Category Archives: Auctions

Intelligent Sourcing through Intesource

Founded in 1999, Intesource is another player in the e-Sourcing / e-Negotiation space, but one with a bit of a twist. Whereas most SaaS providers are trying to sell you the all-powerful self-service fluffy magic box cloud solution, Intesource is still focussed on providing a full-service offering. Specifically, while you are given full access to the platform, their sourcing experts, who have conducted tens of thousands of events for hundreds of companies with a combined supply base that consists of over 10,000 companies, handle all of the event details for you which frees your organization to focus on high-level strategy and analysis. (Of course, if you need guidance in that respect, their sourcing experts are willing to work with you to identify the categories that are likely to generate the greatest ROI.) This approach has proved very successful for them and their customer base, and they typically drive an ROI of 10x for their clients within one year.

In addition to their sourcing expertise, they also have the ability to deliver a customized platform, as they built their entire solution in-house. This customization can go beyond just look and feel and include integration to external systems or new functionality and customized workflows based on organizational processes and best practices.

Platform-wise, they have a fully featured e-Negotiation platform with extensive RFX, Auction, Supplier Information Management (SIM), and document/contract management capabilities, which integrates with Microsoft Sharepoint for those who want a (collaborative) contract and document authoring solution in addition to the ability to track contracts and associated meta-data. And while the platform is not multi-lingual, it is multi-currency and they are integrated with multiple currency exchange data feeds. As a result, up-to-date currency conversions are always available.

With respect to e-Negotiation, or the RFX and Auction component, a buyer can use a templated workflow, capture as much cost and supplier information as they need to, and iterate through as many rounds as required. Plus, there are thousands of templates available to choose from for just about every category imaginable, built up by the Intesource sourcing team over the last decade as they captured the knowledge and best practices that materialized from the tens of thousands of events they ran, many with the global sourcing teams of some of the largest food, beverage, and retail companies in North America (which are the verticals they have particular expertise in). These templates contain complete workflows, customized RFIs, and customized bid templates with all of the relevant cost components. This allows bids to be broken down into unit cost, transport cost, duties & tariffs, utilization costs, warranty costs, etc. And, of course, the auction functionality is full featured and permits suppliers to be ranked against each item, group, or total award; the auction to be automatically extended based on last bid time; and bids to require a minimum decrement.

With respect to Supplier Information Management (SIM), you can capture all of the basic overview, classification, financial, product, service, and catalogue information associated with a company and augment it with feeds from D&B that include risk indicators and MWBE information. You can augment this with your own categories and fields of interest, and collect the data with the built in RFI capabilities. You can also get current marketing pricing on a wide range of commodities, as they have integrated data feeds from over 160 market exchanges.

The document / contract management module is a straight-forward repository- based solution that lets you manage as many documents, and as many kinds of documents, as you want with meta-data indexing and search. Creation capabilities are available through Sharepoint integration.

Based on their extensive workflow capabilities, which supports the hundreds of customized templates that are available across hundreds of categories, they have built a solid e-Sourcing Project Management Module that allows you to not only track your progress, but build your own customized workflows and category templates which can capture a significant amount of detailed information with respect to each task.

Finally, Intesource has an extensive SaaS interface for the supplier as well as the buyer, where the home-page dashboard — which shows current events, previous events, offered awards, accepted awards, pending tasks, etc. — can be customized for each supplier as well as the buyer.

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Should You Use Seller Side Auctions for Your Commodity Buys?

