Category Archives: Sourcing Innovation

Simfoni: Bringing the Orchestra to e-Sourcing

As noted in our last article on how Simfoni is Ascending the Scales in Spend Analysis, we last covered EC Sourcing (which is the foundation of Simfoni’s optimization-backed Source to Contract capability that resulted from their acquisition of EC Sourcing in 2022) on Sourcing Innovation in 2016 (getting ready to take the mid-market by storm), and more recently co-covered them on Spend Matters in a 3-part Vendor Analysis in 2022 (Part I, Part II, and Part III), but, as previously noted, you will need a Spend Matters Content Hub subscription to access that coverage.

Those who have been keeping up will know that Simfoni eSourcing has:

  • Flexible Multi-Round RFX Capability with composable questionnaires powered by conditional logic, unlimited user-defined columns, and multiple scoring options
  • Standard Auctions with enhanced lot management
  • Powerful in-tool pivotable matrix reporting so you don’t have to jump out to the analytics module to slice, dice, and compare RFX responses
  • Supplier Information Management with automatic supplier selection in events based on the products or tags
  • Supplier Portal with self-registration, onboarding, and corrective action support
  • Item Management which allows RFXs to be quickly constructed from scratch on existing items, or as copies of prior RFXs where items can easily be added or removed
  • Strategic Sourcing Decision Optimization with flexible scenario creation
  • Basic Sourcing Project Workflows that can be customized for every project
  • Contract Management with user-definable metadata, complete change history, approval workflows, and push from sourcing

Since their last major coverage over two years ago, Simfoni has integrated the EC Sourcing functionality into their platform and added the following capabilities:

  • Intake Management
  • Enhanced Project Management (Dashboard)
  • Integrated Opportunity Assessments and Wave Plans
  • Optimization Simplification

Intake Management

The buzzwords-du-jour are intake and orchestrate, and Simfoni has heard the message loud and clear. While their solution may not be on par with the big names like Zip for intake, it serves its purpose and intake alone is not a solution — you need powerful platforms for sourcing and procurement to back it up. Their solution allows anyone to make a Procurement request, and then view the status of that request at any time. It’s simple, but if you refer back to our post on Investigating Intake – Diving Into the Details, which was Part 37 of our Source-to-Pay+ is Extensive series, we only had six core requirements for intake for the requester:

  • Request portal: minimal, but check
  • Process visibility: minimal, but check
  • Asynchronous messaging: included in the Simfoni eSourcing foundation and available once the project kicks off
  • S2P platform integration: check
  • Budget tracking: available in the Sourcing Project and the Simfoni Analytics platform
  • Alerting: part of Simfoni eSourcing, and active once a project starts (as long as the requester is properly setup on the platform)

… and we only had six core requirements for the procurement buyer:

  • Request to process: Simfoni eSourcing has a good workflow, and it’s a single click to kick of a workflow
  • Workflow process definition: similar to above, it’s solid
  • Integrated approval workflows: not so much in sourcing, but in contracting and procurement (which will not be covered in this article)
  • Project management integration: sourcing projects are very well managed
  • Policy tracking: policies can be integrated across the Simfoni platform and quick links maintained in a policy widget on the main Terminal dashboard
  • Alerting: this is quite good for the buyer

Enhanced Project / Pipeline Management

The new dashboard for sourcing pipeline management hits the nail on the head. A buyer quickly sees all their open projects and their current stage, the baseline spend, budgeted savings, forecasted savings, and actual savings to date — and the CPO can log in and see the current status of everything at any time. No more “can you get me an update by Friday”. This information is always readily available.

Plus, with a single click, you can get the Kanban view and see which projects are in the:

  • Definition stage
  • Sourcing strategy definition stage: which allows for a task-based breakdown
  • Tender / RFQ / Auction stage
  • Negotiation and awarding stage
  • Implementation stage
  • Project close-out stage

Integrated Opportunity Assessments and Wave Plans

As we noted in yesterday’s article, Simfoni has created a great centralized opportunity assessment dashboard, with deep drill down capability, where a buyer can identify which sourcing project can be launched next and then kick off a project using the enhanced project creation capability and cross-platform integration. In addition, you can see each project in an integrated calendar view and know exactly how much is planned across the sourcing department at any time.

