If you’ve done your research you have likely figured out that it requires a PhD to use optimization. That it is so expensive it should only be used by experts for high value categories. And that the time required to set up optimization for a sourcing event prevents you from using it for more than a handful of events.
All of the above statements were true in 2009. But these statements are completely false today, and have been false for a while now.
Let’s take them one by one.
Optimization requires a PhD.
Modern tools do not require a PhD, a Masters or even a Bachelor’s Degree. A properly designed optimization solution should be usable by junior buyers as it should hide the complexity and simply provide one-click evaluation. With built-in rules, workflows, wizards, templates, and other modern usability features, optimization can be as simple to use as an e-Auction on an average category for a junior buyer.
Optimization is very expensive.
While it used to be the case that optimization solutions were expensive, sometimes costing six (or even seven) figures for a single event, this was pre 2010. Today, mid-sized organizations can receive 40 events with unlimited users for that or unlimited events for a small number of users. Take your pick.
Optimization makes a sourcing event very time intensive.
Modern tools have intuitive web-based workflows to make event creation a task conducted in minutes. While it might take a long time to set up a complex event with dozens of suppliers, hundreds of line items, thousands of lanes, and hundreds of constraints, not all events are that complicated. Many categories are only bid to a few suppliers, need to be shipped using the two or three existing contract options, and don’t have a lot of constraints. This allows the model to be set up, the data imported, and a baseline solve completed in a matter of hours, not days. Moreover, if the model is set up as a template, it can be copied and reused over and over again, and setup is a matter of minutes. Done right, optimization decreases the amount of time it takes to set up a sourcing event by a factor of two or even three or four.
In other words, optimization has become mainstream and should be considered a default strategy for all sourcing events. And what does a modern solution look like? That’s the subject of our next post.