A recent article over on Industry Week (Not Your Fathers Auction) trumpeted the benefits of Seller Side Auctions (SSAs) for commodity sales over traditional negotiations, indicating that the more open and transparent process they enabled bring with it a number of benefits that include:

  • refocused sales resources on higher margin activitiesan auction reduces the time and direct costs associated with commodity transactions which allows sales teams to focus on custom products and value-added services
  • improved revenue visibility and forecast accuracybilateral contracting standardizes terms and conditions across customers, simplifying revenue visibility and visibility and eliminating the invisible risk created by bilateral contracts with customized, non-standard, terms and conditions
  • reduced renegotiation riskinconsistency leads to errors, which start disputes, renegotiations, and, sometimes, even litigation
  • improved customer relationshipsbuyers and sellers are no longer adversarial, the buyers are competing against other buyers, not the seller … which lays the foundation for a better relationship going forward
  • reduced price barriers and market intelligenceauctions greatly reduce the acquisition cost as well as the cost of market intelligence
  • new customer acquisition and penetration into underserved market segmentsincreased efficiency allows the supplier to serve market segments which might otherwise be too costly to serve

But what about the buyer? What benefits do they get beyond market intelligence (and what their competitors are willing to pay)? The relationships will be more cordial, but if it’s a commodity, the supplier will not be strategic and there is no obvious value from a good relationship. They will get a more efficient process, but they would also get that if they just held their own auction and invited suppliers to participate. So where’s the real value?

From a buyer’s perspective, the real value is quality merchandise at true market cost at great efficiency. If a buyer holds an auction and the only suppliers who participate are those that produce lower quality products and/or those that can only produce small volumes, the buyer might get stuck with lower quality products or having to buy from multiple suppliers, which will increase total cost of ownership (with increased service and warranty costs, logistics costs, and even product costs if the suppliers don’t have the economies of scale). But if their supplier(s) of choice are holding auctions, they can participate in those auctions and obtain the commodity products at true market cost, which is always set by the buying organizations. Furthermore, the buyer doesn’t have to waste her organization’s resources setting up and holding the auction. All she has to do is bid. And if she loses the bid with the first choice supplier, she moves on to the second choice supplier.

It’s an interesting idea, and one that deserves further consideration.

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AECsoft: SIM-Powered e-Negotiation, Part II

In our last post, we discussed AECsoft’s Supplier Information Management platform, which is one of the oldest and most mature solutions on the market (with R&D starting on some aspects five years before CVM Solutions hit the scene in 2002). It stacks up very well in terms of basic SIM capabilities, although some of its competitors like CVM Solutions and Aravo, which chose to stay SIM-centric and to integrate more data feeds (which may or may not have value to your organization, as these feeds will get very specialized after a certain point and have no value to the vast majority of businesses) or more customized program management around SIM-based programs (like compliance, sustainability, and risk), are deeper in terms of specialized SIM applications. However, it’s the only major SIM player that also offers a complete, tightly integrated, e-Negotiation management suite as well which makes it a compelling solution for the mid-market in particular who may not have the money for a best-of-breed SIM platform and a best-of-breed e-Sourcing platform and who can do without decision optimization (or do it on a project basis when needed with a vendor that has a project model) and a pricey data warehouse driven spend analysis solution. (And while I would argue that no-one can do without good spend visibility, for some companies, who don’t have the data and analysis skills in house, sometimes the best solution is a consulting firm who has access to the best spend analysis tools and who does an spend and opportunity assessment for you on a quarterly basis.)

As with most suites on the market, the entry point is a management dashboard that gives you the status of all of your RFX’s (draft, pending, open, closing), auctions (draft, pending, open, closing), vettings (AECsoft’s terminology for compliance [verification] projects), and projects (which is AECsoft’s terminology for any SIM or sourcing project).

The RFX is workflow driven, and guides you through the process. It starts with configuration (title, number, currency, standard payment terms, project dates, etc), description, details, and contact information; moves on to user (buyer representative) selection, supplier invitations, prerequisite definitions, and document attachments; then to actual RFI/RFP/RFQ construction (which can include internal components); and finally to supplier delivery, response evaluation, and (scorecard) summarization. The advantages of the platform is that it can automatically pull in all supplier and product information related to any invited supplier, which makes construction simple and minimizes the pre-qualification and supplier survey effort (as the supplier will simply have to verify that the relevant data is still current and accurate), and automatically push any updated information back to the repository or into an e-Auction if the RFX is being used as a pre-qualification for the reverse auction. The auction tool, which is basic, is similarly straight-forward. One of the big advantage that both tools have is that all RFXs and Auctions can be scheduled, repeated as many times as you like, and fully automated. Some of their clients hold in excess of 40,000 sourcing events a year! Every day they’ll automatically push out a group of items in a category to a pre-qualified set of suppliers (with which they have standing offers) for updated bids. Some items will be pushed out weekly, some monthly, and some quarterly … depending on the category and how often prices tend to change. This allows them to focus the majority of their time on those few dozen to few hundred events which are truly strategic. As you can imagine, this feature is particularly useful in a vertical which does a lot of spot-buys to get best market pricing in categories where prices tend to fluctuate regularly or where prices tend to drop continuously (such as in electronics and computers).

