Category Archives: Manufacturing

Need Some New Equipment? Then You Better Get that Financing APPROVEd!

Ten years ago, SI was one of the first sites to cover KWIPPED, which was one of the first, and now likely the oldest (and biggest), marketplace for equipment rental procurement for all your equipment rental needs. Launched to help businesses with idle equipment and equipment rental agencies connect with businesses that needed to rent equipment for the short to long term, it served a niche in complex and project procurement that the major procurement platforms weren’t (and still aren’t) solving.

It works well, and worked well since day one as it grew quite fast, and while it met a lot of the market needs, it didn’t solve all of the market problems that were out there in equipment procurement for precise/complex projects and one-time acquisitions. Namely:

  • Some buyers wanted to rent to own, but suppliers weren’t (or couldn’t afford to be) offering that
  • Some buyers wanted to lease, or lease to own, for long periods of time, but needed up front financing (which suppliers couldn’t afford)
  • Some suppliers wanted to help buyers get financing, but they could only recommend a few lenders, who were often:
    • too strict in their lending criteria
    • too costly with their rates
    • too slow, and buyers walked away
  • Some suppliers didn’t like the loss of visibility into, or control, of the sales process with current lending processes (send the buyer away to a third-party lender and hope she comes back)
  • Many lenders didn’t like random referrals they were unlikely to ever approve (which wasted their time), or the spray and pray tactics savvier buyers who knew how to find options would use (which wasted their time)

In other words, buyers and suppliers wanted financing options so they could lease to own (or even buy outright), but neither of them liked the current application and approval process, and lenders wanted an easier, more efficient way, to get requests relevant to their lending business, so they could waste less time in approvals and more on hitting their lending targets (because they need to lend to make money).

Being techies, the founders of KWIPPED, who started off by making introductions to potential lenders on behalf of suppliers they knew well and buyers who asked, realized there had to be a better way to solve this problem, because forcing buyers to go offline and deal with a lender through old-school fax and email just wasn’t a good experience for anyone. They realized that there should be a platform like Lendgo (that could obtain, and compare, personal mortgages and refinancing options side-by-side), but for business equipment financing and leasing, and, more importantly, one that meets the need of all three parties, not just the buyer or lender.

So that’s what they set out to do, and they do it through the APPROVE marketplace (which can be accessed through the KWIPPED platform, the seller’s website, or even a third-party marketplace through a plug-in).
In KWIPPED, or a supported supplier marketplace, when a buyer brings up a listing, they will see the buy-it-now price, the rental price, and the estimated financing price (per month) based on the equipment type and a predictive model based on a database of over 75,000 financing applications and 3+ responses to each (which allows them to predict, with high accuracy, the estimated financing for that item for a buyer with average or better credit rating).

To start a financing application, it’s a 60-second process for the buyer who just needs to fill in some basic details to kick the process off. At this point, the request will be routed to a supplier’s financing (assistance) department if they have one, or the APPROVE financing team who will contact the buyer for any specific information required to make a lending application, get clarity on their needs, augment the application with the right data in the right language to optimize clarity and success with the lenders, and then, when the application is ready, kick off the automatic application process in the system.

Unlike many of these marketplace financing/mortgage/insurance platforms, the APPROVE platform is not a spray-and-pray platform or one that relies on buyer expertise to build a short list of potential lenders to send the application to. Once all the information has been collected, they use a predictive (machine learning) model that has been trained on this data set of over 75,000 financing requests, over 300,0000 quotes, and third-party risk and financial data on the buyers and sellers to predict which vendors will approve the financing and what the rates will be, and then send it to the top 3 vendors with the lowest predicted rates and a high chance of approval. If one or more of these vendors denies, it will continue down the list of potential lenders (who are predicted to charge higher rates and/or have a lower chance of approval) until it gets 3 quotes for the buyer. And, if the financier on the APPROVE or seller team happens to know that a particular lender is more or less likely to approve a specific request based on experience, they can override the rankings and issue the request direct to the lender (but generally the platform works quite well and it’s best to let it work its predictive model).

This is a very important differentiation. You don’t want to send a financing request to just any lender because:

  • some very risk averse lenders will only approve the top top tier of buyers (the cream of the crop that could probably afford to buy outright), and you’re just wasting your time
  • some less risk averse lenders will lend to anyone, who want to pay exorbitant interest rates that are 2X to 3X prime (and should only be a last resort)
  • some lenders specialize in certain industries and equipment types, and don’t want to lend outside their domain of expertise
  • etc.

This means if you don’t target the financing applications properly, you are going to get a lot of lender rejections or a lot of bad offers that the buyer won’t accept, leading to a lot of wasted time on all parties (and platform mistrust). Through laser focussed targeting, buyers know they have a real shot of getting financing at a rate close to the predicted value, sellers know that buyers are serious if they follow through with the application, and lenders know that, if they want the business, they have (at least) a 33% chance of getting it. That gives these lenders better odds than banks offering a mortgage! Moreover, since APPROVE targets the quote requests, the odds that they will be willing to quote the application is 80% or more, compared to 50% at best for a random application. This means that APPROVE is at least 60% better for lenders than random seller referrals, making it worth the lender’s time to process buyer applications from the APPROVE platform much more quickly.

Moreover, unlike most of the market “lending” platforms out there, all parties have complete visibility into where the application is at all times.

