Affordable RFPs!
Category Archives: RFX
Part Analytics Get PARTicular About Your Electronics-Enabled Supply Chain and Source Smarter with Deep ANALYTICS-based Insight
Over the past few years a few vendors have come out of the factories to support your direct-specific supply chain, but there’s still only a few that specialize in the Electronics Supply Chain (especially when you include deep sourcing [automation] support) and PartAnalytics is one that you may not have heard of, but definitely should know of given their ability to drastically reduce direct sourcing times for electronics components while reducing costs, lead-times, uncertainty, and compliance.
Part Analytics was founded in 2019 to increase open collaboration between Original Equipment Manufacturers (OEMs), Electronics Manufacturing Services (EMS), and suppliers, starting with a comprehensive, standardized source of information for direct components and materials used in electronics-based manufacturing. This would allow demand and supply information to be shared, costs and lead times to be better managed, and supply chain risks minimized. Founded by global sourcing professionals with expertise in electronic and electro-mechanical supply chains, they applied their deep knowledge of products and buying processes to build a solution that would not only simplify the sourcing process for components and bills of material, but also allow much of it to be automated.
The Part Analytics solution is split into four primary modules (which can be accompanied by a fifth that serves as a cross-platform executive dashboard):
- Part IQ: Contains detailed part data for the electronic / electro-mechanical parts the organization sources
- BOM IQ: Contains detailed information on BOMs used by the organization (for sourcing purposes)
- Category IQ: Aggregates part information across BOMs to provide insights into demand, benchmarks, commodity, and supplier risk information and provide analytical insights to reduce spend, lead-time, and risk
- RFQ IQ: deep RFQ functionality for sourcing (automation) on a Total Cost Basis (TCB) (with up to 97% manual time savings once an event has been setup)
In this article, we will look at each module individually, after noting that since Part Analytics is focused on the electronic and electro-mechanical supply chains, most of the sourcing projects (60% to 70%) revolve around PCBs (Printed Circuit Boards, not Polychlorinated Biphenyls) and related components. As a result, the focus of most of their customers is on part and material cost and lead-time optimization in those categories specifically, which is why their central focus in Part IQ is on those components.
Part IQ
Part IQ is the global supplier parts library that
- represents the integrated catalog across all suppliers,
- maintains the organization AVLs (Approved Vendor Lists)
- maintains Part Analytics‘ and the customers’ internal PPE (Prescribed Parts Equivalent) lists
- maintains part cost and risk details by part
- makes global search by part and equivalent quick and easy
Part IQ contains a database of hundred of thousands of components from thousands of suppliers globally and provides real-time inventory availability monitoring from distributors and suppliers. It’s also capable of monitoring part availability and notifying the buyer as soon as a specific part becomes available anywhere in the network.
Deep detail is maintained on every single part and includes information such as manufacturer and part number, usage, prices, savings opportunities, and alternates. It also cross-references BoMs containing the part, known risks associated with the part, and Part Analytics.
This allows a design engineer to quickly gauge availability during R&D or build-to-order quoting, as well as sourcing professionals to quickly gauge immediate availability, lead times and expected pricing if they also have Category IQ (to be discussed later) as it can pull in trends and insights from the Category IQ module. If they integrate with their PLM, they can also see current inventory within the tool as well as pull in product forecasts to see if the available supply is likely to meet their demand.
It also helps R&D to ensure compliance with industry and market requirements as Part Analytics harmonizes all of the data and they can quickly tell not only if a product is compatible, but if it is compliant with certain regulations as detailed specifications with the required material composition will always be available in the drill down.
BOM IQ
Arguably the core of the suite, BOM IQ (or Bill of Materials IQ) stores all of the electronic / electro-mechanical bill of materials being sourced by the organization as well as associated forecasts/demands from the PLM solution (and can push updates on material availability, inventory, AVL, and approved PPEs into the ERP if desired).
At the BOM level, it provides an organization with insight into:
- the overall health rating (based on compliance, material/product risk, product/part/line-item health)
- the number of unique line items with lead time, lifecycle, single source, RoHS, or other supported compliance risk (if data feeds/subscriptions are available)
- the current annual spend summary and projected spend summary
- BOM cost trend over time
- the total estimated savings available from based on alternates and negotiation
For every line item it also stores all of the relevant associated information including, but not limited to manufacturer, distributor, current costs, usages, risk/health rating, and information from past events. It’s very easy for a user to navigate around the BOM IQ product and see not only current prices and usage, but to drill into associated risks and compliance.
