Monthly Archives: November 2013

Vinimaya: Taking Their Procurement Marketplace Global, Part IV

In Part I we noted that since we last covered Vinimaya, the B2B Search Engine that was
the next wave in product catalogue management
, they have continued building out their base platform, adding (more extensive) auditing capability, workflow-based catalog management, quick-quote (RFX), e-Forms, deep analytics, mobile, and social integration on top of a base platform that supported content management, federated search, powerful connectivity options, personalization and customization, globalization, and an easy to use shopping cart. Then, in Part II and Part III we focussed in on their vTransport technology and their new vQuote, vRank, vCatalog, vAudit, and vAnalytics solution modules. Today, in the final part of this four-part series, we are going to talk about vSocial, vMobile, and their up-coming market indices.

vSocial is the social interaction component of the Vinimaya platform. Taking a cue from Amazon, which teaches us that not only do people tend to gravitate to products with reviews but they also want the ability to comment on the products and services they receive and be part of the community, Vinimaya added social interaction capability to their platform. Buyers can post feedback on the goods they procure, suppliers can respond and provide additional details, and procurement can include explanations as to why certain products or services are preferred. In addition, the platform is artificially intelligent, so if there is no feedback for a 14.4 V cordless drill from a given manufacturer, but there is for an 18 V cordless drill from that same manufacturer, the platform will pull the feedback in for the 18 V drill in when a user is viewing the 14.4 V drill to give the user as much information as there is available about the potential purchase. It’s a simple platform, but it works quite well.

vMobile is the mobile instantiation of their platform, and one of the most unique offerings on the marketplace. Not only was the Vinimaya platform the first to do real-time federated search across punch-outs, catalogs, and databases and present the results to a user through a single buying platform, but it’s now the first platform to do the same on a mobile device. Designed for a smart-phone, a corporate buyer now has access to all of the goods and services available through the Vinimaya platform on their corporate smartphone, and despite the small amount of real-estate, it is very useable. Vinimaya put a lot of thought into their solution and made search and product retrieval very easy. In addition to the standard keyword search, the mobile solution also supports artificially intelligent barcode based retrieval. If the buyer happens to have the packaging for an item of interest in close proximity (such as the box for the last printer cartridge that requires an immediate reorder when used), she just has to scan the barcode and the solution will find all instances of the product. And if an exact match is unavailable, because the solution is intelligent and retrieves the manufacturer and product description, the search application will find all related products. Maybe the Brother cartridge is currently unavailable from your current suppliers, but a third party Staples replacement cartridge is. The platform will find that option and present it to you. The results are returned in a list and choosing an option brings up a summary of the product details which has an option to add the product to the cart. The cart can be accessed at any time from the app menu bar, which also allows quick access to search, favorites, and history functionality, and checkout can be as easy as one-click as your data is pre-populated. It’s a very slick catalog-based Procurement solution.

Market Indices

Sometimes, not a week goes by where a Procurement doesn’t hear “your contracts suck — I can get the same printer cartridge 5-pack on Amazon today for 5% less” from an office manager or “prove to me that our prices are as good as you say they are and that we are beating the market average because I don’t believe you” from the CFO who only seems to notice Procurement when, a year after a contract has been cut, market prices for a given commodity drop or when the CIO complains that the organization is spending too much on hardware as it’s forced to buy from an overpriced supplier at last year’s prices that are no longer the best price.

In order to get the monkeys off its back, Procurement really needs to be able to demonstrate how good it’s doing — how the majority of it’s contracts are at, or better than, market price, how paying slightly more for that printer cartridge gives it a discount on a range of electronic products from the same provider at 5% below market average pricing, and how IT isn’t factoring in the huge end-of-year rebate the organization is expecting once it meets the million-dollar spend threshold. But to do this, Procurement needs three things:

  1. index data, to know what market prices are,
  2. pricing data, to know what it’s really paying, and
  3. deep analytics, to put two and two together and map reality to potential.

Vinimaya has the pricing data. Not only does Vinimaya manage all of an organization’s punch-outs, catalogs, and pricing databases — but they save every search result to maintain historical pricing data for all products in the database. And, with the recent release of vAudit and vAnalytics, they have the audit trails and the analytics to analyze purchases in detail. That just leave one element to go — the pricing indexes.

