Monthly Archives: October 2016

Trade Extensions is Redefining Sourcing, Part IV

In Part I, we not only told you that Trade Extensions unveiled the upcoming version of their optimization-backed sourcing platform at their recent user conference in Stockholm, recently covered by the public defender over on Spend Matters UK, but we also told you that, with it, Trade Extensions are redefining the sourcing platform. But we did not tell you how — instead reviewing the brief history of sourcing platforms, of which we’ve seen only three generations (with the third generation being optimization-backed sourcing platforms, which can be counted on one hand — and this should not be a surprise as there are only six true providers of strategic sourcing decision optimization as it is).

Then, in Part II, we built the suspense even more by taking a step back and describing the key features that are weak or missing in current platforms — namely usability, appropriate workflow, integrated analytics support, repeat event creation, limited visualization, and limited support for different types of users and collaborators. While these are not all of the features a platform might need, they are among the most significant and are certainly necessary for for the full power of advanced sourcing to be realized.

Then, in Part III, we finally discussed how Trade Extensions, realizing the need to not only offer these capabilities, but be best of breed in their offering, decided to tackle the creation of these capabilities head on (even though, unlike many of their competitors, they already had a current generation sourcing platform) in an effort to redefine not only their sourcing platform, but the advanced sourcing process itself.

And with TESS 6′s ability to support as many customized advanced sourcing workflows as the organization requires, where the workflow is not bound to the concept of a traditional sourcing workflow and can instead be defined using any combination of workflow elements in any order the buyer wants, TESS 6 is truly redefining the advanced sourcing process itself. Plus, it is in an elite class of the most usable enterprise software ever (despite supporting extreme complexity in the cost, constraint, and optimization models under the hood), with user management taken to a whole new level. But, as we noted in Part III, it is also coming with a new analytics capability that finally places analytics on the other side of the two-sided advanced sourcing coin, a piece that has, until now been missing. How? We’ll get to that but first, as promised, a brief history of spend analysis.

In the beginning, spend analysis was, depending on who you asked, the set of canned OLAP-based spending reports that came with your sourcing, procurement, or analytics suite or the process of mapping Accounts Payable spend and “drilling for dollars” (because, if you drill deep enough, there is always oil, or value, to be found).

This worked great, until it didn’t. In fact, depending on the skill of the user operating the “drill”, the organization would identify savings for somewhere between six and eighteen months. After that, savings would dwindle off. Why?

Most of the platforms limited the user to variations of Top N reports, which could only be drilled on a pre-defined set of dimensions; scatter plots, that allowed the user to see pricing trends and variances; and year-over-year trend reports. Top N reports are only so useful as most buyers know 7 to 8 of their top 10 suppliers, categories, geographies, departments, etc. Scatter plots are only good for as long as the supplier is still under contract, as you never really recover overspend after the fact. And year-over-year can typically be produced by the AP or ERP system, possibly sans graphics, so how much do they really add in the spend analysis package?

In other words, there was a lasting value problem.

Unfortunately, this wasn’t the only problem. If it was, it might have been partially overcome by switching to a service model where every 18 to 36 months the organization worked with a service organization to identify top categories with top waste. But there was a bigger problem. And we’ll get to that tomorrow in Part V.

Sixty Nine Years Ago Today …

GATT was created. Originally signed by 23 nations in Geneva on October 30, 1947, it was the foundation for global trade until January 1, 1995 when the WTO was formally established (after being agreed to by 123 nations in Marrakesh on April 14, 1994). GATT was important not just because it created critical multi-lateral agreements, but because it offered a substantial reduction of tariffs and other trade barriers for its member countries, with average tariff levels for major GATT participants of only 22%. This might sound high as a tax rate, but when you consider some acts can see tariffs as high as 100% or 200% (to prevent market flooding with foreign goods), this is very advantageous. And these levels dropped over time. By 1967, average tariff levels were 15%, and by 1993, two years before the creation of the WTO, average tariff levels were 5%.

Any comments, LOLCat?

One Hundred and Twenty Eight Years Ago Today …

While Constantinople may have fell 563 years ago, it was remembered 128 years ago today in the The Convention of Constantinople which guaranteed free maritime passage through the Suez Canal during war and peace. Connecting the Mediterranean Sea to the Red Sea through the Isthmus of Suez, it provides seagoing vessels with a short route between the North Atlantic and North Indian oceans, reducing the journey (which used to go through the South Atlantic and South Indian oceans) by 7,000 kms. Without this treaty, global logistics could have been brought to a halt with canal blockage.