Optimization Simplification

Simfoni has extensively worked on simplifying the optimization interface making it super easy to set up a number of baseline scenarios (least cost, X suppliers, incumbents only), create a new scenario as a copy of an existing scenario with just one new constraint, see the spend summaries, and see summaries in pre-defined tabular views.

It’s also super easy to create constraints, which fall into one of six categories:

  • Competition: how many bidders can receive an award
  • Bidder: min or max award volumes to specific bidders
  • Qualitative: limit awards to bidders with custom attributes
  • Quantitative: limit awards to bidders with min or max scores (for risk, etc.)
  • Discount: define tiered bidder discounts (as percentages)
  • Subset: work on a subset of data

Creating a constraint is easy — you simply define

  1. the scope (which can be on any defined entity that is available including, but not limited to item, business unit, plant location, category, etc.) Note that if you want to apply a constraint to a group of items, plants, categories, locations, etc. then you need to define these as part of the sourcing event
  2. the bidder the constraint is applied to (if necessary, not all constraints are bidder-based), and
  3. the parameters (min, max, field value, etc.).

Also, you can create multiple constraints of the same type on the selected constraint screen (if you wanted an approximate 50, 30, 20 split, for example, you’d define three instances of the constraint, with the first instance awarding between 49% and 51%, the second awarding between 29% and 31%, and the third awarding between 19% and 21%).

In other words, in addition to integrating the EC Sourcing platform into their ecosystem, which included massive UX updates for consistence and modernization, Simfoni has continued to extend the capability and it’s still a solution that should be on the consideration list for any organization looking for S2C, especially where optimization or leading analytics is required.

Procurement Automation: Good. Automated Procurement: Bad.

We shouldn’t have to say this. It should be very clear by now. But given that a number of vendors are using the terminology interchangeably, possibly to convince you they have the right solution, maybe it’s not clear. But it needs to be. Because procurement automation is NOT the same as automated procurement and while procurement automation, properly done, is the best investment an average over-burdened and under-resourced Procurement department can make, on the flip side, AI-driven automated procurement is the absolute worst. To put things in perspective, downgrading Excel to Lotus 1-2-3 would be a better move. But let’s back up, and start with some definitions.

Procurement Automation is the process of automating certain procurement tasks that can be best accomplished by machines and procurement automation technology is the technology that automates the tasks that can be best done by machines. In simpler terms, it automates the “thunking” by doing all of the tactical, almost mindless, work that is a waste of a senior Procurement professional’s time.

The Source-to-Pay cycle is full of tasks that are best done by machines when appropriate rules and boundaries are defined. For each major area, we’ll outline some of these tasks as an example.

Intake/Orchestration

Procurement Automation will analyze the request, identify similar requests made in the past, identify the actions used to resolve those requests, identify the suppliers considered and selected, the products and services used, and other information. It will present that information to the buyer, including the suggested actions, and allow the buyer to one-click initiate any of the suggested actions, which might include a sourcing event, contract renegotiation, catalog purchase, etc.

Sourcing

Procurement Automation will, when a user kicks off a sourcing event for one or more products, automatically bring up the suggested suppliers, automatically suggest the appropriate questionaries and forms, automatically suggest the appropriate Ts and Cs to insist on up front, automatically send the RFP to suppliers, automatically analyze the responses to make sure they are complete, in the correct format, and in an expected range; automatically compare the responses to find deviations from the norm; automatically highly the lowest and highest costs, CO2 factors, etc. and present all that information to the buyer.

Supplier Management

Procurement Automation will, when a supplier is selected, automatically handle the onboarding; monitor the data for changes; monitor the performance metrics; monitor the OTD; monitor third party financial and risk metrics; and alert the buyer to any issues and performance changes that are detrimental or may indicate forthcoming problems.

