Category Archives: Technology

Trade Extensions Trades Up to a Fact Sheet User Interface

Trade Extensions is another company that has refused to sit still during the downturn. Even though it did a complete overhaul of its UI in late 2009 (when it traded up its UI and e-Negotiation Management Capabilities), it realized that was just the first step of many that would be required to make its application more useful and more useable across the Supply Management Organization. Trade Extensions has been working hard to break out of the “complex transportation optimization” niche that they started in and has developed a fully functional Sourcing and Supply Optimization solution because they see the value that an organization can receive when optimization-based sourcing events are undertaken across the board.

While Trade Extensions started as a niche Strategic Sourcing Decision Optimization platform in the early naughts, it has expanded into a full suite solution over the years and now includes one of the most powerful RFX modules on the market, real-time optimization-powered reverse auctions, contract management, and OLAP spend analysis (which rivals many of the other suite spend analysis solutions on the market and a few of the pure-play solutions as well). And while they don’t yet have much of a SIM/SRM/SPM solution, they recognize that as a weak point and it is one of their top priorities for the coming year.

In addition, while they don’t yet have category RFX solutions or a centralized data management facility (or “Business Centre”), they are planning to introduce new project types to simplify RFX and Auction setup and their new support for fact-sheet based RFX and reverse auctions makes data management significantly simpler and takes them further down the data management path than many of their e-Sourcing Suite provider brethren who have been standing still for the last few years.

Internally, Trade Extensions uses OLAP cubes to store its data. Thus, the user can provide data in d-dimensional fact sheets, which include 2-dimensional spreadsheets and 3-dimensional workbooks, that define data in familiar matrix notion. This is a very powerful method of data input. A user can define a fact at any level that makes sense. If the cost of interest is a single freight cost from a ship from to a ship to, the user can provide costs in a 2*2 matrix of ship from locations and ship to locations. Users can also define costs at the region or country level if they like, and if a user defines a fact sheet that relates lanes to regions, the user only needs to specify costs at the region level. Moreover, if the user so desires, once costs are specified at the region level, they can be overridden at the ship from – ship to level. The system will do this automatically if the fact sheets are appropriately defined and included in the project as it knows d+1-dimensional costs always override d-dimensional costs. In other words, if you define continents as collections of territories, territories as collections of regions, and regions as collections of lanes, the system knows that territory data overrides continent data and region data overrides territory data, if defined. Otherwise, default values from a higher level in the hierarchy are to be used if no suitable cost exists at a lower level of the hierarchy. This is important as this allows a user to only enter detailed cost data where it is required (and where it differs from default pricing for the category).

As a result, data collection in Trade Extensions’ e-Sourcing platform is quite easy. A buyer only has to define what the organization wants to collect, and a supplier only has to bid on what it can provide. Furthermore, a supplier only has to bid to a level of detail that makes sense. Plus, all bids can be formula based. So, if a supplier supplies a product in different sizes, and the price is dependent on weight or volume, it can define a formula once and re-use it on each size. Furthermore, a user can re-use any and all fact sheets from the event in other events, minimizing data collection and data entry. It’s definitely another step along the path to ultimate usability.

Don’t Forget The Most Important Principle of Performance Measurement

SIG just ran a great article on the “Three Guiding Principles of Performance Measurement” that hit upon a key point that is regularly and repeatedly overlooked. Simply put,

Your data is good enough. Really, it is.

As the author says, your data will always be murky. No matter how many times you clean it, massage it, enrich it, transform it, and polish it up, there will always be errors. There will always be omissions. There will always be inaccuracies.

But that’s okay. Remember the 80/20 rule, which is just as appropriate here as it is everywhere else. (In fact, more appropriate.) The law of the vital few states that roughly 80% of the effects come from 20% of the causes. This says that only 20% of your data is vital anyway. And since it is expected that at least 80% of that data will be clean, it’s going to be quite straight forward to spot important trends. (That go just beyond who your top suppliers are, but which items are ordered the most. What types of purchases are regularly bought off contract. What products are really selling best. Etc.)

And if the decision being made is critical or risky, the data will always come up short. There will always be some flaw, some missing piece of information. Because if there wasn’t, the proverbial pointy-haired boss could be an effective manager. Executive decisions will always require a bit of a risk, but they will be much better when there are data to base them on then when there aren’t. So measure, manage better, and manage some more.

Does Verizon Have Its Head in the Clouds?

As we all know, Verizon recently acquired the right to offer iPhones on its network, a status symbol that mobile providers the world over have been vying for as they wait for the initial exclusivity agreements to expire. As the first provider given permission by the world’s fifth largest mobile phone manufacturer (Globe and Mail) to challenge AT&T in the United States, it is probably a little bit smug right now as it waits for its February 10th launch date. But is that any reason to leave its head in the clouds?

