In our last post we talked about a new entrant to the Strategic Sourcing Decision Optimization arena that was about to take up the education gauntlet. That new entrant is Keelvar. A spin-out from the 4C research laboratory in the Department of Computer Science at University College Cork that raised 750K Euros in 2012, it was formed as a Software-as-a-Service (SaaS) company to help purchasers establish a balanced and cost-effective outcome between large and small suppliers, which can be critical to indigenous industry by way of a price-gathering mechanism that supports communication of creative ways in which waste can be removed, helping government departments and multinational companies reduce costs. (Source: Silicon Republic)

It does this by augmenting its auction and RFX-based technology platform with true strategic sourcing decision optimization technology, but doing so in such a way as to hide the inherent complexity from the average buyer. Unlike many competing solutions on the market, the Keelvar UI is designed using a wizard-based workflow that guides the user in the setup of a combinatorial auction that is then solved using an optimization engine that uses a mix of solver technology developed at the 4C research laboratory and commercial solvers.

The solution walks the user through a simple process that even an average buyer can handle. The user needs to only:

• Define the event typeThe solution comes with a number of pre-configured event types, each of which has appropriate corresponding bid templates.
• Select the products and services and define the lots (contracts)The bidding sheets can be auto-generated off of these templates.
• Select the suppliersWho will be bidding? The system then sends out the appropriate auto-generated bid sheets, tagged to each supplier.
• Accept the bidsWhen the bids are returned, the user has to specify what bids are accepted and are to be used in the scenario.
• Define the constraints.For each pre-configured event type, the system supports a number of pre-defined constraints. These include:
  • Supplier Limits (Risk Mitigation)
    where the buyer specifies a minimum or maximum number of suppliers
  • Award Splits (Allocation and Capacity)
    where the buyer can dictate that a supplier, or the winning suppliers, get an award split, minimum, or maximum award
  • Quality/Delivery Requirements (Qualitative)
    if the model is a freight model, the suppliers can specify lead times and the buyer can insist upon a maximum lead time, etc.
• Run the ScenariosThe solution then runs the unconstrained scenario, the constrained scenario, and outputs a report that summarizes the constrained scenario cost, the number of bidders, and how much more it costs than the unconstrained scenario.
• Define What-If Scenarios (Optionally)The user can specify constraints to add or drop, run the scenario again, and compare it previous (and the unconstrained) scenario.
• Output a full award reportOnce the user is happy with a scenario.

It’s as easy to use as an auction tool, which is something that cannot be said for many of the optimization solutions out there, and no math or understanding of optimization is required. Plus, it’s a true SSDO solution as it is based on solid mathematical foundations (as the scenario can be built and solved as a MILP model), supports true cost model (as some of the templates allow different cost factors to be defined), supports reasonably sophisticated constraints (and enough to meet the minimum requirements of a SSDO solution), and has what-if capability. It’s definitely not the most sophisticated or powerful tool out there, but it doesn’t need to be.

For your average mid-size company at the lower end of the range, the solution gets the job done and does it in a way that the buyer can understand. There are thousands upon thousands of companies out now that don’t need more than this.

So if you’re in the lower-end and you’re ready to start optimizing your sourcing, you should head on over to Keelvar‘s site and check them-out. The solution might just work for you.