The Vinimaya platform crawls a large number of consumer sites (including Amazon, Alibaba, and other online storefronts) and has a huge database of commercial pricing in its archives. This provides the foundation for a consumer price index that will allow an organization to compare its pricing for a product in many consumer categories with the average price charged to a consumer. Vinimaya serves a large number of public sector clients and since public sector pricing is public, this provides the foundation for a market index that will allow an organization to compare its pricing for a product with the average price charged in the public sector for products for which Vinimaya has a lot of data. If you’re beating the public index, you’re doing good but not great. If you’re beating the consumer index, you’re doing okay but not that good. Better shape up. And if you’re not even beating the consumer index, better get your house in order before trying to enforce your contracts on the rest of the organization!

In conclusion, since we last covered Vinimaya, they have made many advancements to their base platform in the last 5 years, but the best may be yet to come. The market indexes are just the tip of the iceberg! More to come in 2014!

The Right MindSet is the Foundation for a Successful Procurement Career but

the mind has to be prepared for the job at hand to succeed.

A recent post on the right mindset: what does it take to have a successful acquisition career today over on the Public Spend Forum (powered by Spend Matters and the Censeo Consulting Group) by David Wyld did a great job of outlining twelve traits that procurement professionals need to succeed in supply management today. However, while these traits may do a great job of laying the foundation for a procurement career, they are not sufficient on their own to prepare one for a successful procurement or supply management career.

SI would add at least six additional traits to the list, three major traits and three minor traits. The major traits that SI would insist are necessary for success in today’s Supply Management space are:

Technological Competence

Modern Supply Management runs on modern supply management technology – without it, best-in-class status is unobtainable as sophisticated spend analysis, decision optimization, and decision support systems are need to analyze, manage, and squeak cost savings and efficiency out of modern supply chain networks.

Risk Awareness and Risk Averseness

The rate of supply chain disruptions is increasing year-over-year and the chances of a major multi-national not experiencing a disruption over a twenty-four month period is 2% or less and dropping fast. In order to succeed, a supply manager needs to be aware of risk and have a mindset to mitigate it before it happens. Contingency and mitigation are the new modus operandi.

Project Management

Sourcing is no longer three-bids-and-a-buy. It is a sophisticated process that typically involves sophisticated supply market research, should cost models, deep category expertise, fact-based negotiations, and in-depth analysis. In addition, most sourcing exercises are category-focussed and need to be managed as category-based projects.

The minor traits that SI would insist are necessary are necessary for success in today’s Supply Management space are:

Habitual Change (Management)

Supply Management is in a state of constant flux these days as technologies, best practices, and global trade regulations are constantly changing and shifting. In order to stay on top of the supply chain game, a practitioner needs to be ready to adapt as needed.

A Sustainable Mindset

Oil reserves are limited. Demand for rare earth metals is increasing. Food reserves are hovering near all-time lows. Water is becoming scarce. Energy production is limited in many locales. A Supply Management professional needs to not only be thinking about the environment, but needs to be focussed on sustainable alternatives in order to keep production going.

Cost Conscious

Inflation is back, and hyper-inflation might be just around the corner. Manual processes are costly, and a lack of data is costlier. A Procurement Professional has to always have cost at the back of her mind and identify unique and creative ways to contain costs going forward.

When You’re Riding the Rails

Don’t Forget Canada!

Not only does Canada, which is only 11th in GDP, have the 5th largest rail network in the world, it is also one of only two countries in the top 10 list of countries with the largest rail networks with a privatized rail network, and this makes it prime for freight.

CN, which has over 32,350 km of track, which constitutes 70% of the rail network in Canada, moves more than 300 Million tons of cargo and delivers more than 250 Billion in goods a year across its transcontinental network that goes from Halifax to Vancouver and down to the Gulf Coast (and New Orleans) through Chicago and Memphis — reaching 75% of North American consumers!

And the rail rates in Canada are extremely competitive. Adjusted for purchasing power parity, Canada has some of the lowest rates in the world, tying or beating the US and beating Russia, China, Japan, India, Germany, and France with an average cost per mile hovering just above 3 cents in 2010 whereas France came in at over 8 cents!

Furthermore the Rail Sector in Canada, and CN in particular, is continuing to invest Billion(s) every year to increase capacity and efficiency and keep rates low in an effort to continue to decrease the miles required to make rail more cost effective than trucking. (Even though trips as short as 500 miles are now just as cost effective on the rails as they are on an 18 wheeler.)

And with integrated operations at four of Canada’s major ports — Halifax, Montreal, Prince Rupert, and Vancouver — Canada’s railways, and major rail network, provides your organization with a viable alternative to getting its goods to North American consumers. Given that many US ports are near, or at, capacity, and that the railways in and out of those ports are also near or at capacity, this gives your organization a strong incentive to include Canadian Rail as an important part of your North American distribution network.