And LOLCats everywhere rejoiced!

Trade Extensions is Redefining Sourcing, Part III

In part I, we not only told you that Trade Extensions unveiled the upcoming version of their optimization-backed sourcing platform at their recent user conference in Stockholm, recently covered by the public defender over on Spend Matters UK, but we also told you that, with it, Trade Extensions are redefining the sourcing platform. But we did not tell you how.

Instead, we briefly reviewed the history of the sourcing platform, discussing the hallmarks of first generation, second generation, and (third generation) optimization-backed sourcing platforms.

Then, in Part II, we dived into some of the key features that are missing in many current platforms: namely usability, appropriate workflow, integrated analytics support, repeat event creation, limited visualization, and limited support for different types of users and collaborators. These weren’t all of the missing features, but some of the most significant ones. Moreover, for sourcing requirements to be adequately addressed, and the full power of advanced sourcing to be realized, a platform has to address these issues in a way that enables buyers of all levels of experience and capability to take equal advantage of the platform and realize equal savings for the organization with equal effort.

Trade Extensions realizes this, and is redefining their sourcing platform, and in some ways sourcing itself, so that, at least to a reasonable degree, it can not only overcome the limitations it has, but advance its capabilities to the next level. And it’s doing so in a way that makes advanced sourcing a natural exercise for every category — not just the high dollar, strategic, or complex.

So how is Trade Extensions achieving this?

First of all, their interface, re-designed in conjunction with a leading usability firm, is more user friendly to average and junior buyers. It’s so user friendly that few sourcing platforms can stand beside it from a usability perspective. With functionality grouped into key areas (and not modules), and lesser used advanced functionality buried under appropriate categories and subcategories, it’s easier to find what you need when you need it.

Moreover, since the platform is centered on fact-sheets, it’s quick and easy to access, create, import, and edit these sheets — as well as export them to Excel for editing (and re-import) — from anywhere in the sourcing process.

Secondly, instead of being centered around a relatively standard (but adjustable) workflow (with optional steps), the platform has been redesigned to allow the user to not only select the appropriate workflow, but define the workflow that is needed. That’s right, a senior buyer can define the appropriate workflow for any (and all) sourcing projects and then a junior buyer can follow it through, or even modify it slightly if needed.

And when we say the user can select any workflow that is required, we mean that. Whereas most platforms allow a buyer to select or ignore a pre-defined workflow action, every action in the new TESS Platform has been separated out as a workflow element that can be assembled in any order. If you want to start with an RFI, import historical and market data from spend analysis, run a what-if optimization, select a group of suppliers, go back to an RFP, push the data into an auction, push a subset of winning bids into a fact sheet for optimization, augment it with transportation data from third party carriers, run multiple optimization scenarios, copy one and manually modify it to create an award scenario, push the award into contract management, and create a contract, this custom configured workflow can be created and run as needed.

Plus, it can be duplicated, and modified, as many times as needed for similar categories. Moreover, not only can the workflow be customized as needed, but each step can be annotated and documented as needed. This makes setting up repeat events easy, since the workflow can be copied, and modified, with or without data elements, and repeating events becomes truly easy. So even though the workflow capability in TE is on par with the best, they are cranking it to 11.

And there is ample support for different types of users and collaborators. Whereas most platforms have a limited number of roles which are platform wide, the roles in the next generation of the Trade Extensions‘ platform can be defined at the platform, project, or even workflow element level. This makes sure that anyone who needs access can get it, and get only the access they need.

And while the usability and workflow elements are great, one of the best abilities is the new integrated analytics capability — which, finally, gives us a solution where analytics and optimization go hand in hand and give us both sides of the advanced sourcing coin? How?

We’ll get to that, but first we’ll need to provide a bit of history on spend analytics … in Part IV.

Trade Extensions is Redefining Sourcing, Part II

In part I, we noted that Trade Extensions are redefining sourcing with their TESS 6 sourcing platform, unveiled at their recent user conference (which has already been discussed by the public defender over on Spend Matters UK), and indicated that what they were soon to release was significantly beyond first generation, second generation, even modern (third generation) optimization backed sourcing platforms, even though we didn’t precisely say what that was yet.