The buyer can see when the financing request has been formally issued to the lenders, when a lender has returned a quote or rejected it, and then the 3 quotes side by side once 3 are received (and then select one to accept through the platform).

The lender has a view into the status of all of its open requests, as well as its request history, and all communications between it and either the APPROVE or supplier financing team (to collect any additional data it decides that it needs to issue a quote).

The lessor/seller can see where the process is at any time for each buyer that submitted a financing request, any communications that went back and forth between the APPROVE financing team and the lender (on the lessor/seller’s behalf), what quotes were returned, and when a buyer has accepted a quote and then begin the process on their end of completing the transaction without delay.

The APPROVE platform, especially when accessed through KWIPPED, a supplier web site, or third-party marketplace, makes the entire process of finding the right equipment, engaging with the supplier, getting the right financing, and closing the deal smooth, efficient, and relatively painless for all parties.

So while, like KWIPPED, this is NOT a typical sourcing or procurement platform that SI would normally cover, it is a very important platform nonetheless as most of your direct, indirect, and complex services sourcing platforms don’t enable the identification of rent-to-own or lease-to-own options when you need to temporarily (or permanently) acquire new equipment for a new construction, commissioning project, factory, or lab, and definitely don’t help you with financing when you can’t afford to, or don’t want to (because you have other, better, uses for your working capital now), pay for the equipment up-front. Like KWIPPED, APPROVE fills a very specific niche that is overlooked until it is desperately needed, and one that any organization that needs to rent or buy equipment, that just can’t be sourced or procured through normal S2P/P2P platforms, should know about.

Find a Supplier You Won’t Part Ways with Using PartFox!

Partfox, billing itself as AI-Powered CNC Matching, Locally or Globally, is an offering from a Zurich-based tech company that was created to solve the dual problems of

  • allowing a buyer to find CNC (Computer Numerical Control) factories that can precisely meet the buyer’s need for a custom manufactured part, allowing the buyer to short-circuit a long discovery and qualification cycle only to find out that a factory doesn’t have the right equipment that meets the stringent manufacturing and metrology needs, can’t work with the desired materials, doesn’t have the right certifications, etc. etc. etc.
  • allowing a CNC factory to advertise its services to buyers who can quickly qualify it for RFPs and purchases

<p[> Partfox is the primary offering form Orderfox, founded in 2016 to meet the needs of the industrial B2B sector, of which they saw one of the greatest needs to be CNC factory location and matching for precise part pairing. While you may not have heard of them, they have been valued in Europe as a Unicorn startup and are just entering the North American marketplace.

For the Buyer

PartFox is an AI-driven commission-free global (and local) network (that can be accessed at no-cost for simple searches) that matches buyers with manufacturers that can meet their exact part manufacturing needs with exact machining capabilities, and can even take into account capacity and availability. When they say perfect match, they mean it because they can take into account the exact machining (including metrology) requirements, material requirements, dimensionality, volume requirements, region and country requirements, and certification requirements.

Using the platform is just a matter of

  1. creating a profile
  2. uploading your part file as a PDF (which will be parsed by an advanced AI solution) or an ISO 10303 Standard for the Exchange of Product Data STEP (STP) file (which allows for even more precise parsing due to its standard formats for 2D and 3D geometric data)
  3. specifying the region and capacity requirements

and then letting the platform find the matches. Then, a buyer can reach out through the platform to the manufacturer to let them know of an opportunity for an in-network manufacturer or connect through the manufacturer’s website for an out of network manufacturer. Using Partfox can significantly speed up an average direct Procurement process, and once an organization has embedded such a solution into their direct Procurement process, they can see cycle time improvements of 30% to 40%.

Partfox is a lot more than just a simple matching marketplace. First of all, it supports over 60 metrology and manufacturing technologies, which means matches are much more precise than traditional supplier discovery solutions. Secondly, it has the largest network of CNC manufacturers with almost 100,000 manufacturers currently in its database. Like Tealbook, it can scour the web for manufacturers and, when it does so, identify the equipment, metrology, and manufacturing capabilities it publicly identifies. It then creates a record and sends an invite to that manufacturer to register on its network to update its profile with any additional capabilities and maintain it over time.

I’d like to call out the 100,000 manufacturers. This is one of the largest, if not the largest, listing of CNC manufacturers out there, and definitely the largest we’ve seen with deep part match capability. It’s that latter part that counts when doing supplier discovery for custom manufacturing.

Before, or after, doing a search, the buyer can create a request for one or more parts, which contains the basic details required for exact matching extracted from the uploaded PDF or STP file, and specify the quantity and basic RFP requirements of quantity, delivery date, incoterms, currency, language required for communication, and deadline to express interest. This can then be pushed to all matching manufacturers in an area, or a subset of your choice, and can be published as public (where any manufacturer can search for, see and respond to your request) or private (and restricted only to verified manufacturers on the platform, as per the tiers defined below). In addition, block lists can be defined to ensure that certain manufacturers will never (ever) see it.

It’s important to call out that the buyer has full control over the specifications the manufacturers see and can limit part file access to verified, select, or NDA-accepting manufacturers only.