Bravo Business Center 2.0 – A Complete Category Solution for Retail Part III

As per part I, two years ago we reviewed BravoSolution‘s Business Center Category Sourcing Solution that took e-Sourcing to a new level for nine common categories that provided the Supply Management organization with a considerable sourcing challenge. In addition, we noted that BravoSolution didn’t stop there and kept going until they built a solution that, capturing the years of experience and knowledge built up by their global sourcing and solutions teams (who work out of offices in ten different countries on four different continents), captured all of the common categories for entire industries. This allows a sourcing professional in those industries to use the Business Center as a complete sourcing solution and apply built-in best practices built up from decades of experience.

Then, in Part II (dot 1 and dot 2), we noted that one of the industries that the Business Center serves, out of the box, is MRO because it is a vertical that is almost tailor-made for a business centre solution. Even though, as a category, it is one of the broadest categories imaginable, MRO organizations are generally not sourcing any particular product or service in volume and success often depends not on identifying the supplier who can give you the best price at the best service level on a part, but on identifying the supplier who can give you the best average price at the best average service level of a large market basket of parts (or the supplier who can bundle the services associated with installing a related market basket of parts at a competitive rate). Part II detailed how the business centre guides a buyer through the process, automates as much as possible, and makes it as easy as possible for a buyer to take a sourcing event from conception through award.

Today, we are going to discuss the business centre solution for Retail, used by some of the largest retailers in North America and Europe. The retail solution is designed to support categories with a large number of products that need to be sourced to a large number of distribution centres which serve a large number of stores that need variable volume levels of different products. These events need to be built on sophisticated models that can fed to an optimizer because the variable demand for a product means that not only do you need to consider multiple bids from multiple suppliers and multiple lanes, but buying certain products from certain suppliers for low demand locales could result in a lot of LTL shipments that will significantly increase transportation costs and buying products that will need to be shipped great distances for repairs or warranty claims will also drastically increase TCO.

The BravoSolution Business Center Solution for Retail allows the sourcing organization to define all of it’s distribution centres, all of its stores, the stores served by each DC, markets, the markets served by each store, the warehouses for each supplier, and the DCs that the supplier warehouses are able to serve. It also allows the sourcing organization to define all of the items that it buys, all of the supplier products, the mapping from supplier products to buyer items, categories for its items, and categories for the supplier items. All of the distribution centres, stores, warehouses, items, products, and categories can be uploaded from an (Excel) datafile, and so can starting prices.

It also allows for the easy definition of a very sophisticated discount model that can capture any convoluted discount the supplier can come up with. In addition to the standard volume rebate by product, volume rebate by spend, volume rebate by category, volume rebate by category spend, and volume rebate by supplier spend, suppliers will often offer new store discounts, co-op discounts, payment discounts, EDI discounts, in-store promotion discounts, defective discounts, and cross-product discounts where a discount will be offered on X for every unit of Y purchased. The workflow, and interface, is set up to allow for easy capture of any, and all, of these discounts.

The workflow also allows for the definition of (additional) item attributes which can be used in qualitative constraints in the optimization model, which will allow a sourcing professional to create models which will only include eco-certified items, validated suppliers, etc. in the award. It also supports price targets, so that a buyer can determine the impact of a proposed price decrease in an optimization model and use this information in fact-based negotiations.

Once all of the stores, distribution centers, warehouses, items, products, and categories are in the system, project definition is extremely easy and, as with MRO, the sourcing specialist is walked through the project which starts by identifying the categories being sourced, verifying the dc-store structure, uploading the projected demand, selecting the suppliers, verifying the supplier-warehouse buyer-distribution center and supplier-product buyer-item mappings, defining any bidding requirements the supplier has to meet, sending out the RFX, verifying the responses, and pushing the responses into multiple pre-defined optimization models, which will include base-line and incumbent models. The sourcing specialist can then create additional what-if models, including what-if models on target pricing, go back to the suppliers for a subsequent bid round, and continue the optimization (and bid-rounds) until the specialist is ready to make an award (and push the award into the contract management module).

As with MRO, the Business Center for Retail is optimized to make sourcing, and re-sourcing, of all of the retailer’s categories as easy and painless as possible so that, if needed, less critical categories can be driven by a junior buyer (under the guidane of a senior buyer) and free up the senior buyer to focus on the high-value and strategic categories. In addition, BravoSolution‘s Global Team has the experience to get this solution up and running for even the largest of retailers in a matter of weeks. It’s a quick way for a large retailer to start advanced sourcing and get it’s costs under control.