Category Archives: Technology

BravoSolution: Making Spend Analysis More Useful to the Average Supply Management Professional, Part I

For reasons I don’t quite understand, spend analysis is not used enough in the average organization. More often than not, even basic spend reporting — that would tell an organization what is being spent, on what, with whom, and when — is not run. Even though most organizations can probably name seven of their top ten suppliers, categories, and organizational units by spend if you just ask them, chances are that not only will they be surprised by the other three, but they won’t quite comprehend the magnitude of the spend. And until an organization understands the magnitude of their lack of comprehension, getting spend analysis adoption in the organization is likely to be a problem.

However, that is only the first obstacle. Once a solution is adopted, chances are it will only be used by a small number of senior analysts. Just like decision optimization, there seems to be a common misconception that it is “hard”, requires “math skills”, or “takes too much time” — as a result, many users are intimidated or can’t find the time to try it. The “hard” and “math skills” misconceptions can usually be overcome with a demo or two on a properly implemented, easy to use, tool, but unless it’s easy to import data and generate reports, the “takes too much time” stigma may stay.

But if you get past the stigmas, if all it does is generate a few canned reports, you hit the real problem. It’s usefulness quickly comes to an end. Once you’ve attacked the Top N suppliers, Top N categories, and Top N spenders in the organization and reigned in costs and performance, unless there is a way to identify the next N opportunities, the usefulness of the tool has come to an end. That’s why the traditional spend analysis value curve flattens out within a year and spend analysis never reaches wide adoption.

But this doesn’t have to be the case. Not only can spend analysis reach wide adoption throughout the supply chain organization, but it can continue to deliver value year over year if it is properly integrated into daily supply chain activities. And the key to making this happen in your average Supply Management organization is integrating spend analysis not only into the (e)Sourcing process but the e(S)ourcing suite. From eBidding through Decision Optimization and Contract Management through Supplier Performance Management, Spend Analysis can play a vital role.

In BravoSolution’s Collaborative Sourcing Suite, Spend Analysis is integrated into the Contract Management solution, Compliance (& Spend) Management, and Performance Management and will be integrated into Risk Management in the next version of the solution that is currently under development. In tomorrow’s post, we will discuss the benefits of integrated spend analysis and what is available in BravoSolution’s suite.

Dell’s Guide to Growing in India

In four short years, Dell has risen to become the number one supplier of desktops, laptops, and notebook computers in India, going from sales of only 79,244 in 2007 to over 1.1 Million in 2010. This is more than HPs market share of 1 Million and Lenovo’s market share of about 600,000. So what did Dell do to rise to the top, acquiring year-over-year growth of 55% along the way? This recent article in Fortune on “how Dell conquered India” provides some interesting insights.

So how did Dell do this?

  1. They set up a factory in India.
    This cut local delivery time by 50% while improving profitability.
  2. They changed the model.
    While online worked great in North America, exclusive outlets worked much better in India. Once a customer selected a product, it was then delivered to their door (which saved on warehousing costs).
  3. They borrowed from the insurance model.
    Rather than use the established national, regional, and local retail distribution model, they determined that the insurance model fit best with their exclusive outlet / build-to-order strategy and used it instead.
  4. They extended the on-site service model to small businesses and retail customers.
    This gave them an edge over the competition.
  5. They built a core team in India focussed on growth.
    They were sure to recruit the best not only from other Dell international divisions, but from rivals (like HP and IBM) and retailers (Unilever, Whirlpool, and Airtel) who had experience in the India retail market.

In otherwords they:

  1. Established a local presence,
  2. Adapted to the local retail market, and
  3. Handed the reigns over to a team that understands the Indian marketplace.

While it will take a lot of work to brew up this recipe for success, it’s not a hard one to understand. To do well in a region, whether you are buying or selling, you need to go local, adapt, and work with the right partners who understand the region.

Oh No! App Mania Has Hit The Supply Chain!

Prepare to be nickel-and-dimed one feature at a time. It’s coming.

