Daily Archives: February 7, 2011

Deferred Spending Isn’t A Recovery

A recent article over on CNNMoney.com on Made in America. Staying in America. reported that a turnaround in the U.S. economy is contributing to the solid fourth quarter profits reported by manufacturers that have been staying afloat by making a killing by selling industrial goods to customers in emerging markets.

As the CEO of Eaton said, people that deferred maintenance eventually have to buy new products. And people who prolonged a product’s life with maintenance eventually have to buy new products. And after two or three years of deferred spending, no matter what efforts are made to keep old machinery working, it’s going to start to break and the organizations are going to have to replace it. This doesn’t mean that there’s a recovery in the works or that demand is going to skyrocket, and acting like this is the case will only lead to the appearance of the bullwhip effect in your forecasting. And that’s not good for anyone.

The economy will recover, but it’s going to be a slow-and-steady recovery this time. Not only is the North America is tired of the boom-and-bust cycle of the past decade, but the jobless recovery and continuing mortgage crisis is going to ensure that it will be a while before exuberance returns to the market. So take it slow. Your supply chain will thank you.

Trade Extensions Trades Up to a Fact Sheet User Interface

Trade Extensions is another company that has refused to sit still during the downturn. Even though it did a complete overhaul of its UI in late 2009 (when it traded up its UI and e-Negotiation Management Capabilities), it realized that was just the first step of many that would be required to make its application more useful and more useable across the Supply Management Organization. Trade Extensions has been working hard to break out of the “complex transportation optimization” niche that they started in and has developed a fully functional Sourcing and Supply Optimization solution because they see the value that an organization can receive when optimization-based sourcing events are undertaken across the board.

While Trade Extensions started as a niche Strategic Sourcing Decision Optimization platform in the early naughts, it has expanded into a full suite solution over the years and now includes one of the most powerful RFX modules on the market, real-time optimization-powered reverse auctions, contract management, and OLAP spend analysis (which rivals many of the other suite spend analysis solutions on the market and a few of the pure-play solutions as well). And while they don’t yet have much of a SIM/SRM/SPM solution, they recognize that as a weak point and it is one of their top priorities for the coming year.

In addition, while they don’t yet have category RFX solutions or a centralized data management facility (or “Business Centre”), they are planning to introduce new project types to simplify RFX and Auction setup and their new support for fact-sheet based RFX and reverse auctions makes data management significantly simpler and takes them further down the data management path than many of their e-Sourcing Suite provider brethren who have been standing still for the last few years.

Internally, Trade Extensions uses OLAP cubes to store its data. Thus, the user can provide data in d-dimensional fact sheets, which include 2-dimensional spreadsheets and 3-dimensional workbooks, that define data in familiar matrix notion. This is a very powerful method of data input. A user can define a fact at any level that makes sense. If the cost of interest is a single freight cost from a ship from to a ship to, the user can provide costs in a 2*2 matrix of ship from locations and ship to locations. Users can also define costs at the region or country level if they like, and if a user defines a fact sheet that relates lanes to regions, the user only needs to specify costs at the region level. Moreover, if the user so desires, once costs are specified at the region level, they can be overridden at the ship from – ship to level. The system will do this automatically if the fact sheets are appropriately defined and included in the project as it knows d+1-dimensional costs always override d-dimensional costs. In other words, if you define continents as collections of territories, territories as collections of regions, and regions as collections of lanes, the system knows that territory data overrides continent data and region data overrides territory data, if defined. Otherwise, default values from a higher level in the hierarchy are to be used if no suitable cost exists at a lower level of the hierarchy. This is important as this allows a user to only enter detailed cost data where it is required (and where it differs from default pricing for the category).

As a result, data collection in Trade Extensions‘ e-Sourcing platform is quite easy. A buyer only has to define what the organization wants to collect, and a supplier only has to bid on what it can provide. Furthermore, a supplier only has to bid to a level of detail that makes sense. Plus, all bids can be formula based. So, if a supplier supplies a product in different sizes, and the price is dependent on weight or volume, it can define a formula once and re-use it on each size. Furthermore, a user can re-use any and all fact sheets from the event in other events, minimizing data collection and data entry. It’s definitely another step along the path to ultimate usability.