Daily Archives: March 2, 2016

Re-introducing Keelvar, An Optimization Backed Sourcing Platform

Last summer, we introduced you to Keelvar, a provider of an optimization-backed Sourcing Platform with a strange name that produced uncommon results. A client of Keelvar’s with 30 year’s experience in ocean freight sourcing remarked that it was like their first generation sourcing suite on steroids, so Keelvar is definitely a platform that should be on your radar.

A spin-out from a research laboratory that built a next generation solver, Keelvar was formed as a SaaS (Software as a Service) company in 2012. Unlike the majority of sourcing optimization software providers, they realized from day one that the solution wasn’t a better optimization module, it was a better sourcing platform where ease of use was the most important driver of adoption. Their Founder and CEO, Alan Holland, believes that “every sourcing event with a possible split-award should be optimized but in a completely transparent manner so that it’s easy for both buyers and suppliers” to understand the award recommendation and the reason therefore.

The starting premise was that the average user wasn’t advanced enough to use the first generation strategic sourcing decision optimization (SSDO) solutions where optimization was a standalone module and you needed to be an optimization platform expert to set up the models and run the sourcing event. It had to be intuitive and easy. Moreover, these average buyers have much simpler categories. As a result, the models were simpler than what some of the first generation expert providers were throwing at them, and, moreover, the majority of these models for standard, “simpler“, categories were fairly standard and could even be mapped to a default template by a senior buyer that the junior buyer could start with, and sometimes use unaltered.

Unlike many platforms, the optimization-backed sourcing platform walks the buyer through a simple process for creating and executing a sourcing event that even a junior buyer will feel comfortable with, detailed in our introductory Keelvar post. This process is as easy to use as a powerful, weighted, RFX tool or e-Auction, which is something that cannot be said for the majority of optimization solutions on the market that still require a solid understanding of the underlying mathematics and operations research. It’s sourcing for the every-man.

And it’s not just for the mid-size company anymore. If you will recall, when SI first reviewed the solution, SI identified it as the perfect solution for the lower-end of the mid-market. However, over the last six months, the usability and power has been steadily improved, and now SI will also identify it as a perfect solution for the entire mid-market and a candidate solution for the Fortune 500 / Global 3000. Keelvar, which has a US presence in addition to its UK presence, has acquired a number of Global 3000 clients for whom the solution is perfect for. For the majority of categories, and spend, in these organizations, there is no need for overkill optimization and the solution is a perfect fit. That’s not to say that it can’t handle the more complex categories either, with a number of global logistics events for some of the world’s largest shippers already under its belt, just that it is perfect for those enterprises where the majority of events are not that complex and can be templated for the average buyer.

Plus, the Kevlar platform is under continual development and improvement. Not many SSDO platforms can say that either. When optimization is one module in a set, providers can’t focus constant development on it. When optimization powers a single platform, it’s a different story.

Any company that chooses Keelvar gets a solution that allows all spend to be subject to the appropriate level of optimization, which is what allows Keelvar to get fantastic results for some organizations and why they have progressed so fast. If you have a traditional, heavy, solution that can only be used by a small set of dedicated resources on a few large categories, the organization will struggle to get 10-20% of spend under optimization-backed management which means, at the end of the day, the savings potential of the solution (expected to save 10%) is a mere 1-2% on the bottom line. But if you have a solution that is lighter, streamlined, and useable by everyone in your organization, you can get 80% of spend under optimization-backed management. And while the simpler categories won’t hide the same opportunity, even if you squeezed out a mere 6.25% average savings, that’s still 5% to the bottom line and a much better investment. At the end of the day, it’s not the line item count that the product can support, but the amount of spend that flows through it. And the bravado claims by first generation solutions that their solution can support tens of thousands of line items have done more harm than good.

Keelvar is an agile company and is developing new product features and global coverage quickly. New developments in the last six months include …

  • RFI with bulk editing capabilities.
  • Bid data sanitizer to detect, correct and prevent erroneous bidding (via automatic identification of outliers).
  • Enhancements to multi-round RFQ capabilities.
  • Large scale e-Auction support for hundreds of lots and bid upload capabilities.
  • New support portal to cater for the growing global customer base.
  • Partnerships with benchmark data providers in Global Logistics.
  • A partnership with an e-Sourcing Suite provider.
  • New offices in South America and Australia (which give it a presence on four continents).
  • Paid trial offering for Global 5000 companies (and, as per a recent SI post, paid pilots, under the consulting budget, could be just what you need to prove the value of an optimization-backed sourcing platform and get investment $$’s to upgrade your platform, and your results).

As one of the few companies aggressively developing an optimization-backed sourcing platform, and one of the few companies in the Supply Management space focusing on adoption first, Keelvar is one of a handful of global companies that might just lead Procurement out of the dark ages (in which Procurement seems to perpetually exist as a resident of the Island of Misfit Toys) and into the enlightenment.