This, however, is where buyer capabilities end in the current release as the platform does not yet support RFP responses in the platform (which is slated for the next major release). This means that they will have to (re)create a full RFP in their default sourcing platform when they want to collect price and auxiliary data and invite the newly discovered manufacturers to their formal process (which is easy since Partfox will give you all known contact information in the organization summary).

Also note that the current release does not integrate with any Source-to-Pay, Supplier/Vendor Management, or ERP systems or come with an Open API that allows you to export the basic RFPs you define and matching vendor profiles. They are currently working with select customers on an advisory board to determine what would be the most meaningful and efficient method of integration, which will appear in a release after the RFP response functionality has been completed, and the methodology will either be:

  1. create the RFP in the ERP/S2P and push to PartFox
  2. create the base RFP in PartFox, and then push the selected vendors and responses to the ERP/S2P
  3. create a new standard export format and/or Open API and to each customer its own (which will likely come eventually anyway for customers that don’t use a standard S2P/ERP, but we all know that most customers want an out of the box solution, so you will likely see [a] or [b] well before this option)

(Early adopters will get input into these and similar product roadmap decisions!)

For the CNC Manufacturer

They can register on the platform and maintain a basic profile for free, before or after their website has been discovered (and if before, the platform can parse it and pre-populate some basic data in their profile for them) and be included in searches (but not in priority rankings), which ensures their profile is always up to date and accurate. For priority rankings they can purchase a basic (essential), intermediate (superior), or full (concierge) membership which will give them the ability to define capacities and show up in highly tailored requests (at the basic level), achieve a higher search rank and embed images and pictures in an enhanced company profile with a verification badge (at the intermediate level), and, in addition to a top search slot (as concierge vendors are ranked before superior vendors who are ranked before essential vendors who are ranked before free vendors), concierge-level manufacturers receive expert deal support, preferred buyer recommendations, and exclusive concierge deals.

Moreover, member manufacturers can access the integrated order management system that allows them to get (real time updates on) RFP invitations from buyers, see order requirements, and respond that they are interested directly through the platform. Moreover, premium members can access support services to help them identify potential buyers, access private RFQs, and get help with responding to buyer RFPs.

The supplier profile allows them to specify where they are, how to contact them, and all of the capabilities and certifications that the platform will match on including metrology, machinery, materials, and technologies — with over 60 different technologies supported along with all of the corresponding material, machining, and metrological capabilities of relevance.

So if this sounds like a solution that can solve your direct manufacturer supplier discovery process, which is becoming more critical by the day, you should check Partfox out. It is definitely worth your time to do so.

Is your Procurement Practice Too Tactical? Maybe you need to Quote STRATegic with QSTRAT!

QSTRAT was founded twenty years ago to help companies get a better understanding of real product and part costs in order to assist those companies with the relentless margin pressure, constantly tightening timelines, and always-on global competition. They do this through a very customizable, and customized, Sourcing and Supplier Management Platform along with a rather unique Distributor Quoting Solution (which we are not covering in detail) to support value-added distributors (VADs) [who go beyond just logistics and fulfillment and might also provide training, technical support, sales demonstrations, and/or bundling with other complementary products for more complete customer solutions in addition to other value-add solutions]. Let it just be said that the Distributor Solution is an extension of the manufacturer solution where the value added distributor can get detailed quotes from the supply base, add its own markups and outbound costs, and provide very detail quotes to a buyer.

The core of their platform is a highly configurable single tenant cloud sourcing and supplier management solution for manufacturers and distributors who need to extend their ERP backbone with solid strategic sourcing capability in a manner that is compatible with their favourite tools — Microsoft Excel, e-Mail, and PDF forms.

Before we go any further we are going to call out one key difference between QSTRAT and most other cloud-based platforms — there is no supplier portal. In certain traditional manufacturing industries populated by old-school manufacturers, they are not very modern technology / SaaS savvy. They don’t want yet another supplier portal to try and figure out, to try and remember the passwords and security configurations for, and to have to log into every day to try and find their orders and communications when for years they ran off of email and spreadsheets and could get all their communications through one source. Also, in defense, it can be very hard to get yet another platform/portal approved, and even if it’s okay for your company, if one of your suppliers is also a defense subcontractor, they may not be able to use your new platform, putting you in a pickle — do you insist on the platform and find a new supplier, or keep the supplier and not get the benefit of the platform you jut bought.

QSTRAT was developed with those customers in mind and ensures all bids, quotes, surveys, and information exchange goes through secure PDF forms (or, should the customer choose, Excel spreadsheets can also be used, especially for simple information requests where there is no need for provably secure audit trails because no award is being made). This is because, with their target market, e-mail, Excel, and PDF forms are already universally accepted by the majority of suppliers. Whenever a quote, survey, request, etc. is issued, a custom secure PDF form is generated by the platform which is sent to the supplier through an email (link) for completion (and button based submission when they are happy with the form, where the state can be saved while it is in process).

The QSTRAT Sourcing and Supplier Management platform has the following key parts:

  • part database
  • supplier management
  • events (RFPs/Qs and Surveys)
  • reports
  • administration

Part Database

The platform can maintain the organization’s complete part database natively to facilitate rapid (re)sourcing of parts and programs, which can even consist of multiple quote packages that collectively satisfy a bill of materials. Part profiles are extremely extensive and can be configured to track all of the fields you want to track as well as have their own cost breakdown models if desired. They can be associated with risk factors, compliance requirements, insurance requirements, and detailed CAD/CAM drawings / STP files and all of this information will be sucked in by an event that includes the part.