The platform also includes decent library management functionality which can be used to easily track and find projects, documents, templates, vetting groups, and currency exchange rates. The master document library, which tracks all of your documents through meta-data, supports versioning and full meta-data search, and also forms the basis for the limited contract management capabilities offered by the platform. The platform can track your contract templates, contracts, and all relevant metadata, associate the contracts with suppliers, and generate alerts at renewal time.

The platform contains basic scorecarding functionality, built on the same capabilities used to weight and score RFXs. Scorecards can be on suppliers, on buyers, and filled out by buyers or suppliers. They can be filled out by a single individual, or by a team, and the results averaged. Each section can be weighted separately to compute the final score.

Finally, the platform, which can be extensively configured by the AECsoft development team, supports a decent amount of configuration by the administrator within the product itself. Administrative buyers can define and alter workflows, system settings, (SIM) menus (and data categories), permissions, user accounts and roles, category and sub-category questions, commodity codes, dashboard displays, and basic report configurations.

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EC Sourcing Makes Sourcing Easy and Affordable

Today I’m going to briefly introduce you to yet another e-Sourcing company that you just might want to consider if you’re a mid-market company who has yet to adopt a sourcing solution and wants to get started with something that’s easy to use, easier to manage, and easier still on the budget. With pricing starting around 3K a month (depending on the size of your company and the number of licenses you need), you can get full access to a basic e-Negotiation suite with RFX, Auctions, Project Management, a Contract Repository, and Corrective Action Reporting with the EC Sourcing Group solution. And while it may not have as many features as some of the other platforms on the market, it doesn’t have the price tag either. (A number of companies quote twice as much for fundamentally the same functionality.)

In fact, EC Sourcing made a conscious decision to keep the platform as lightweight, straight-forward, and obvious as possible. Designed by sourcing consultants, they wanted a no-fuss, no muss, no training required platform that was comfortable to people familiar with Microsoft Office and Microsoft Project. They studied the process, did their research, and decided to build the 80% solution which would include everything you need and everything you would want 80% of the time. Rarely used, complex features that only cluttered the screen or confused the average user were purposely not included. As a result it’s smooth, slick, and surprisingly effective in their target market.

RFX allows you to create the RFI, RFP, or RFQ you need on a section-by-section basis, from scratch or from a template, define scoring, customize supplier views, add attachments, collectively score responses as a group, view supplier attachments, re-calculate scores based on alternate weightings, generate supplier scorecards, and view a number of different response and/or scoring based reports. As with your standard RFX, each section and question can be weighted independently, and it will even generate the weights dynamically if you would rather define priorities than try to insure that all of the weights add up to 100. You can define auto-scoring rules for questions based on predefined response selections, score manually, or score based upon the weighted average score assigned by the RFX team. You can also use formulas. With respect to RFQs, it has a number of built-in features to make bid collection and validation simple. You can define pricing formats, which can be based on custom formulas, bid validation rules, and bid tables for complex bids that involve multiple plants, currencies, or volume breaks. You can then view the bids using a number of built in reports and formats that let you see just what you need to see the way you want to see it. With all of your standard capabilities, it gets the job done.