Contract Management

Procurement Automation will, when an award is selected, push the award into the Contract Management system, automatically generate the draft contract, send it to the supplier, highlight any redlines the supplier makes when it comes back and automatically inform the supplier if any non-negotiable terms and conditions (including those they agreed to when they responded to the RFP), and automate the generation of the response email when the buyer does their redlines.

e-Procurement

For catalog buys, it will automatically generate the POs, route them for necessary approvals, distribute them to the suppliers when approved, automatically match the ASNs when they come back, alert the buyers if ASNs are not received in a timely basis, and match the invoices when they come in.

Invoice-to-Pay

When the invoice comes in, it’s automatically matched to the purchase order, it’s checked for price accuracy, identified as partial or full, verified to be non-duplicate, and if any checks fail, it’s bounced back to the supplier with a description of the issues and a request for correction and resubmission. If the resubmission deals with the problems, it’s queued waiting for goods receipt/confirmation if not present, or matched if present. If the match is made, then it’s automatically sent down the approval chain, and if it’s not made within a certain time period, an alert is raised.

In all cases, it’s automating the tactical tasks that don’t require any decision making and only involving the human when necessary.

In contrast, Automated Procurement is the process by where entire procurement processes are handed over to the machine to fulfill instead of the human. In other words, when an intake request comes in and the buyer marks it for sourcing, an Automated Procurement solution will handle the entire event up to and including the award and auto-generate and distribute the Purchase Order(s). The buyer is completely bypassed and the right inventory showing up at the right time at the right price is left entirely up to the machine. Sounds good in theory. Looks good in practice when it actually works, which it will some of the time. But grinds the company to a halt when it fails.

A machine that pursues lowest cost will select an unproven non-incumbent supplier for a critical part when the suppler, who has not supplied that particular part to the company before, outbids the incumbent. It will not detect that the bid was made in an desperate attempt to help the financially struggling supplier stay in business, that the bid is not sustainable, and that the supplier is not capable of producing the part at the indicated level of quality. Then, when the first shipment is mostly defective, and the promised rush replacement order never arrives because the supplier goes out of business, the production line for the 75K luxury car folds all for lack of a single control chip. (A similar situation has occurred in the past. Recently, chip shortages stopped Cherokee production in 2021, and that wasn’t the first occurrence. Or even the second, or third.)

Machines are not intelligent. Not even close. And expecting them to make a good decision every time with no logic whatsoever (as modern Artificial Idiocy algorithms just stack probabilistic equations on top of probabilistic equations almost ad infinitum) is lunacy. So while you should invest in the best Procurement Automation tech you can get your hands on, you should steer clear of any and all Automated Procurement Solutions those fancy new startups try to sell you. While those solutions may work 90% of the time, that last 10% of the time, they won’t work that great. And, in particular, that last 1% of the time they will fail so miserable that the disruptions and losses that result will more than cancel out any and all savings and efficiencies you might get from the 90% of the time the tech worked in the beginning.

How Medium Sized Enterprises Can Better Manage Spend

McKinsey & Company recently ran a long article on how medium-size enterprises can better manage sourcing that noted that the big reasons that mid-sized companies have difficulty reining in external spending are:

  • a lack of spending transparency
  • a myopic focus on the short term
  • talent gaps
  • underused digital tools and automation
  • exclusion of procurement and supply chain in business decisions

And noted that any action plan that a medium-size enterprise comes up with for procurement cost savings should include:

  • establishing CoE (Center of Excellence) teams
  • improving forecasting
  • expanding use of digital procurement tools
  • gaining greater market intelligence
  • establishing a culture of — and process for — continuous cost improvement
  • incorporation supplier-driven product and service improvements

And they recommend a ladder model that consists of the following steps:

1) Set Aspirations
2a) Rapid renegotiations with top suppliers
2b) Make-vs-Buy Analysis
3) Build spec catalog to enable market engagement
4a) Conduct request-for-quote (RFQ) rounds
4b) Build parts catalog
5a) Validation of suppliers and production parts
5b) Consolidation of SKUs and modularization

And this is all very good, and when you read the article for the details you will understand why it’s all very good, but it doesn’t really provide a clear, step-by-step, roadmap on where you should start.