Supplier Management

Supplier management is kicked-off during initial implementation where the cusstomer’s (active) supplier list is loaded from the ERP. Once the suppliers are loaded, additional information can be collected through surveys that can be sent to the suppliers as part of onboarding, data collection, performance reviews, etc. Suppliers can be categorized into organizational hierarchies of choice which can be product based, region based, raw-material based, etc. to allow for easy administration and selection of relevant suppliers for events.

Supplier profiles can be as in-depth as you like and upon system installation QSTRAT will define as many data fields in as many categories (basic profile, financials, contract management, risk factors, Scope 3, scorecard, etc. etc. etc.) as the organization desires. All available data will be imported from the existing supplier master in the ERP, the rest can be collected from surveys or manual entry, and updated data can be pushed back to the ERP on a schedule.

Suppliers can be created and onboarded natively in the QSTRAT application (and then pushed to the ERP when approved), and onboarding can begin with only a supplier name, contact name, and contact e-mail. Onboarding can be multistage and start with a registration questionnaire, continue with specific questionnaires based on the categories you will assign the supplier to (and focussed on its capabilities), and end with a formal evaluation exercise that follows a pre-defined workflow that will end in a supplier approval (or denial). The specific requests can include tooling capabilities, associated capacities, and, if the supplier is an MRO supplier or provides services, it can also include maintenance services and default rate cards.

Events

RFQs, which are the primary events in the system, consist of header information, line information, attachments, suppliers, communications, and returned quotes. The header information is the information that defines the event and goes beyond the simple meta data (id, name, dates, contact) but also defines the RFQ type (and associated workflow), program relationship (is it supporting a program defined by a parent RFQ that has been split into sub-programs to simplify analysis based on similar part types or supply base), prior event history (with the last quotes received, if they exist), and any financial guidance you want to provide (like expected margin % in detailed cost breakdowns, etc).

The attachments consist of global event attachments as well as individual attachments by part. Default attachments will be pulled in according to the RFQ type and the parts included in the RFQ, but additional can be attached at the global or part level before the RFQ is issued. This attachments will typically include NDAs, CAD/CAM drawings, compliance and insurance requirements, etc.

The lines represent the individual parts being quoted, each of which can have their own custom-defined detailed cost breakdown model, notes, and attachments. The quotes, which are filled out through custom PDF forms generated for the suppliers, can be exported in bulk to CSV for users that like to do spreadsheet-based analyses, but can also be compared in the QSTRAT platform in the QuoteMatrix which will show the quotes summarized (and sortable) on two key fields (landed cost, fully burdened cost, country of origin, or any other pre-defined calculation or identifier). The buyer can use this quote matrix to select bids for award, or use the pre-defined auto-select functionality (which, depending on the workflow, will select the lowest cost, the lowest cost that meets a certain requirement, etc.). The quote matrix is not limited to current bids by line, but can include key description fields (unit count, target price) as well as historical quotes for comparison. The matrix has extensive filtering capability so it is really easy to see parts with all or without one or more supplier responses, that are or are not selected for award, and with and without returned attachments. The buyer can also drill in to the cost breakdown matrix by supplier as well to see the relative costs for each component (material, tooling, certification, etc.).

Suppliers can be auto-selected based upon a pre-configured auto-assignment rule (that will select all suppliers that can supply all of the parts or at least one of the parts), assigned en-masse based on associated categories, assigned on a part basis based on manual selection, or selected en-massed based on category and then deselected on a part-by-part basis. Once the supplier is selected, the buyer can select the contacts at the supplier who should receive the RFQ, which, depending on the event flow, will be pre-selected to the first/default contact or all.

Events are single round by default, but can be turned into multi-round events with the re-quote functionality, which can also be used to kick back a quote (with a comment) to the supplier for re-quoting during the event if the buyer believes the supplier made a mistake.

Reporting

Accessible from its own tab or as drill downs off the dashboard, the platform contains a number of built in reports around event activity, customers, suppliers, and parts that breakdown by status, spend, activity, etc. The specific dashboard widgets and reports will depend on the platform configuration on implementation, and if the buyer wants DIY reporting, they can export all of the data to CSV or pull it into an external business intelligence (BI) or spend analysis tool using the Open API.

Administration

The user can do standard organization, user, workflow, and form field administration through the platform, but most of the configuration is done on implementation where the different event workflows are defined for the different event types that the buyer wants the system to support.

The platform supports a large number of event types which include, but are not limited to, supplier registration, supplier information update, supplier evaluation, tooling request, RFI, estimate (only), RFQ, order request, maintenance request, market test, etc. and additional types can be configured on demand. Associated with each event type can be an associated response/quote-flow definition that defines not only the desired header information, attachments, and communication requirements, but also the associated workflow both for event creation and issuance but also review and approval. Note that every field/document submission requirement defined at the header level will cascade down to each individual line, which will also pull in the cost model, fields, and attachment requirements associated with the part/SKU. These templates can also be configured to pull in the cost of an item currently in inventory or the last quote from a supplier (if still valid), to minimize the effort on the part of the supplier to update a quote and respond to an estimate request or RFQ.