In a nutshell, the solution provides actionable data by leveraging technology to contextualize data from hundreds of sources including distributors and manufacturers.
Category IQ
Category IQ rolls up the line-item/part/component/material intelligence by category and allows an organization to get an overview of their spend, opportunity, and risk from various points of view such as commodity, supplier, business divisions and products. This allows the organization to get a comprehensive view of spend and savings potential from different viewpoints and make the best overall sourcing decisions for the organization.
More importantly, the organization can also see a roll-up of risks and non-compliance by category, which can be filtered to certain risk types to allow the organization to address the most critical risks first. Especially since it can roll up the number of units in a given life cycle state, being single sourced, etc. and drill in to parts coming from a specific region to allow an organization to quickly assess the potential impact of geographic/geopolitical events and disasters on the supply chain.
Once the buyer has a firm handle on her categories, she can proceed to sourcing in RFQ IQ.
RFQ IQ
With a strong understanding of her categories, a buyer can initiate sourcing projects using RFQ IQ. This module simplifies the sourcing process by allowing buyers to set up events with ease. Key elements include defining line-items or BOMs, approved vendors, questionnaires, and bid sheets with detailed cost breakdowns.
Upon receiving bids, buyers benefit from a comprehensive summary that highlights the total parts up for bid, the number of bids received, and potential new spend based on the lowest bids. This summary also offers insights into category spend by business unit.
The platform enables buyers to delve deeper into individual supplier bids, comparing spend differentials and assessing the impact of choosing specific bids. Buyers can utilize automated features to award the lowest bid by supplier on a part or BOM basis, or make manual adjustments to finalize awards. Notifications are then sent to suppliers, and the award details can be integrated into the ERP system to initiate the contracting and P2P process.
One of the standout benefits of RFQ IQ is the ability to automate much of the sourcing process. Once the master file is established, buyers can launch events by simply defining timelines. Automation can handle the process from initiation to award recommendation, significantly reducing manual effort. For example, one client saw a reduction in manual effort from 710 hours to just 10 hours, thanks to the module’s robust automation capabilities. While results may vary, most organizations experience efficiency gains of 30% to 60%, depending on their automation preferences. Additionally, the overall sourcing process time can be cut from months to mere weeks, providing substantial time savings.
Furthermore, since the demand can be defined by business unit, it allows their customers to maintain their decentralized structure (as the platform can support bids by business unit when each is in a different location and would dictate a different landed cost) while still supporting volume consolidation through a Centralized Center of Excellence (COE) for cost reduction and best practice sourcing. This also allows an organization to get a fully centralized view into their global supply base by category, BoM, and part; identify key areas of material/part/product-based risk that needs to be assessed; and harmonize costs and lead-times at the same time.
By giving buyers a global view, they can identify all FFF and F component alternatives, including those that are more readily available, higher in quality, and/or earlier in their life-cycle, allowing the organization to identify potential strategic OEMs and suppliers early. And for off-the-shelf, always having centralized insight into global supply across hundreds of distributors is extremely valuable when a disruption happens in your current supply chain.
Furthermore, the fact that Part Analytics is PLM (and not ERP) first means that buyers have a firm handle on not only what Manufacturing needs, but what R&D is working on and can ensure R&D is not designing for materials/parts that could be expensive or hard to get and/or maintain a stable supply of when there are more affordable, more available, or more reliable alternatives available.
Plus, if desired, part and BoM population can be done entirely from spreadsheets, allowing for an organization to get up and running quickly as a) most organizations without a system custom designed for electronics / electro-mechanical direct sourcing, even if they have a modern PLM (and/or ERP), maintain all their part and BOM info in spreadsheets. Not only does this allow Part Analytics to get an organization up and running quickly, but it also allows them to instill best practice as Part Analytics serves as the Parts Master and, once the PLM integration is completed, always keeps the BOM in synch, and the organization never has to worry if they are sending the sheet with the right version of the BOM (was that v.21 or v.23 we finally decided on) to a supplier for bidding.
Looking Ahead
Right now, it’s just cost trends over time for category intelligence, but by Q4 Part Analytics intends to release advanced commodity/sub-commodity insights around pricing trends, availability, and lead time using advanced analytic and forecasting algorithms and supply and demand signals in their Category IQ Module.