We outlined first generation platforms, and what the glaring issues and omissions were; second generation platforms, and noted how the rigid workflows limited not only flexibility but capability; and optimization-backed sourcing platforms, which, while much more flexible and capable and powerful, are also much harder to use for the average user. And we noted that in today’s post, we’d give a little more background on what’s missing.

First of all, especially in first and second generation platforms, usability is missing. The more the user wants to do, the less they are able to accomplish. Workflows are rigid, features are limited, and the optimization model is often fixed. And in third generation platforms, even though the flexibility is there and the optimization model is fluid, the reality is that the more the user wants to do, the more math they need to know, the more formulas they need to write, and the more difficult it is to build the cost models and scenarios.

Secondly, the more involved the process, the harder it is to determine the appropriate workflow. Since the most powerful platform is data centric with few controls, it’s just as easy to create a workflow that results in the core data being overwritten and destroyed or a workflow that results in an incomplete model as it is to design the right model under the right workflow that results in the right model and right scenario. Sometimes only the experienced can figure it out and get it right.

Third, most platforms centred around optimization have little or disassociated analytics support, when analytics and optimization need to go hand-in-hand in advanced sourcing. Even though Trade Extensions, like many leading platforms, has some analytics and reporting support, like many leading platforms, they are not currently best in breed in analytics. Optimization success requires appropriate cost models on accurate data in categories where there exists additional value to be captured. Without good analytics, the best categories may not be identified (and inappropriate categories may be rigorously pursued, wasting valuable time and resources to identify little or no additional value), the cost models may not capture all the relevant components at the appropriate level of detail to maximize the opportunity, and bad data can slip in and invalidate the entire result. Plus, forget about cleansing, mapping, and enriching without strenuous effort. (Considering this is the case in even most standard-faire analytics platforms, which claim to be best of breed, what can one really expect in a sourcing suite where analytics is just a component?)

Fourth, repeating events or creating similar events is typically quite cumbersome. Many platforms allow “copy”, but then a buyer has to go in and delete all the inappropriate scenarios, old suppliers, invalid starting bid data, etc. Some allow templates to be created, but these typically only capture the basic RFX questionnaires and cost models, and significant work is required to set up the timelines (which change little in phase duration), supplier pool, scenarios of interest, current constraints, etc. Trade Extensions allows templating, copying, initiation from fact sheets, and any combination thereof and is better than most, but there is always room for improvement and streamlining.

Fifth, visualization is limited, especially in first and second generation platforms. Most platforms limit visualization to standardized reports with graphics options limited to line charts, bar charts, and pie charts – which are not at all appropriate to visualizing global sourcing requirements and award scenarios. This is one area where Trade Extensions really shines, with Google Maps integration and the ability to plot global supply chains and proposed awards, but their dashboard reports are only average, and new 3-D charts are hitting the market.

Sixth, most platforms have limited support for different types of users and collaborators. While the lead buyer should be the one that builds and runs the event and identifies the award that is most likely the best, stakeholders need to weigh in on initial supplier identification, RFX response scoring, model design, constraints, scenario analysis, and contract proposals. Some collaborators can score, other collaborators can comment, and some users will need to create their own views, reports, and even scenarios. Depending on the affiliation of the user (organization or consultancy helping on the sourcing project) and their role, their access needs to be defined appropriately. Most platforms only have the concept of an admin or a buyer or a reviewer, and these are applied on a platform, and not an event, or task, basis. Again, Trade Extensions does quite well here, but anything to simplify user management for the buyer is a plus.

And so on. But these missing or incomplete requirements are key to advanced sourcing success.

For sourcing to advance, and the full power of advanced sourcing to be realized, a platform has to address these issues (and more) and do so in a way that enables buyers of all levels of experience and capability to take advantage of the platform and realize savings for their organization at an equal level. But this will only be possible in a platform that changes the way sourcing is supported, and that is why TESS 6 is redefining sourcing — so that, to at least a reasonable degree, it can overcome all of these limitations (and more). And do so in a way that makes advanced sourcing a natural exercise for every category — not just the high dollar, strategic or complex.

So just how is TESS 6 going to accomplish all of this?

We’ll finally get to that in Part III.