Implementation and Integration

Now, with everything customized for each customer, it sounds like it would take a long time to get this system up and running, but the reality is that customers are usually up-and-running on supplier onboarding and core categories within four to six weeks and fully up and running in three to four months. QSTRAT has been delivering their solution in this manner for over 15 years (as the company turns 20 this year) and have a huge library of templates for each event type, each industry, etc. that they can start with for rapid customization to customer needs.

QSTRAT integrates with the major ERPs and has an open API for loading parts/lines/suppliers from your existing systems (ERP, CRM, EDI feeds, etc.), automatically creating events, and pulling information back.

Summary

QSTRAT is very interesting in both its approach to manufacturing and distributor sourcing and the way it implements that approach. Unlike many sourcing platforms,

  • it believes in 100% customization to the client and the way they work, maximizing the value-add on top of the ERP/MRP/WIMS the manufacturer/distributor uses to run their business.
  • it is single tenant cloud both to ensure maximized customization capability and to meet the security requirements of defense contractors that are subject to rigid security requirements
  • it uses secure PDFs for supplier interaction and data capture, forgoing the “yet another portal” approach the majority of vendors take to supplier interaction
  • it was built around Open APIs as most buyers want to work with their existing systems and tools they are comfortable with to the extent possible, and just use a sourcing tool for sourcing

So if you happen to be looking for a direct sourcing solution that meets one or more of these requirements, QSTRAT is definitely a solution you shouldn’t overlook when making your shortlist, and one that is currently serving customers across automotive, aerospace, medical devices, industrial, and high tech manufacturing.

How Many Zumens to Manufacture a Light Bulb? Just One!

Zumen, billing itself as the most comprehensive Source-to-Pay software for product manufacturing companies, purports to be the connect between the Part Life Cycle, Product Life Cycle and the Procurement Life Cycle and offer you one platform to manage your entire Source-to-Pay Process through their Direct Material Life Cycle Management platform.

So how does it stack up?

Well, let’s start with the basics. The Zumen platform offers core functionality in five areas:

New Product Development

To support new product development, they have modules centered around:

  • product, part and material data
  • product & infrastructure planning

The core of any direct sourcing platform is its pats management capability, and the Zumen platform can track all of your parts, all of their versions, all of their associated programs, all associated product and costing plans, all associated sourcing events, all awards, all procurements, and all associated drawings and documents. With respect to part data, you can not only track every related code and cost, but all associated materials. With respect to materials, you can also track estimates, supplier, and market commodity price data as well as associated scrap rates and scrap value. When it comes to building cost models for parts, which can include tooling costs, the platform also allows processes to be tracked in the norms master (with associated machines, norms, and units).

The platform goes beyond just tracking parts, but also tracks inventory, blocks (internal commitments), commitments (from awards/contracts), and production schedules around the parts.

In the Zumen platform, product development is governed by a program that tracks production sourcing, supplier management, strategic sourcing, and procurement. The platform supports the definition of full programs at the final good level, even if that is an automobile or piece of construction equipment with 10,000 parts, assembly level, or part level. Like any good product management platform, it supports versioning and a full history. Programs can be imported from the ERP or engineering systems (like Windchill) or created in the platform from scratch. BOMs are placed inside a product hierarchy of product sectors, product lines, model families, models, and/or other programs, as appropriate. The bill of materials will support as many levels as desired.

Bill of materials are very extensive and go beyond just basic specifications, but will also track all costs and commitments at each phase of the bill of material lifecycle based on the associated program. This can include estimated and actual costs during initial product planing, production sourcing (during initial development), strategic sourcing (for mass production), the current procurement cycle (if the costs are tagged to indices), alternate part costs if there are alternate parts defined, and (alternate) quotations if there are associated quotations from suppliers.

Moreover, from the currently active programs, the platform can automatically extract the current material requirements plan to get a complete overview of the material requirements at the base level across all of the bill of materials, including the current delivery dates, which can be amalgamated and modified in the material requirements plan.

Sourcing

  • product costing and approvals
  • request for purchase
  • RFQ
  • budgeting & spend management

Cost estimates can be as high level or as detailed as the user desires. They can be high level models that simply break down the cost into material costs, production costs, delivery costs, and tariffs, or detailed models that break out the cost associated with each material, production processing step, service, transport leg, and delivery/trade charge. This can include tooling cost breakdowns, assumed minimum order quantities (for economies of scale), packaging, internal rate on credit, and other related costs.

Once a cost plan is complete, often after one or more suppliers have returned a quotation in a (production) sourcing event, a product cost approval can be created for formal costing approval.

At any time, a user of the platform can request a part or program for purchase for production sourcing or full (strategic) sourcing, and it will kick of an RFQ. The request will be pre-populated with all of the part data, and all the user has to do is define the volume required (which could be as low as a single unit during R&D or initial production sourcing or as high as a few million units during strategic sourcing for mass production of the product over the next few years). For production sourcing, the annual volumes are automatcally derived based on the program definition or the annual operating plan. The RFQ will be instantiated from a template that can be linked to the appropriate program classification, and the documents associated with the relevant commodities will be pulled in automatically as well when the RFQ is constructed. The RFQ can be limited to a single supplier, all suppliers who can supply the part, or a chosen set of suppliers. All associated documents, compliance requirements, NDAs, delivery terms and conditions, etc. that have been configured in the platform will automatically be included, as will the default manufacturing locations for delivery and product encodings.