Also, as indicated above, future releases will support more data integrations for supplier (and not just material/component/part-level) risk analysis.
Summary
Part Analytics is a great solution to harmonize sourcing, inventory, and supply chain visibility in your electronics and electro-mechanical spend categories. Furthermore, it’s real-integration to hundreds of OEMs and distributors provide invaluable real-time insight into supply, demand, lead-time, and cost trends and benchmarks that can help organizations get a better handle on their overall sourcing efforts, especially if they primarily run as a decentralized operation across product lines / business units or geographies, especially since it can unite engineering and commodity sourcing teams on one coherent picture. It’s a great solution for part-based supply chain visibility, and for deeper insight into how to achieve this, you can download and checkout their handbook on supply chain visibility.
Affordable RFPs – The Real Reason(s) They Are So Rare, Part 2
Three articles ago, we noted that The Key to Procurement Software Selection Success: Affordable RFPs! was critical to getting the right technology to help manage your complex supply chain. This was because a proper RFP required a LOT of understanding to get it right, which we covered in detail in that article and summarized in Part 1. Then, two articles ago, we noted that we know all too well that most of you are asking Affordable RFPs — What Are Those? because you’ve never seen one. So in Part 1, after reviewing the requirements of a good RFP, and pointing out why you weren’t likely to get an affordable RFP from the majority of consultancies, we told you that they were still the answer because
- they could be affordable if Niche Consultancies stopped thinking like consultants
and started thinking like enhanced product-and-data-based SaaS Management Providers, - they only require knowledge management and expert augmentation to get it right, and
- if a consultancy understood this and was willing to make the necessary investment, they could quickly become a market leader.
Today we’ll explain what that means. We’ll start with the 10 types of understanding we outlined in our first article on The Key to Procurement Software Selection Success: Affordable RFPs!.
- Procurement Maturity: the consultancy needs a maturity matrix, along with key capabilities at each level, key questions that need to be asked, and follow on questions (and contextual knowledge) to elicit the right details
- Process Maturity: the consultancy needs a process progression flow to pinpoint where an organization is in each process, both from a human viewpoint and a technology enablement viewpoint
- (Critical) Use Cases: not just from a standard “procurement” (“sourcing”, “supply chain”, etc.) point of view, but from an industry point of view; the consultancy needs a large library of standard (critical) use cases to build on
- Current Technical Maturity: not just from an organizational point of view, but based on the progression of technology in a typical enterprise organization (which, of course, requires a knowledge of the history of tech to the present day along with progression flows along architecture, standards, models, etc. )
- Missing Capabilities: based on the process and tech maturity, but also based on industry peers and leading solutions; requires all of the above AND all of the below
- Key Solution Types to Address the Gap(s): knowledge of the standard modular / best of breed offerings in the space and related spaces, as well as knowledge of the standard must have, should have, and nice to have capabilities of each solution type, as well as the progression of technical maturity in each area; a rather extensive knowledge base will be required
- Key Existing Solutions to Maintain: knowledge of the core, should have, and nice to have requirements of foundational ERP/MRP solutions and companion solutions in inventory, logistics, etc. (to make sure the S2P+ solutions will be enough to go to market for or if other modules / systems [and RFPs] will be needed); a more extensive database
- Globalization Requirements: knowledge of what the e-procurement requirements are in each country the organization does business in, what languages will be absolutely necessary, what currencies will need to be supported, what government regulations there are for the products/services being sourced/sold, what industry regulations/standards need to be supported etc; internal databases or appropriate database subscriptions will be required
- Service Requirements: knowledge of what requirements are needed for implementation, data migration, integrations, and maintenance; and how to judge if a vendor / service provider is up to the task
- Unique Organizational Requirements: knowledge of industries and what differentiates them from a process requirement and solution requirement standpoint; detailed, but yet curtailed, knowledge in an internal database that matrixes this by industry, process, and technology solution
In other words, it means a LOT of detailed models, knowledge bases, and standard progressions as well as a lot of detailed knowledge on:
- metrics where most organizations lie on the maturity curve(s)
- vendors, what modules they offer, and how they stack up
- once all of the above is racked, stacked, and mapped, what the core questions are
- etc.
And that, of course, requires the consultancy to step up and
- make some up-front and ongoing investments to build these knowledge bases that will
- allow their intermediate associates to do the baseline work and
- enable their experts to come in and finish it up in a fraction of the time compared to if they had to do most of the work themselves (i.e. 1/5 to 1/4).