Needless to say I was a little shocked to hear that Verizon is paying $1.4 Billion for Terremark Worldwide, a provider of cloud computing services. While it’s true that Terremark runs 13 global data centres, and data centres are valuable, 13 data centres are not $1.4 Billion valuable. Trust me. I can build you ten modular and scalable Green Data Centers for 1/10th of that with a lot more computing power than you might think you’d get for that price by going with high-density low-power 64-core servers from IBM or SUN which, by the way, cost less than 100K each, even maxed out on memory. You can easily fit 8 of those on a 20u rack. That’s the equivalent of 256 dual core servers on a single rack. Fill 8 racks with servers and 4 racks with SANs (Storage Area Networks) and you have a data centre — that fits in a small room — with the equivalent of 2,000 machines of processing power, that only costs you about 10 Million. I know Terremark also offers services and has a market cap of about 945M, but a 35% premium for something you can build yourself in a few months? I just don’t get it!

BravoSolution’s Business Centre Category Sourcing Solution Takes e-Sourcing to a New Level

Yesterday’s post discussed how BravoSolution has figured out that a real key to e-Sourcing success is a platform that is usable and efficient. It’s one thing to collect bids through a browser (which can be done by any junior high student these days, literally, especially when you consider 14-year olds and 11-year olds are building top downloaded apps in the app store), but another to actually make such an application usable for a category where thousands of bids need to be collected and compared from dozens of suppliers along with tens of thousands of pieces of non-price information.

In other words, they have hit upon the fact that key to e-Sourcing success is the delivery of a platform with the ability to:

  1. define an event of a known (category) type with the click of a mouse,
  2. dynamically determine appropriate and minimal data requirements,
  3. but still handle as much data as can be thrown at it, while the platform tools
  4. make use of and manage existing data.

This is what BravoSolution has done out-of-the-box for nine different categories, what they are doing for more categories as you read this, and what a buying organization can do for any and all categories of their choosing (with a little elbow grease up front). A buyer can view a category specific business centre for Chemicals, Transportation, Packaging, Industrial MRO, Facilities Service, Direct Materials, Contingent Labor, Travel, and Fleet Management which not only lets the buyer see the status of all of her past, present, and upcoming events, but quickly set up, manage, and re-run an event of the given type with a few mouse clicks.

But, more importantly, it is setup to allow a buyer to define and capture all of the relevant pieces of data about a complex category for consideration and analysis with minimal effort. As an example, we’ll consider a rigid packaging RFP through the Packaging Business Centre. In this type of RFX, a buyer will often be looking for plastic bottles and containers. The pre-defined RFX format can capture plant locations; detailed plant information; up-front costs by resin, machining, decoration, and colorant; pricing by group, where groups can be defined by volume, shape, finish, height, overflow capacity, and/or resin; freight; bundle information; plant and machine capacity limits; and additional RFI and RFP details as defined by the buyer.

But more importantly, if all of this information is known for a supplier from a previous event, it can be configured to automatically attach the existing information for a supplier so that all a supplier has to do is define new capabilities, remove old capabilities, and define new pricing. Furthermore, since all of the information is accessible through the business centre, before the buyer even selects the supplier, she can view the supplier information in the business centre to determine whether or not the supplier is even appropriate to invite. (If capacities are too low or if the supplier has not been awarded business in the past three events, it might not even be worth inviting the supplier. On the other hand, if a new supplier has been added to the system and meets the capacity and capability constraints, which can easily be determined by either querying the data or doing a search for suppliers that meet a minimum requirement, then it might be a good idea to invite the new supplier this time around.)

The information that can be collected and maintained about suppliers and capabilities is incredibly detailed. Plant definitions can be multiple screens long and a buying organization can capture location, hours per shift, shifts per day, operating days per year, labour contract information, number of employees, yearly changeover, key contact information, inspection and certification info, and other fields meaningful to the buying organization. Machine capabilities can be captured for each plant and this information can include machine types, models, tonnage, average age of machines, and cost per fully loaded machine hour. Other up front costs that can be captured included detail cost information on resins (for PP, HDPE, PES, PET, etc.) by manufacturer and SKU, bottle decoration (which have one-time set-up costs, waste percentages that affect costs, dec. cost per 1,000, etc.), and colorant costs. Pricing can then be defined for each group and freight can be defined for each lane by truckload (and less than truckload if so desired). Bundles can be defined along with minimum volume rules and discount information. Capacities can be defined by plant and machine type and can include auto-increments for each machine a supplier indicates they are willing to add if such supplier is awarded sufficient business. And no time is required to set all of these templates up, because they are already there.

And once everything is captured, all of the information can be fed into (collaborative) sourcing optimization and rules (and filters) can be defined on any price or non-price factor. All of the standard price adjustment (favor/disfavor, by bid attribute), count (supplier, bid attribute), award allocation (conditional, guaranteed, relationship, revenue, etc.), exclusion, limit, and force rules are available. These rules can be restricted by any or all suppliers and bid types and allow a user to do a very powerful analysis. And once the award has been made, the details can be pushed into the contract centre where a contract can be quickly authored using an existing template, or existing clauses. BravoSolution’s category solution RFXs are very well thought out and much better than many of the first generation e-Sourcing tools still on the market (which were a great start, but leave much to be desired once a Supply Management organization is ready for next generation sourcing).