Fortunately, Sourcing Innovation did provide a partial roadmap in it’s 39 Steps … err … The 39 Clues … err … The 39 Part Series to Help You Figure Out Where to Start with Source-to-Pay which outlined the order in which an organization should get the tools (and thus the associated market intelligence) it needs to effectively tackle spend (and forecasting), work with suppliers, and establish a culture of continuous improvement. About the only item we didn’t address on the McKinsey list is the establishment of CoE teams — the right structure is highly organization dependent, and will be better enabled by the implementation and adoption of the right tools.

So, if you missed the series, go back to the beginning and understand where you start, why, and how a proper, ordered, logical implementation of Source-to-Pay in a modular fashion will help you maximize savings, efficiency, and even sustainability within your allowed budget.

Efficiency Is In The Process, NOT THE MARKETPLACE!

the doctor really should stop reading the “news” and “best practice” articles the internet pushes his way because most of them are rubbish and just make him angry, but then again, if he didn’t get angry, what would he have to write about?

One of the articles recently was about how procurement can push efficiency and sustainability into the organization. The sustainability advice of “look for eco labels or EPA ID or products with recycled content” was pretty abysmal (because, duh!), but the efficiency recommendation of “create an e-marketplace to give your buyers an online catalog of goods and services” was just appalling.

That’s only efficient for organization end-users charged with restocking the supply cabinet in the office or keeping the MRO stock levels high enough to guarantee the production lines keep going when the store room gets low. That’s not injecting ANY efficiency into the Procurement process.

When you consider even the most basic strategic procurement process, you have to:

Identify the Need
and efficiency here is an intake management solution that allows you to collaborate with the end-users / end-sellers to make sure you’re procuring the right products for them to ply
Identify the Potential Suppliers
and efficiency here is a solution for supplier discovery, evaluation, and onboarding
Identify the Evaluation Requirements
and efficiency here is an orchestration solution that allows procurement to integrate all of the requirements from the users, the business, and the organizational goals
Evaluate the Bids
and efficiency here is an RFX solution with integrated analytics
Negotiate and Sign the Contract
and efficiency here is a contract lifecycle management that at least supports the contract negotiation process with complete document (and version) tracking and preferably also includes support for initial contract creation from award, key issue tracking, and e-signature integration
Determine the Appropriate Ordering Strategy
and efficiency here is determining whether the best fulfillment is regular shipments (if the factory uses X thousand units a month), auto-reorders on inventory level triggers (if the usage is/sales are irregular, but the product can be pulled quickly), or (managed) catalog-based orders as needed
3+-Way Match (against an invoice)
and efficiency here is a solution that makes it easy to ensure the invoice matches the goods receipt that matches the PO (at a minimum, and you also want to make sure the PO matches the contract etc.)

Efficiency is injecting efficiency into this process, not just setting up a marketplace!

TenderEasy: Easy Breezy Beautiful Freight Quotes

First things first: if you are shipping globally, you need a(n) RFQ / Spot Bid solution built for freight. You may believe that just because you have a generic RFQ / e-Auction solution that can be used to collect freight quotes that you don’t need a custom freight tendering solution, but nothing could be further from the truth. When it comes to freight, at a minimum you have to consider:

  • five modes: road, rail, ocean, air, and small parcel,
  • multiple cargo types: dry, cold, frozen, and liquid,
  • palletized vs. non-palletized,
  • LTL vs FTL,
  • regular vs flammable vs hazardous, and
  • multiple cost tiers

and that’s quite a few data elements that most RFX tools are not setup to collect out of the box. Furthermore, even if the solution is highly configurable and can allow the creation of bid collection matrices that will collect all of the associated bid and lane data, chances are the platform isn’t setup with the rules to enforce the right bidding, the analytics for the right comparison, or enough sophistication in auto award scenario creation even for a baseline low-cost cherrypick scenario.

