Daily Archives: March 4, 2010

Does a Quick Start Imply a Quick Finish?

It seems that the fashionable thing to do these days if you’re a Supply Management technology provider is to build a “Quick Start” platform and promote a rapid initial implementation, and the “obvious” rapid ROI that will result. Coupa, Rosslyn Analytics, and Aravo, among others, have all been making noise about their new SaaS platforms that allow for rapid results. And while each platform will give you rapid results if you listen to their advice and apply it properly, I’m starting to worry if this is the right thing to do.

Just like a narrow focus on “cost savings” can actually result in overspending and financial devastation if taken to the extremes, a narrow focus on quick wins can also cause you to miss the big picture, and the incredible savings opportunities that can result from good long term planning and cost control policies. A focus on short-term wins usually focusses on overspending recovery (which is good, but doesn’t solve the fundamental problems that led to the overspending), re-sourcing or re-negotiating high-spend categories (which may or may not have high savings opportunities), auctioning commodities (with little oversight), and “automating” processes (which is good if you take the time to redesign the processes first, which most companies don’t). And while all of these activities are good, because they always result in some cost reductions, there’s only so much low-hanging fruit on the spending tree and once it’s gone, if you don’t have a plan for reaching the bigger fruit in the higher branches, your new cost reduction program will finish as soon as it starts.

This is not to say that the companies I mentioned don’t have the tools and techniques to help you reach the fruit in the higher branches (after all, I’ve reviewed them all in the past and noted many positive aspects of each platform), but that you will have to take the time to build the ladder to get there. You’ll have to carefully research high-spend categories and build should-cost models to see which ones offer opportunities for immediate cost reductions, and which ones you’ll need to spend time working with engineering to come up with new product designs or delivery models to enable real cost reductions. You’ll have to move beyond auctions to decision optimization to tackle custom manufacturing categories where you have to consider dozens of costs which could include unit, shipping, storage, production, tariffs, taxes, currency exchange, hedge, utilization, and other costs. You’ll have to move beyond pure spend data to understand why production costs are higher than you expect — are your production times lagging industry average?, is your equipment out of date?, is your plant too big or too small?, etc. And you’ll have to implement end-to-end sourcing and procurement technologies to do true m-way matches that match contracts to purchase orders to invoices to goods receipts to payments to make sure you’re only buying on contract at the contracted price and only paying for what is actually delivered. True, long-term cost and risk reduction is a marathon, not a one hundred meter dash. And just like a quick start can wear out a marathon runner and prevent him from finishing the race, an uncontrolled quick start can set unreasonably high expectations or deliver less than optimal results, which can kill support for your project before you reach the end of your journey, where the real cost reductions await.

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EC Sourcing Makes Sourcing Easy and Affordable

Today I’m going to briefly introduce you to yet another e-Sourcing company that you just might want to consider if you’re a mid-market company who has yet to adopt a sourcing solution and wants to get started with something that’s easy to use, easier to manage, and easier still on the budget. With pricing starting around 3K a month (depending on the size of your company and the number of licenses you need), you can get full access to a basic e-Negotiation suite with RFX, Auctions, Project Management, a Contract Repository, and Corrective Action Reporting with the EC Sourcing Group solution. And while it may not have as many features as some of the other platforms on the market, it doesn’t have the price tag either. (A number of companies quote twice as much for fundamentally the same functionality.)

In fact, EC Sourcing made a conscious decision to keep the platform as lightweight, straight-forward, and obvious as possible. Designed by sourcing consultants, they wanted a no-fuss, no muss, no training required platform that was comfortable to people familiar with Microsoft Office and Microsoft Project. They studied the process, did their research, and decided to build the 80% solution which would include everything you need and everything you would want 80% of the time. Rarely used, complex features that only cluttered the screen or confused the average user were purposely not included. As a result it’s smooth, slick, and surprisingly effective in their target market.

RFX allows you to create the RFI, RFP, or RFQ you need on a section-by-section basis, from scratch or from a template, define scoring, customize supplier views, add attachments, collectively score responses as a group, view supplier attachments, re-calculate scores based on alternate weightings, generate supplier scorecards, and view a number of different response and/or scoring based reports. As with your standard RFX, each section and question can be weighted independently, and it will even generate the weights dynamically if you would rather define priorities than try to insure that all of the weights add up to 100. You can define auto-scoring rules for questions based on predefined response selections, score manually, or score based upon the weighted average score assigned by the RFX team. You can also use formulas. With respect to RFQs, it has a number of built-in features to make bid collection and validation simple. You can define pricing formats, which can be based on custom formulas, bid validation rules, and bid tables for complex bids that involve multiple plants, currencies, or volume breaks. You can then view the bids using a number of built in reports and formats that let you see just what you need to see the way you want to see it. With all of your standard capabilities, it gets the job done.

In addition, RFXs can be multi-round and you can create custom feedback reports that each supplier can view between rounds which can let the supplier know their rank, quartile, and variance range with respect to each item or lot. And everything can be exported to and imported from Excel. Auction is built on top of RFX and includes the ability to define custom baskets (lots), sessions (for each basket), and settings (time limits, time extension rules, stopping rules, etc.). You can also configure what the supplier sees or doesn’t see. Reporting can be table based or graphical.

Project Management includes the ability to define projects — which include suppliers, users, RFX’s and/or Auctions; message with users and suppliers — through integrated message boxes and e-mails; and define notifications in addition to standard project management features — such as timelines, state tracking, and document management. And the platform includes all of your standard RFI (comparison and scorecards), administrative (suppliers, users, statutes, etc.), and bid analysis (baseline spend, pricing summary, item level comparisons, round comparisons, etc.) reports and most of the reports allow filtering on any entity row or column.

And even though they are primarily serving the US market at this point, they are expanding into Europe, currently support 4 languages, are almost finished translating languages 5 and 6, and will support 10 languages in the near future (including Unicode languages). They are also in the process of updating and streamlining the UI to keep it as simple and easy to use as possible (and beginning R&D on a brand new module).

In summary, there’s nothing you haven’t read about before on SI, except the price tag. I’ve only demoed one other solution in the last year with the same breadth of capability in a self-service SaaS model that starts in their quoted price range. And while it might not have the same depth as many other solutions, or include more advanced sourcing modules, for many mid-sized companies just starting on their sourcing journey (and many more without complex categories), it will meet their needs.

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