During a production sourcing event, the buyer can also include details on the program, estimated annual volumes, estimated delivery schedules, current (buyer) (program) cost estimates, any associated (child) part details of relevance, and other relevant data. With proper platform configuration, all of this can be automatically included. When a buyer creates a sourcing event, they can access the entire part history for reference. They can also associate (internal) sourcing criteria with an RFQ, and when a quotation is returned, evaluate each quotation, and see the sourcing evaluations and score side-by-side with the quotations. (They can also see which documents have been returned and access any documents they need to for quotation and criteria evaluation). Note that the quotations have full drill-down capability even in side-by-side mode, allowing you to drill down to components of interest and roll back up for high level (assembly) overviews.

When an RFQ is returned, be it for production sourcing or full strategic (multi-year) sourcing, you can see the full quotation from each supplier, and compare them side by side, as well as comparing them to estimates.

These quotations can be used to create budget items, populate budgets, and update budget cycles (as budgets can be over multiple periods and associated with multi-year production plans). Budgets in the system can be at the part or program level, and, like purchase requests and quotations, be approved before finalized.

Procurement

  • purchase orders
  • accounts payable

Once the quotations have been returned and an approval has been completed, the buyer can create the relevant purchase orders to begin the sourcing process. These will then be sent to the suppliers for acceptance and/or requests for modification (if they want/need to split shipments), and once the suppliers accept the purchase order, they can send advance shipping notifications (ASN) when they are ready to ship.

Once the parts have been shipped, the suppliers can flip the purchase order into an invoice and send it back to the buyer, who will then receive it in the accounts payable module for processing.

Analytics and (Production) Monitoring

The platform contains a number of built-in dashboards for monitoring parts, programs, RFQs, production plans, cost estimates, budgets, inventory, and other platform capabilities. One of the main dashboards is the production dashboard that allows you to track total production over time from global production down to an individual part through drill-downs.

The platform also has some basic spend (analysis) dashboards for total spend and program/product cost analysis which, like the other dashboards, can summarize spend at the highest level across a time period of interest and allow drill down to a single part for a single date, and everything in between. The dashboard can also allow a buyer to drill into changes in product cost breakdowns over time. There is a similar dashboard for direct material spend, which can be global, program level, plant level, across all materials, a category, or a single material. And, of course, a dashboard that lets you drill into spend by supplier.

There are also a number of built in analyses around product costs which include, but are not limited to, landed cost analysis, import cost analysis, currency trend analysis, spend by plant, share of business analysis, and overall product cost analysis.

Supplier Management

Supplier Management is centred around supplier onboarding, information, quality (PPAP/APQP), and performance management. You can onboard a supplier using a customized workflow that collects the corporate, capability, and compliance information that you need to work with a supplier.

The Big Q

The real question is, does the platform fulfill its promise?

Let’s consider a minimal product development, sourcing, and procurement cycle.

  • Design
  • Development Sourcing
  • Design Finalization
  • Sales Projection
  • Demand Planning
  • Production Planning
  • Production Sourcing
  • Procurement & Fulfillment
  • Demand and Production Updates
  • Part Replacements and Supply Base Modifications
  • Service and Support

Through its new product development support, Zumen allows you to maintain product and part designs, including all historical versions, manage bill of materials in programs (and sub-programs), and ensure your sourcing initiatives are tied to design. With its RFQ support, deep cost models, and quotation comparison capability, development (and production) sourcing is well supported. You can import the projections from your ERP and do period based (month-over-month, etc.) demand planning and break that down into projection plans, which can be used to enhance production sourcing by providing potential suppliers with the demand breakdown over time. Once the awards have been made, they are tracked and purchase orders can be automatically or manually kicked off as needed. ASNs can be automatically received and tracked during fulfillment, demands and production plans can be tweaked at any time, part replacements tracked and associated with original parts, and associated services tied to the product/part awards.

Thus, Zumen really does manage the core part life cycle, product lifecycle, and procurement lifecycle in an end-to-end Direct Source-to-Pay platform and limits the number of additional best of breed platforms you will need to support your Source-to-Pay+ and supply chain management activities beyond the ERP/MRP and PLM. Key weaknesses are no scope 3 carbon tracking, which should be done at the part level to not only fully support EU requirements but allow for precise calculations, which is best done in the Source-to-Pay platform (and not a third party system) and supplier risk assessments (critical during qualification, and typically doesn’t live in a supplier discovery platform). While risk data should come from other platforms, the risk analysis should live in the supplier management platform to allow for not only performance tracking, but risk and compliance tracking. However, neither of these capabilities would be that difficult to build on the foundations they already have in place, so our bet would be that core capabilities for risk and carbon management will be added in over the next 12 to 24 months.

And, of course, if you are on the market for a new direct source-to-pay platform for product-development and direct product(ion) sourcing, Zumen is an option that you should add to your shortlist, especially in heavy machinery and manufactured parts industries (where the founder and his team have decades of experience).

ProcureForce: Bringing the Power to Manage Direct To You!