BravoSolution Masters High Definition Sourcing with the Business Centre

Yesterday’s post introduced us to BravoSolution’s Next Generation Sourcing paradigm that they call High Definition Sourcing. Built on their Collaborative Sourcing framework, BravoSolution’s High Definition Sourcing paradigm realizes that for collaborative sourcing to be truly effective, the following additional requirements must be met:

  • all affected parties have access to the tool and can contribute relevant data,
  • data entry must be as simple as possible,
  • data that already exists somewhere else on the platform need not be reentered at any time, and
  • selected data must be capable of being pushed out with a single click to any tool on the platform that requires it.

In other words, BravoSolution has realized that the ultimate key to long-term e-Sourcing success on an e-Sourcing platform is usability — and usability is more than simply letting people enter data in an Excel spreadsheet and upload it through a browser. It sounds simple, but the sad truth is that it takes an average enterprise software company (at least) ten years to realize what usability really means (and some never figure it out). And even though the more progressive enterprise software companies realize after about five years that usability is important, it still usually takes them a few tries to get it right (if they even try).

The big problems with first generation suites are:

  • the monumental effort required to define an event for a high-value or complex category where a considerable amount of price and non-price data elements are required,
  • the subsequent monumental effort to collect all the data, and
  • the monumental effort to do it all again when the category has to be re-sourced.

If the tool does not allow the buyer to create an event template (and many of the low-end first generation tools still don’t have this ability), then the buyer pretty much has to start from scratch next year. This is one of the biggest limiting factors of wide-spread tool adoption. If it takes weeks (or months) to do an event, then the Supply Management organization can only do a few dozen each year.

The key to e-Sourcing success is a platform with the ability to:

  1. define an event of a known (category) type with the click of a mouse,
  2. dynamically determine minimal data requirements (and allow a supplier to define as little or as much data as they want, or need, to),
  3. but still handle as much data as can be thrown at it, while the platform tools
  4. make use of and manage existing data.

While most of the progressive e-Sourcing platform providers recognize the first two requirements, and have some capabilities in that regards (usually by way of templates and conditional RFIs), only a handful can handle massive amounts of data well. Most providers haven’t figured out the right way to use and manage existing data — for which there are a couple of valid approaches.

Supplier masters or MDM (Master Data Management) is not enough because, where events are concerned, there is the need to collect and manage multiple rate sheets, term sheets, and bid sheets and to maintain these over time. A supplier will have standard quotes by region or mile, bid sheets for certain high-volume lanes, and then specific quotes for a buyer if a certain volume is agreed to on lanes the supplier is best capable of servicing. All of these rates are valid depending on the situation — and all should be maintained. Furthermore, each set of bids should be usable in any and all events (and scenarios) where they are valid. And in a well-designed tool, it should be trivial to attach the bid sheet to the event (or scenario in the event). And I mean attach, not import. Most tools import, which creates another copy of the data, which is not automatically updated if the supplier creates a new rate sheet that has to be maintained separately. That’s okay if the buyer wants to create a “what-if” scenario and manually override bids, but if the buyer just wants to use standard rates, it’s not acceptable.

In a well designed tool, a buyer will be able to create and run an event simply by selecting an event category (which will load the workflow that has already been defined), defining a few dates, inviting suppliers (from a known list), and populating the event by selecting all of the appropriate data already in the system (current/standard quotes, KPIs, volumes, etc.). Creation of a simple or low-value category, when everything about the buyer’s procurement and shipping preferences are already known, should be a single click, just like checking out on Amazon.com. And the most complex of categories should only take a few hours to configure. No one has days (or weeks!) to create an event any more, and with the workflows known, standard questionnaires in the system, and standard pricing and last year’s responses already known, all a buyer should have to do to create the event is define any changes (in volume, delivery location, sustainability, etc.) from the last event and all a supplier (who has bid before) should have to do is define any changes since last year. The only effort required should be in the analysis, and even that should be partially automated (as the standard price and change reports should be run automatically as well as the baseline, basic rules, last-year’s allocation, and comparison optimization scenarios). A buyer shouldn’t have to work, only think, because that’s what the organization is paying its top Supply Management professionals for.

BravoSolution has figured this out and created their Business Centre where a user can not only log in to their management console (complete with dashboard) to see what they are doing, what needs to be done, what has been done, etc. but can also manage all of the events and data in the system (and, if they are a power user administrator, customize the workflows as appropriate). When a user wants to create an event, they select a category type with a click. They can then add suppliers with a few more clicks, attach last year’s data or standard bid sheets with a few additional clicks, import supplier performance data with another click, and, if enough data is already in the system, run starting reports and baseline scenarios before a single supplier responds. It’s a simple concept (that many first generation e-Sourcing platform providers continue to overlook) with a powerful implementation. But what is even more impressive is how it’s easily integrated with the custom RFX category workflows and how much value this gives a buyer. Tomorrow we’ll discuss one of BravoSolution’s pre-packaged category RFXs, that they have created by working with leading Supply Management organizations over the years, and discuss how easy it is, with the right platform at the organization’s disposal, to take Sourcing to the next level.