Unlike the author of a recent post in the SCMR blogs, I am not pleasantly surprised by the amount of effort being put into smartphone app development right now. First of all, there’s only so much you can do on a smartphone screen. For the vast majority of analytical supply management applications, smartphones just don’t make sense. Secondly, unless you have constant access to free wifi, you’re not going to want to download megabytes of data and push your mobility bill through the roof. Thirdly, the real value in supply management systems materializes when data flows from one to the next — and all of the relevant data is available. Data stuck in a standalone app that doesn’t do much more than display that data isn’t very useful.

Plus, do you really need 100+ WMS apps? Really? No! There aren’t 100 WMS applications, and if you think there are, then what you are really buying is 100 different instances of a WMS workflow engine custom tailored to a specific situation. You’re paying for 90% of the same functionality 100 times over. I guess it’s good for the vendor if they can create 100 apps by only doing the work required to create 11 and charging you for each and every app, but it’s not good for you.

HighJump, one company that plans to release up to 100 apps a year, may try to tell you that it’s a great idea because it is a way to get new functionality in your system without waiting for a new release, but you don’t need apps for that. If you’re using a true multi-tenant SaaS application, then you get every update the vendor makes as soon as its available, and you get it all for one maintenance fee.

In other words, if you want to needlessly empty the corporate bank account, there’s an app for that.

Lavante – The Newest Contestent in the SIM Arena

As mentioned in yesterday’s post, Lavante is the latest provider of Supplier Information Management solutions in the Supply Management space (which includes Aravo, AECSoft (just acquired by SciQuest), CVM Solutions, Hiperos, and Rollstream, which have all been covered on SI). And while it arrived late, it comes ready for battle.

Since you all know by now what a good SIM solution should do (and if you don’t, reread the classic vendor SIM posts linked above), I’m not going to waste any time describing what it should do or spend a lot of time on the details. Instead, I’m going to mention all the standard stuff that the platform does and then focus on what makes Lavante different from the competition and why it should be included in your SIM vendor short list.

Like its competitors, Lavante allows you to collect detailed information on all of your suppliers, including detailed information on each contact. By default, this detailed information includes tax information, headquarters information remit-to information, business structure information, ERP (System) information, ownership information, certifications, services/materials information, risk management information, insurance information, bank information, and user defined summary information. A supplier has the option of entering all of the information on-line or downloading a template. Lavante can import your current supplier master (in a standard format such as XML) or provide a buyer with a (CSV) template to enter information for new suppliers. The information collected can be customized for every supplier, notifications on change can be configured at the element level, and approvals can be required before critical information is changed.

In addition to the standard browser interface, suppliers can also respond to e-mails or faxes (and even call a rep who will enter the information for them if they are still technologically illiterate). The supplier interface allows a supplier to log-in and manage 100% of their information, which minimizes buyer effort if suppliers take an active role in buyer interaction.

At any time, a buyer can get a list of all suppliers who have not provided requested information as well as suppliers who have registered and completed their profile. The buyer can also see which communication attempts have been tried or whether or not the supplier has not provided an e-mail or fax number.

The distinguishing characteristics of the platform are the following:

  • it was built on the cloud
    it was designed to be 100% multi-tenant and cloud compliant from day one
  • extremely configurable
    many early platforms only had the ability to send an alert when a change was made; later ones allowed for alerts to be configured to change type; Lavante’s platform allows each individual data element to be marked as notify/don’t notify on change
  • automatic validation of Tax ID
    Lavante does a real-time check of every TIN that is entered and a supplier is not allowed to register without a valid TIN that matches their name
  • multi-mode outreach
    whereas most providers assume browser or e-mail data provision, Lavante also accepts faxes and integrates OCR and provides supplier outreach services that will get suppliers onboard by e-mail, fax, or phone if necessary
  • a supplier portal that equals the buyer portal
    suppliers were an afterthought in many first generation SIM platforms and a supplier had to log in to a separate instance of the portal for each buying organization they dealt with; in Lavante’s platform, a supplier can manage their data for all buyers who use Lavante through a single log-in — information needs to only be entered once and common information is segregated from buyer specific information
  • very large supplier database
    Lavante, which started as a recovery audit vendor, has been around for 10 years and has amassed a database of over 2 Million vendors that its client do business with — as a result, it has current information on over 2 Million vendors in its database