ProcureForce, an offering of Advanced Purchasing Dynamics, is a platform that was designed from the ground up to address the unique direct sourcing needs of automotive, aerospace, and other complex manufacturing industries where a product often requires ten thousand (or more) parts and managing the sourcing process in a spreadsheet workbook (because even the ERP can’t handle the Procurement requirements) is a nightmare.

Advanced Purchasing Dynamics grew out of the experience of the founder trying to manage the procurement of a Bill of Materials at a Big 3 US Automotive Company in the 80s, along with subsequent stints as Head of Procurement at other big industrial manufacturers, and his struggles trying to help them succeed when they didn’t have the right systems, and processes, to make them more efficient and successful. He found that a constant commonality was the lack of good systems, that supported good processes, for Procurement and wanted to help big manufacturers identify good systems and put good processes in place to be more efficient and effective at Procurement.

But he, and the team he built, discovered something that those of us who have been in the Source-to-Pay space for 25 years know all too well. He discovered that most of the platforms out there aren’t very well suited to direct, and many of those that do direct okay aren’t that configurable. So they decided to start working on their own, test it extensively with a few beta-customers over multiple years, work out the bugs, fill in the gaps, and do so in the hopes of bringing a product to market that actually works well for its target industries.

And one thing we will say is that it does work quite well, and the customization ability allows it to be fine-tuned to the needs of its clients. It’s the first new solution built on American soil in quite some time that we believe can truly handle the most complex automotive, aerospace, and complex industrial equipment source-to-pay requirements that exist today.

Their platform is sold as three comprehensive “solutions” that can be used standalone or collectively, where each “solution” covers an end-to-end process. (This is different than how most Source-to-Pay vendors that sell modules for specific tasks or functions, but not end-to-end processes.)

They are:

ProcureAlign: their core Source-to-Contract platform that allows for the creation and management of source-to-contract workflows tailored to organizational processes, which also includes embedded part and tool management, price indexing, price prediction, and other enhanced capabilities that go beyond traditional source-to-contract capabilities

SupplierAlign: a configurable supplier portal that allows Procurement to provide an interface to suppliers where they can self-manage updates, get centralized notifications, respond to requests online, and manage all of their buyer interactions through one location; the portal makes it easy to customize documentation and compliance requirements that the suppliers need to meet

AlignAI: their centralized data platform that structures and organizes procurement data to fuel AI-powered insights and transform data into standard formats required by PowerBI, Tableau, and QlikView for self-serve data analytics and decision making

We will mostly be focussed on ProcureAlign and SupplierAlign in this write-up.

The primary parts of the ProcureAlign Platform are:

  • Parts: manages the parts and programs (the Procurement view of the bill of materials)
  • Suppliers: the supplier master
  • RFQs: the organizational RFQs
  • Financial Evaluations: deep supplier quote analytics
  • Reporting: built in reporting
  • Administration: platform configuration and administration

Parts

Parts are the core of direct sourcing and procurement, as they create the programs (bills of material) that need to be sourced, and until they are in the platform, they can’t be sourced. The ProcureForce platform provides three ways to get parts into the platform:

  • Flexible Integration: purchasing signals to quote can be initiated in an Engineering Product Data Management system or the ERP
  • File Upload: ERP files can be pushed to SFTP on a schedule and loaded automatically or standard CSV format can be used to upload part data on demand
  • Manual Creation: a part can manually be created by the user

Part records are extremely detailed, and include description and classification fields, unit of measure, commodity classification(s), various statuses, associated plants, replacements, manufacturer part info, design stage, cost plans, and associated cost requests. They are so detailed that it’s not actually a “part” that is stored, but a “part-design level-cost request type” as this allows them to maintain a full history of the part design and costing in the system.

Suppliers

The platform can be configured for deep supplier profiles and onboarding can be configured to the organization’s liking, as with most modern supplier information management platforms. Onboarding starts with a supplier request, which requires basic details, and a program manager review, which then results in a notification to a supplier to visit the supplier profile and fill out the requested information. The onboarding can be configured to present required forms online or as downloads, require key fields in fixed formats, mandate acceptance of NDAs and provision of contacts, and designation of users who will have system access.

One important element to note is that suppliers are not just linked to parts, and thus the commodities (and overarching categories) that they provide, but also organizational divisions and or the geographic regions that use them, which can allow you to restrict suppliers to certain divisions and regions (through administration settings) if you so desire.

RFQs

It is very easy to create an RFQ in ProcureForce — so easy, in fact, that it can be done with zero clicks if you have ERP integration as you can push a purchase request from some ERPs directly into ProcureForce and kick off an RFQ. Otherwise, it’s just a matter of selecting a Program, selecting any attachments that are required to define specific program requirements, selecting the suppliers (which can be done down to the part level, and if the parts are linked to active suppliers, the system will default this for you), defining the incoterms, and specifying a little bit of meta data. The primary data required is the responsible buyer, name and description, causal code (reason for), dates, bid rounds (if not the default of 1), and currency settings (if not the default organization currency).

The RFQ automatically pulls in the appropriate cost breakdowns for each part for the RFQ, any associated part specifications, default (compliance) document requests, and default settings (based on templates and past projects). If desired, the user can specify alternate cost breakdown templates (if they are just looking for a quick quote for an emergency re-sourcing project, a potential packaging replacement, etc.) Also, the user can customize attachments or requests on a supplier level if they so choose (which they might if a new supplier is being invited to their first event, etc.). (This goes beyond typical indirect sourcing platforms where only messages can be targeted to an individual supplier.)