Furthermore, when you are shipping globally, you need to

  • understand approximate current lane costs / benchmarks,
  • know who is shipping in a region AND their typical capacity, and
  • be able to quickly access current rate agreements or spot-market bid rates

and your typical out-of-the-box RFX tool for indirect or direct sourcing is not going to do that.

However, a tool built by freight sourcing / logistics professionals for freight sourcing is going to do that and more. That’s what TenderEasy is. Founded almost two decades ago in 2004 to help organizations optimize their freight sourcing, they launched the first version of their fully SaaS-enabled freight tendering solution eleven years ago. Their freight tendering solution was among the first solutions that were custom built to help global companies manage their global fright RFQs across air, land, and sea. Since then, they have added spot quote capability, rate (contract) management, an integration API for custom data push to any TMS, ERP, or S2P system you want to transfer the awards to, out-of-the-box integrations with multiple TMS systems (e.g., Alpega, SAP4Hana), out-of-the-box APIs with public freight rate benchmark and analytics platforms (including Xeneta, Freightos, Upply, and Alpega FX), out-of-the-box integrations with container management platforms (including BuyCo), and out-of-the-box integrations with freight/lane-based emission calculators (including EcoTransIT World).

There are three main parts to the TenderEasy platform:

  • Administration
  • Buyer Interface
  • Supplier Interface

Administration

There are six main parts to the administration interface:

  • User Management: where you can manage your internal users with easy profile settings controlling visibility, accessibility and inter-activity with bidders
  • Supplier Management: where you can import, add and manage suppliers, including the ability to #tag supplier groups, and this management includes the management of (supplier) modes, cargo types, pallet capability, whether or not they do LTL or FTL, any certifications for flammable and hazardous materials, countries they can operate in, etc.
  • Currency Rates: where you can define, on project level, the currencies you support and the rates you wish to use for base conversion
  • Keyword Lists: where you can define as many arbitrary value lists as you want for bid and data collection during a tender (to make sure responses are with the right naming convention for rule creation and future data integration with your TMS, ERP, and/or S2P system)
  • Integrations: where you manage your export connectivity to whatever systems you want to push data to
  • Partners: where you select the data partners you wish to connect with for data enrichment of your analysis data (freight benchmarks, emissions, service KPIs, etc.). With some Partners you can “pay-as-you-go” via TenderEasy. Other partners will require a subscription and your partner license key credentials to access the data.

Supplier Interface

The supplier interface has four main parts and is designed to be as simple as possible for the suppliers:

  • Tender List which lists the tenders they are currently invited to and the status of those tenders
  • Tender Details where they enter their bids by lane
  • Import/Export where they can export the tender to Excel, fill it out in their favourite tool, and then import it
  • On-line bidding where Suppliers can fine-tune bids on-the-fly

Buyer Interface

There are four main parts to the buyer interface:

  • RFQ/Tendering which is where the multi-round magic happens (which we will dive into shortly)
  • Spot Quote Request where a buyer can empower their organization to execute quick spot requests for a single load in a transparent and compliant way
  • Rate Management where the buyer can store and manage their contracted rates in an auditable and sustainable way
  • Rate Search where the buyer’s stakeholders can search for contracted services and rates (that are stored in the system) in real-time, including historical rate records

The core is the tendering component where the buyers spend most of their time.

A tender can be created from an existing tender (as a copy) or from scratch. Creating a tender from scratch is quite easy:

  1. name it
  2. select a currency group and a default currency
  3. define the transport mode
  4. define the end time of the current round (with start [auto-]populated when you publish it)
  5. define the range for which supplier bids must be valid
  6. optionally upload any attachments with requirements
  7. optionally provide a detailed event description
  8. optionally define any terms and conditions (separate from the file uploads)
  9. create the bid / rate matrix by either
    • copying a matrix from a previous event
    • instantiating one from a best-practice template defined on system implementation
  10. add the suppliers (and you can easily upload their details via Excel)
  11. select/customize notifications
  12. publish

That’s it. Complex freight events can be instantiated in a matter of minutes. Why?