Plus, Lavante can use this platform to streamline its recovery audits and save an organization up to 10X more than a recovery audit without access to detailed information would save. So when you add the initial savings that will come from 1099 reporting compliance with reduced SIM (when 20% to 40% of supply base information needs to change annually) resource requirements and more successful cost recovery audits, the solution pays for itself almost immediately. Plus, since it’s true multi-tenant cloud, Lavante can turn your organization on in less than an hour.

Trade Extensions Keeps Extending the Platform

The fact-sheet based RFX module is not the only improvement that Trade Extensions has made since it last traded up its UI and improved its optimization and reporting capabilities. Since Trade Extensions was last covered on Sourcing Innovation, it has made a number of significant improvements to its platform, including:

  • RFI-driven supplier data requests
  • multiple dimension ranking in e-Negotiation
  • integration with Google Earth
  • more cost support and new incumbent rules in optimization
  • conversion of all reports to OLAP reports and implementation of a new n-way comparison report

RFI-driven supplier data requests

In the Trade Extensions platform, supplier data collection can be configured to be dependent on supplier responses. If a supplier indicates that they don’t have a certain capability (or don’t wish to bid on particular item or category), then they don’t see the associated fact sheets (which they can download as an Excel Spreadsheet if they like). Also, if they indicate they do perform a certain function, the RFI can be configured to request additional information.

Multiple dimension ranking in e-Negotiation

Most auction platforms rank by bid, volume, or another relevant factor to the buyer. The Trade Extensions platform can be configured to rank (and report on) bids on multiple dimensions, such as supplier and location or supplier and quality. This makes it easy to quickly see how a bid stacks up against multiple relevant factors.

Integration with Google Earth

Often times when I hear about integration with Google Maps or Earth I say “that’s nice” because it usually doesn’t add much value. But the TE implementation actually makes Google Earth useful. Not only can you quickly see the lanes, relative volumes [by line thickness], and carrier distribution [by line colour] at different scales, but, with a click, you can pop up a box that provides the full details of what is flowing down the lane (products, volume, from, to, frequency, total weight, etc.). A warehouse manager can quickly zoom into her facilities and see what is coming and when. It can take a scenario with thousands of allocations and make the information quickly comprehensible.

More cost support and new incumbent rules in optimization

Relative and absolute fixed, on-, cost support has been greatly improved in the application. A buyer can define a cost on supplier selection, on a certain volume threshold, on a specified property, etc. This allows for incredibly detailed and accurate costing formulas to be created. Trade Extensions has also added four new incumbent rules to the optimization solution, two new allocation and two new keepers. The user can now choose to allocate an incumbent volume at least equal to what they have now, or to the current percentage of volume, or to incumbent proportions and allow redistribution between incumbents, or between winners in incumbent proportions.

Conversion of all reports to OLAP reports and implementation of a new n-way comparison report

When Trade Extensions last traded up their UI, they had just implemented their new OLAP reporting feature and were in the process of converting their existing reports. Now that the OLAP reporting feature has been fully implemented, all of the reports have been converted and the new report creation facility is complete, allowing users to define their own OLAP reports on the dimensions of their choosing. Also, the user can now create arbitrary n-way comparison reports and “glue” reports together from existing report definitions.

And Trade Extensions has no intention of slowing down. In addition to a commitment improve SIM/SPM/SRM, Trade Extensions is also working on:

  • auctions – simplifying them for low-end spot buys
  • e-Negotiation – instant messaging, better charting, etc.
  • enterprise features – search across projects, track cross-project metrics, integrated BI
  • roles – admin, project manager, buyer, viewer, etc.
  • new project types – to simplify auction setup
  • on-demand training – the wiki is under constant development and walkthrough videos will soon be available

It should be an exciting year for this European company that has just started to gain traction in North America (where they opened a new office last year).