This will allow most of the work to be done by the intermediate resources at a lower day rate, who will be more efficient with a knowledge base to build on, and then the expert to come in and review the work, identify the areas of weakness, and take it the last mile.
And a consultancy who saw that and made the investments could scale up their operation by allowing their top resources to be four times as productive and support four times as many customers (as well as supporting their customers through the implementation in the project, change management, data migration, and assurance roles. (We only said that they had to be vendor neutral, and not be an implementation provider for the vendor’s software. Everything else is process or organization centric, and as the experts, that’s the work they should be doing, and the most valuable work to be done.)
Again, Affordable RFPs are the answer and maybe someday we’ll see a herd of those mythical unicorns.
Affordable RFPs – The Real Reason(s) They Are So Rare, Part 1
Two articles ago, we noted that The Key to Procurement Software Selection Success: Affordable RFPs! was critical to getting the right technology to help manage your complex supply chain. This was because a proper RFP required a LOT of understanding to get it right, including, but not limited to:
- Procurement Maturity
- Process Maturity
- (Critical) Use Cases
- Current Technical Maturity
- Missing Capabilities
- Key Solution Types to Address the Gap(s)
- Key Existing Solutions to Maintain
- Globalization Requirements
- Service Requirements
- Unique Organizational Requirements (less than you think, but those that exist are situation critical)
And this required a breadth of understanding across
- the market
- process evolution
- use case specification
- … including what must be technology backed
- … and what should be technology or data enhanced
- common module/solution types that mind the gap
- internal foundations
- the unique requirements, regulations, and resignations of each country you do business in
- the services your team, and current partners, can and can’t do — even service specializations you didn’t know exist
- what other organizations do
And most of this you won’t have in house. So you need Affordable RFPs. But we know all too well that you are all asking Affordable RFPs — What Are Those? because, as far as you know, they don’t seem to exist. And we hear you, because they rarely exist at mid-sized and larger consultancies (because only a select few from their talent pool can do it efficiently and relatively cost-effectively and those resources with deep experience are going to be dedicated to any F500/G3000 that can afford to pay the A rates to keep them as a dedicated advisor), and unless you are a larger mid-size buying a mini-suite, they don’t even exist at the Niche Consultancies where they should be common.
We also spent a fair amount of time explaining why they don’t exist, even though one would think that they should be readily available at the niche consultancies (as this could not only make those niche consultancies true leaders in Procurement but also help them grow). In this last case, it was because it was typically only their senior resources that could do these projects, and since these projects aren’t currently quick to complete, it doesn’t take long for a senior resource day rate to add up. And, as we noted before, while this won’t be that much when you are larger mid-sized organization looking for a mini-suite or suite, if you’re just looking for one or two modules to fill a gap, this could add up to quite a bit.
So if this is the case, why are we telling you that Affordable RFPs are the answer if they’re almost impossible to find?
Because:
- they are the answer,
- they would be affordable at Niche Consultancies if those niche consultancies stopped thinking like consultants and started thinking like enhanced product-and-data-based SaaS Management Providers, and
- they only require knowledge management and expert augmentation to get it right.
So what would a Niche Consultancy have to do to get it right?
We’ll outline that in our next part. But it starts with investment. (And how many partners at consultancies want to invest their money? They were brought up on the Wall Street Mantra — Other People’s Money.)
Affordable RFPs — What Are Those?
A couple of weeks ago we penned an article on The Key to Procurement Software Selection Success: Affordable RFPs!. This resonated with those of you wanting to improve your Procurement operations who were willing to admit that you could use the help, but it also left you with one big question: where to find these affordable RFPs?
And the doctor hears you on this. You can’t just go to any old consulting firm and get an affordable RFP. Most of you have encountered high price tags, whether you went to a Big X, mid-size consulting company, or even a niche specialist. And you’re probably wondering why. Well, first you need to understand the following.
1. The Big X.
There are a number of reasons you’ll RARELY get an affordable RFP from a Big X.
- their modus operandi is to get their people embedded on your projects and keep them there for as long as possible at 3X to 5X+ their hourly rate, they are service firms with a large number of people to keep employed (and they need to invest in employing those people, and, to be honest, trying to streamline RFP processes across every type of software imaginable is just unreasonable for any company to do, so why should we expect it)
- they have agreements with a number of big suite vendors where they are a preferred implementation partner (and not only do they get a big referral check in addition to YOUR implementation fees which makes finance happy, if they don’t bring enough clients, they could lose that partnership and the deep insight it gives them into the partner, which is key to them being able to bring value to the implementation — see when should you use a Big X?
