-known, brand name, global companies from almost every vertical market, have executed over $1 Billion in online orders over the past 12 months alone. Delivered SaaS with the ability to “plug and play” with just about any e-Procurement system (e.g. SAP, Ariba, Oracle, Peoplesoft, etc.), once installed, the system not only allows you to find the product you need simply and efficiently, but also verifies that you’re paying at the contracted rates. Vinimaya‘s clients sit back and watch their negotiated savings materialize with every purchase.

SmartSearch Catalog also comes with a number of unique features that enhance your efficiency and savings. The unique features include true side-by-side comparison shopping across suppliers, price audit (which will alert you whenever a price has changed or diverged from the contract price), supplier self-service catalog management (which allows your suppliers without any online capabilities to either maintain a catalog for you or create a punch-out site), and inventory checking (which checks that the item is in inventory before sending the order to the supplier). It even offers some capabilities specific to certain procurement systems (e.g. SAP Item Master Check). In the coming weeks, I plan to review the new version of the SmartSearch Catalog (a.k.a. the B2B Search Engine), as well as some of their new offerings, and if I can track down the Sourcing Maniacs, see if they have any insights from their last site visit.

Vinimaya‘s bent toward innovation is no surprise when you look at the management team. CEO Gary Hare, who recently penned a piece on B2B e-Commerce right here on this blog, Orville Bailey and Richard Waugh have been thought leaders in the e-procurement space since its inception.

So please join me in welcoming Vinimaya. It’s innovative companies like them that keep this blog going.

Service Leaders Speak: Mark Usher of Treya Partners on “A Game Changing Procurement Initiative”

Today’s post is from Mark Usher of Treya Partners.

Procurement service providers can create game-changing value for their customers in the current economic climate through high impact sourcing initiatives in both DIRECT and INDIRECT spend areas. Since indirect procurement has been well covered in the blogosphere recently (and one can only keep readers interested for so long about how to design the perfect office supplies core list) I’m going to focus solely on how procurement can not only protect profit margins but create sustainable competitive advantage through world class direct materials sourcing. Whether your customers are in manufacturing, retail, food, or consumer packaged goods these procurement strategies will keep your clients afloat through the perfect economic storm and excellently equipped to maintain a healthy lead over their competition when balmy financial weather returns. 


Increase Gross Margins by developing a supply base that enables an organization to minimize cost and maximize customer service for its most highly demanded products.

Thousands of companies go out of business in recessionary economic environments because their supply chains are unable to deliver the very products that their customers are ready and willing to buy. It turns out that many of these same products are also their most profitable. In good economic times, a poorly performing supply chain like this doesn’t present too many obvious problems. If you’re selling a billion dollars of product at 20% gross margin you can swan along quite happily feeding an operating expense base of nearly $200 million, leaving millions of customers wanting stuff you’ve run out of and millions of dollars of stuff they don’t want sitting on store shelves or in the warehouse. However, when the downturn hits and your sales nosedive, your 20% gross margin is now trying to satisfy the same operating expense base. Hello negative operating income!

Procurement service providers can help companies maintain positive operating margins in recessionary or slow growth environments by helping them select suppliers that can deliver the lowest total cost inputs to production (or resale merchandise for retailers and distributors) while also supporting the highest levels of customer service for the end products that are in highest demand from customers. Low cost inputs result in a profitable product while high customer service results in an available product. Making a profitable and highly demanded product available is the greatest lever a company has to increase gross margin. What role can Procurement play in this? First, analyze historical order history by product (making sure to include backorders) and identify the 20% of products comprising the top 80% of customer demand. Then calculate profit contribution for each of these high demand products, where profit contribution is the difference between a product’s selling price and its total cost including procurement cost, transportation cost, and any internal manufacturing costs. Now identify the 20% of the high demand products that comprise 80% of total profit contribution. These are your company’s most profitable and highly demanded products! If an organization can ensure that these products are always available for their customers to buy, it will be fully realizing maximum potential gross margin for its industry sector.

Procurement’s role in helping an organization achieve this goal should be to facilitate a cross-functional strategic sourcing process that identifies, evaluates and selects suppliers based on their ability to meet exacting criteria for total cost management and customer service. Specifically, Procurement should work with stakeholders in marketing, manufacturing, distribution and other departments to develop weighted, metric-based criteria in areas such as a supplier’s capability to strategically source their own raw materials, implement lean manufacturing processes, deploy logistics strategies capable of consistently achieving 99% line item fill rates at their customers’ point of sale, and manage indirect operating expenses to maintain financial health while delivering low prices to their customers. The outcome of the strategic sourcing process should be a set of closely integrated supply relationships with a small number of supply partners that between them satisfy the ultimate goal of lowest total cost of ownership and highest customer service for the company’s highest demand products.

If you are a service provider with a competency for developing low cost/high service level supply bases, you can ensure that your customers will always enjoy gross margins in the top quartile for their industry. Particularly in recessionary or slow growth periods, a laser-like focus on service levels and availability for high profit/high demand products will guarantee financial health until the recovery is in full swing. And by helping your customers optimize their supply chains today, you will help them remain strides ahead of their competitors long after the recessionary period has ended. By maintaining above average profitability for their industry they will be able to make heavier investments than competitors in all aspects of their business, allowing them to maintain a perpetual competitive advantage.

Who said procurement was all about buying pens and pencils?

Thanks, Mark.

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