In addition, RFXs can be multi-round and you can create custom feedback reports that each supplier can view between rounds which can let the supplier know their rank, quartile, and variance range with respect to each item or lot. And everything can be exported to and imported from Excel. Auction is built on top of RFX and includes the ability to define custom baskets (lots), sessions (for each basket), and settings (time limits, time extension rules, stopping rules, etc.). You can also configure what the supplier sees or doesn’t see. Reporting can be table based or graphical.

Project Management includes the ability to define projects — which include suppliers, users, RFX’s and/or Auctions; message with users and suppliers — through integrated message boxes and e-mails; and define notifications in addition to standard project management features — such as timelines, state tracking, and document management. And the platform includes all of your standard RFI (comparison and scorecards), administrative (suppliers, users, statutes, etc.), and bid analysis (baseline spend, pricing summary, item level comparisons, round comparisons, etc.) reports and most of the reports allow filtering on any entity row or column.

And even though they are primarily serving the US market at this point, they are expanding into Europe, currently support 4 languages, are almost finished translating languages 5 and 6, and will support 10 languages in the near future (including Unicode languages). They are also in the process of updating and streamlining the UI to keep it as simple and easy to use as possible (and beginning R&D on a brand new module).

In summary, there’s nothing you haven’t read about before on SI, except the price tag. I’ve only demoed one other solution in the last year with the same breadth of capability in a self-service SaaS model that starts in their quoted price range. And while it might not have the same depth as many other solutions, or include more advanced sourcing modules, for many mid-sized companies just starting on their sourcing journey (and many more without complex categories), it will meet their needs.

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Twas the Night Before Auction

Twas the night before Auction, when all through the plant,
Not a creature was stirring, not even an ant.

The bid sheets were placed by the display with care,
In hopes that a new award soon would be theirs.

The workers were waiting for news from afar,
While visions of bonuses danced in the stars.

The boss with his black tie, and I with my Dior,
Had just readied our guns for a long bidding war

When out on the lawn there arose such a clatter,
I sprang from the desk to see what was the matter.

Away to the window I flew like a flash,
Tore open the shutters and threw up the sash.

The moon on the breast of the new-fallen snow
Gave the lustre of mid-day to objects below.

When, what to my wondering eyes should appear,
But a miniature sleigh, and eight tinny reindeer.

With a little old driver, so lively and quick,
I knew in a moment it must be St. Nick.

More rapid than eagles his coursers they came,
And he whistled, and shouted, and called them by name!

“Now Dasher! now, Dancer! now, Prancer and Vixen!
On, Comet! On, Cupid! on, on Donner and Blitzen!

To the top of the roof! to the top of the wall!
Now dash away! Dash away! Dash away all!”

As dry leaves that before the wild hurricane fly,
When they meet with an obstacle, mount to the sky.

So up to the house-top the coursers they flew,
With the sleigh full of Goods, and St. Nicholas too.

And then, in a twinkling, I heard on the roof
The prancing and pawing of each little hoof.

As I drew in my head, and was turning around,
Down the smoke-stack St. Nicholas came with a bound.

He was dressed all in fur, from his head to his foot,
And his clothes were all tarnished with ashes and soot.

A bundle of Goods he had flung on his back,
And he looked like a peddler, just opening his pack.

His eyes-how they twinkled! his dimples how merry!
His cheeks were like roses, his nose like a cherry!

His droll little mouth was drawn up like a bow,
And the beard of his chin was as white as the snow.

The stump of a pipe he held tight in his teeth,
And the smoke it encircled his head like a wreath.

He had a broad face and a little round belly,
That shook when he laughed, like a bowlful of jelly!

He was chubby and plump, a right jolly old elf,
And I laughed when I saw him, in spite of myself!

A wink of his eye and a twist of his head,
Soon gave me to know I had nothing to dread.

He spoke not a word, but went straight to his work,
Restocking the warehouse, then turned with a jerk.

And laying his finger aside of his nose,
And giving a nod, up the chimney he rose!

He sprang to his sleigh, to his team gave a whistle,
And away they all flew like the down of a thistle.

But I heard him exclaim, ‘ere he drove out of sight,
“Happy Auction to all, and to all a good-night!”