If a user is happy with the default settings pulled in from the templates and the parts when an RFQ is created from an ERP Push or the selection of a Program for sourcing, it can be launched in a single click. The entire platform is built to minimize the effort required by the user by taking advantage of all data present in the system and actions taken in the ERP. And the workflow can be customized to the preferences of the buying organization, although we must admit that it is quite standard and efficient out of the box.

Once the quotes are returned, the buyer can see the quotes side by side by part at the RFQ level, and then drill into each part so see the cost breakdowns side by side by supplier. They can add variance columns, prior quotes, variances against prior quotes, and even quotes in alternate cost models for comparisons (but will only get comparisons at the lowest level breakdown the models can be compared at).

One of the most unique features is that the platform supports multiple workflows for RFQs, which can be managed in the Administration section, and each RFQ can follow a workflow custom defined for that program (type). For example, if you’re just looking to get a price on an updated part design from your primary, you just want to (1) upload the part, (2) send the RFQ, get the quote back, (3) approve or reject it, and be done in a simple 3-step process. But if you’re looking to source a program for a new drive train, once you (1) upload the program, you want to (2) first define the sourcing plan (which may restrict certain suppliers to bidding on certain parts), (3) send the RFQ to the potential (pre-vetted) supply base, get the quotes, (4) do a financial evaluation over a three year period, (5) select an award scenario, (6) go through a multi-stage approval process, (7) make the award, (8) revise the program as appropriate (in case re-sourcing needs to be done later) and complete a set of organizational defined mandatory actions, and then (9) push it (back) to the ERP (if you have an integration) in a much more sophisticated 9-step process. The platform can support both (and any other process you want) and pull up the right process simply by linking it to the causal code or division.

Just in case it’s not obvious, they also support multiple approval workflows as well based on delegation of authority and sourcing type/causal code.

One unique aspect of the platform that may not be obvious in a demo is that you can include the country and city of manufacture for each part in the program and then use this data with public import/export data to build a detailed map of the tier 2 supply chain based upon their quotes and not third party or AI-guessing (based on generic import/export statistics).

Financial Evaluations

If the buyer needs to dive deeper into quote analysis before making a decision on an RFQ, the financial evaluation component allows them to create potential award scenarios as splits across multiple suppliers and analyze the full costing over the expected demand cycle based on full cost breakdowns (which are defined by commodity, not a high level category), expected changes in price indexes (which would trigger cost increases or decreases) over time, logistics from individual plants, and expected supplier performance. (As long as enough cost detail was included in the cost template used for the RFQ.) The buyer can create multiple scenarios, and then use the cost comparison capability to analyze them side by side. (It’s not optimization, but it allows a buyer to get pretty close as they can always identify the lowest cost awards for any part or program, but also modify that to ensure they are comfortable with the risks, delivery times, expected Scope3 emissions in the supply chain — which is critical if they are in, or have, EU customers, and so on.)

Reporting

The platform comes with a number of built-in reports, but doesn’t have extensive DIY analytics and/or reporting support (beyond the AlignAI platform that normalizes the data for integration with a leading BI platform so you can do DIY data analysis in the platform of your choice). These include:

  • Cost Breakdown: cost breakdown of a part by demand/utilization for a time period
  • Part Sourcing and Pricing: tracking of part sourcing and tracking can be done by receiving plant, program, commodity, supplier, and buyer
  • Program Management: for a given program, what parts have been sourced/awarded and approved and which parts have not
  • Program Waterfall: summary of how the program has been fulfilled by sourcing events over time

In addition, if you have PowerBI, PowerBI reports can be embedded in the platform, and a few are templated for you, including a Program Dashboard, Supplier Map, and Costing Breakdown.

And, of course, all data can be exported to every buyer’s favourite tool — Microsoft Excel (as most buyers in direct organizations still live in this tool, and even if everything can be done in ProcureForce with PowerBI or a spend analysis tool, some buyers will still want to use Excel).

Administration

The administration is one of the deepest sections of the platform. It supports the definition and management of the:

  • company : profile, business units, and users
  • financial evaluations : templates, models, variance calculations, etc.
  • custom fields : universal, platform wide
  • notifications : for every event that needs to trigger an action or approval
  • communication engine: triggers for internal messaging and external notice delivery, active notification management, etc.
  • parts : fields, unit of measure, commodity classification(s), statuses, associated plants, replacements, manufacturer part into, etc.
  • programs : the (Procurement view of) the Bills of Material, program history, status information, audit log
  • RFQs : default fields, other fields, default attachments, etc.

Moreover, in addition to being able to define arbitrary fields and data elements on every object in the system, the organization can also define elements limited to certain divisions or geo-regions, since different regions will have different requirements.
And, most importantly, it allows the organization to turn off anything they don’t use or disable the view on anything their users don’t need to see (and the users won’t see any fields or data elements tagged to a division or region they are not in), making the platform easy and efficient for the average user.

ProcureForce is an extremely well thought out, and very well executed, direct sourcing platform for automotive, aerospace, and similar complex manufacturing industries that is ready to take its place in the big leagues. If you’re a mid-size or larger manufacturer looking for such a platform, it is one that we would not hesitate to recommend for a short-list.