- they’ll put a senior resource / junior partner as lead, but you’ll hardly ever see that person, instead, most of the work will be done by a team of inexperienced recent hires, usually recent graduates, who will, unfortunately, even with a good playbook, rack up the hours just trying to get the basics right as they get the experience needed to be more effective (mainly because this senior resource / junior partner will also be attached to many other projects so that they can close the deals, leaving the team without a lot of senior guidance)
2. The mid-size consultancies.
While it is sometimes possible to get an affordable RFP from a mid-size consultancy, the reality is that it’s a rare occurrence (and your odds are about the same as achieving success with an average technology project which, as per Gartner, is less than 1 in 5, largely because they are never scoped and planned right, starting with the RFP), and most of you never will. As with the Big X, there are a number of reasons you’ll RARELY get an affordable RFP from a mid-size consultancy.
- like the Big X, they want to get projects that keep their people busy (usually at more reasonable 3X to 4X resource hourly rates) as they want to grow, and this leaves little time for trying to streamline RFP creation methodologies which is possible if they are sticking to a niche with only a few, and maybe a few dozen, different solution modules that would be relevant (and, in their quest to grow, they can totally miss the big picture that it is delivered value that wins repeat business)
- while they are willing and able to be more impartial than the Big X (who need to keep their partners happy to get the insight and training they need to deliver unparalleled value), they have a few partners they prefer to direct any RFPs (and awards) to as they know the systems well (and can get the implementation work), those resources get it done fast, and it keeps them front and center with the vendors who need to direct implementation work to a third party
- they can’t afford benchers, so their recent grads are not only the top of their class who have shown aptitude for their domain, but they are balanced by intermediate personnel on the projects who can guide them and there’s usually always at least one senior person, but only the senior people can do the RFPs well enough on their own, so the day rates are almost as high as a Big X as the RFPs tend to be mostly senior and intermediate personnel
3. The niche consultancies.
The niche consultancies are your best bet of getting an affordable RFP, but the reality is that it’s still, unfortunately, hit and miss and it’s likely that less than 1 in 3 of you will see a decent rate when all is said and done (where we measure RFP spend against total system spend over five years and try to maintain the right ratio).
This is despite the facts that:
- unlike the Big X and mid-size consultancies, they have lower overheads and can keep their bill rates in the 2.5X to 3X range (enough to cover their resources’ hourly rate, overhead, and a fair profit margin)
- even if they have partnerships with a vendor or three, they tend not to favoured by the vendors who will never direct work to them (and only allow them to implement deals they bring) due to their small size and inability to rapidly scale up (like a Big X or mid-size), which means their bias towards any vendor, if it exists, is quite limited
- they don’t have junior people, because they can’t afford benchers and resources that don’t deliver with their cost model, and only hire (high-achieving) intermediate and senior personnel, and focus primarily on those who can do small projects entirely on their own or with limited support
When you look at this, you should be able to get a lot of value for a reasonable amount of money. And, make no mistake, you do get value for money.
However, when you look at the total system cost that you can afford as a (smaller) midsize company, and then you look at the cost of getting that good RFP, the problem is that the cost of the RFP is more than you can afford (and should be spending relative to the annual cost of the specialized system you are likely to buy). This means that you end up having to cut corners on the software (and get less from a preferred vendor or go with a more cost effective runner up) or forego more than a modicum of help from the consultancy (where you just get a few advisory days and hope your team to can capture enough of the brain-dump to put together something reasonable).
Even though this shouldn’t be the case.
So why are most niche consultancy RFPs not affordable (unless you are acquiring a mini-suite or significant advanced functionality that comes with a significant price tag and are a larger mid-size with the budget for it) when they could easily pick a focus area and make it so? And for that matter, why aren’t the razor focused mid-sized consultancies more affordable when they could do the same? After all, it’s only the Big X where the investment would be unjustified compared to the return, and, to be honest, you are going to them for enterprise systems that cost nine (9), if not ten (10), figures, so you should be expecting to pay high six figures for a good RFP in that situation! (See when you should use a Big X!)
We’ll get to that in our next installment.