  • pre-defined best practise rate cards can be utilized, or you can copy a previous RFQ
  • pre-defined currency groups make currency definition one-click
  • the platform can store attachments in the platform, creating libraries for your standard specialized requirements, Ts&Cs, etc.
  • the buying organization can define matrices for every mode – region – good type / transport requirement they have on system implementation, including all of the validations and rules that are 100% compatible with Excel, with all of the appropriate lanes
  • the system will automatically select the suppliers associated with the mode and region with the necessary characteristics (hazardous certification, etc.) and all the buyer has to do is check the suppliers it wants to invite
  • there are ready-made automatic notifications in the system for every event you want to action

A key point to note is that TenderEasy supports full Excel capability within the platform, and easy wizard base definition of column and cell settings and properties. For example, each column can have a type, an associated validation rule, display/coloring properties, a visibility definition (buyer or supplier, read or write), etc. and each cell can have a more specific validation based

Another key point is that it’s stupid simple to import benchmark data into (private) columns in the matrix that you can use to evaluate bids (and, automatically, flag any that are too high or too low, possibly with colour coding in the column, or a separate column if you are using colour coding to show the percentage change in a bid from round to round. You simply select “import benchmark” and select the benchmark provider you want to use (which is typically the one you have a subscription with) and the quotes get sucked in automagically.

Bid analysis is also very easy. It’s simple to define a scenario that auto-selects the appropriate carrier and bid for each lane. There’s an integrated scenario builder where you simply define the grouping columns, the supplier group to consider, the tariffs to use, the (optional) adjustments to apply (where you can favour incumbents or innovative carriers and disfavour new carriers or eco-unfriendly carriers or low reliability carriers using a financial cost percentage adjustment or fixed cost modifier), and whether or not you want to use breakpoint optimization (where it will select the FTL amount when that is cheaper than the LTL amount at the current weight / space utilization).

Supplier feedback can also be customized and color coded in a multi-round tender to tell a supplier approximately how far off they are from being selected (e.g. < 10%, 10% to 20%, > 20%). You can generate feedback on any numerical value in the rate card, including service data, emissions, quality etc.

You can create as many (partial) bid analysis as you want, including baselines, using whatever rules you want, and then visualize them graphically in the dashboard, where you can also define thresholds to alert you if any carrier would get too little or too much business. You can also compare them side by side to help you identify the awards you want for each lane. When you figure out what you want, you can incrementally build (by combining partial awards from existing scenarios) the award scenario you want, push it into your external system for contracting, and lock it down as a set of rates to be included in the rate management part of the platform.

If you do need help (which won’t happen often as the platform is very usable, it is usually quite obvious what to do next, and all of the up-front setup on implementation jump-starts pretty much everything you will ever do), there is extensive help built into the platform, training material and self-testing, and a webinar archive.

There is pretty much everything you need out of the box to get going, with the only obvious exceptions being

  • combinatorial carrier optimization (once you have selected the preferred carriers) to balance cost, emissions, and/or delivery time (which they are currently investigating)
  • market-based alerts if a supplier you select is not likely to have current capacity (based on the spot market), if prices are going up quickly (and you should make lock in an award sooner rather than later), or if KPIs are dropping for current carriers (which are currently under investigation, with KPIs and improved benchmarks, which are needed at the foundation level, being investigated with Partners on how to best share this information pro-actively)

In other words, if you do global freight, and you don’t have a custom solution for freight RFQs and spot buys, you should not only have one but include TenderEasy on your shortlist. Once you see the capability a platform like TenderEasy can provide and how much more efficient and effective it can make your freight buyers, you’ll wonder how you ever lived without it. (Like any good e-Sourcing tool, it will quickly pay for itself many times over.)