Daily Archives: December 12, 2014

Optimization, Are You Ready for What Comes Next?

Probably Not. And if you haven’t yet downloaded Sourcing Innovation’s latest Illumination on Optimization, What Comes Next, then you’re definitely not.

As indicated in Sourcing Innovation’s recent post, So You Think You’ve Mastered Strategic Sourcing Decision Optimization, you haven’t even mastered the extent of strategic sourcing decision optimization available to you today. If you’re in the Hackett Group 8%, applying (at least baseline) optimization to the majority of your high-dollar and/or strategic categories, and are even building Billion Dollar sourcing models, then you might have mastered the basics of optimization 2.0. Barely. But optimization 3.0 is on the way.

And because you’re still struggling with the basics of model building, data collection, constraint definition, scenario comparison, and, most importantly, when you should use optimization (always, but not necessarily to make the award decision), you haven’t even had to time to realize that there might be more coming. And there is. Lots more. Just like there was a substantial increase in capability that hit the market starting between 2005 and 2007, about 5 to 7 years after most of the optimization vendors hit the scene circa 2000, we are reaching the point where the next set of rapid advancements in capability are about to hit the market, and those companies that latch on to these advancements first will be in a prime position to quickly advance down the path of supply mastery. They will be years ahead of the average company and decades ahead of the laggards. Decades.

These organizations will not only be the first to take optimization to the next level — and go from T-CAP (Cost of Acquisition and Production/Utilization/Distribution) to true TCO (Total Coat of Ooptimization) on their journey to TVM (Total Value Management) — but the first to merge big data, analysis, and optimization in new and innovative ways that will identify previously undetectable cost avoidance and value generation activities.

So, if you want to be one of this decade’s Supply Management leaders, download Sourcing Innovation’s new white-paper on Optimization, What Comes Next (registration required), sponsored by Trade Extensions, and start preparing for the future of optimization today. It will be worth your while and when you start applying these techniques, you won’t be disappointed.