Category Archives: Technology

Ahoya, Akoya

When I was being blown away in the windy city, I had a chance to sit down with Brett Holland, Co-Founder and SVP of Akoya (acquired by i-Cubed). It was an illuminating conversation, and one that highlighted why companies like Akoya and Apriori are taking spend management to a whole new level, especially in manufacturing (even though they are both attacking problems at different ends of the spectrum using two different approaches). Not wanting to spoil Brett’s upcoming posts over on Spend Matters, I decided to hold off on a post of my own.

In his “Getting Ahead of the Product Cost Management Curve”* post on Spend Matters [WayBackMachine], Brett points out that procurement and sourcing play a very critical role in understanding the product cost implications associated with the sourcing and purchasing of engineered components and that procurement and supply management can and should lead conversations regarding product costs since today’s spend management 2.0 solutions allow procurement and sourcing professionals to arm themselves with much more information about what drives costs and where there are opportunities to save money in direct materials and contract manufactured component categories. Furthermore, most of the current approaches in the market are highly complementary to each other and manufacturing companies should be working with all types of product cost management techniques to maximize their position in an increasingly competitive environment. And this last point is key. One solution is great – a small basket of complementary solutions that attack cost from all the angles is either better.

In his “Taking Control of Cost Management for Engineered Direct Materials”* post on Spend Matters, Brett points out that in the past, there have not been very good ways to systematically find cost inefficiencies and take action on them within engineered direct materials. Companies have developed cross functional teams, conducted six sigma projects, brought in consultants and domain experts, but none of them have had the direct access to the critical data and the analytical tools to dissect it so they could have a clear picture on the factors that drive cost inefficiencies in the direct materials across the organization.

However, today, analytical solutions are available for product cost management that can take the data that is within your control – financial, purchasing, supplier, and manufacturing – analyze it, and present you with a highly accurate list of parts that have potential cost savings. Additionally, these analytical solutions provide reasons why these savings opportunities exist and potential actions to take to capture them. The analytical solutions can then be complimented by activity-based cost models, risk management solutions, supplier relationship management solutions, and e-Procurement packages that help execute on the actions.

Furthermore, Today’s product cost management analytics work by drawing out the elemental factors within the part and its manufacturing requirements that drive the cost. They then analyze this data to determine commonality and comparability, and can predict target costs. They augment (and sometimes correct) this predicted cost with data that determines the factors that may contribute to cost inefficiencies (you can think of it as the evidence that makes the case). From this combination of approaches, these analytical solutions can accurately assess which parts are good renegotiation candidates, which parts are good resourcing candidates, which suppliers are best at each part, and other actionable findings.

This last point is key – and why you should use a basket of complementary solutions, starting with Akoya and Apriori. Akoya helps you figure out where you are likely overspending and why, and Apriori helps you figure out by how much and what you do about it, with its process-based mechanistic cost models. In other words, given the forest, Akoya helps you find the trees that need to be cut down and Apriori is the saw you use to tackle the trees.

For another perspective on Akoya, refer back to Jason’s “Spend Management Goes Upstream: Part 3 – The Akoya Philosophy” post.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Supplier Information Management with Aravo

Aravo is a provider of an on-demand Supplier Information Management solution based in San Francisco with the goal of enabling business to rapidly onramp all of their suppliers and corresponding information. During my last trip to San Francisco, I was fortunate enough to be able to sit down with them and talk about what makes their solution unique.

Aravo focuses on what they call the Supplier Information Lifecycle that starts with the initial engagement, proceeds through supplier selection, and continues through supplier relationship management. Aravo contends that most systems do a poor job of supplier information management and that good, centralized, supplier information management is essential
to process efficiency, error prevention, rapid supplier on-boarding, compliance, and good, actionable decision support. For the most part, I have to agree.

I’m a big believer in Supplier Relationship Management, since I believe this is the foundation for innovation, performance, and risk management. Furthermore, when you get right down to it, you can’t have good SRM if you don’t know your supplier – and that involves knowing who they are, where they are, what they do, who to contact when things go wrong, what their financials are, etc., etc., etc. To do this effectively requires good centralized data management. Furthermore, without good, centralized data management, each individual in your organization who requires such data will have to spend time searching for it when she needs it, and updating it in her own applications when she finds it is out of date, leading to a lot of lost productivity over the course of a year when you add up how much time people spend just searching for and updating supplier information.

This is where Aravo’s solution comes in. They have a suite of tools that supports a slew of data formats and a suite of tools that supports a slew of common ERP, eSourcing, and eProcurement applications. Furthermore, their J2EE-based web-services stack makes it easy for them to integrate many different systems that use many different data formats. This allows them to do true integration of all of your supplier data – and do it across your enterprise. They can suck it in from each and every system you use, and when it is updated, push it back. Furthermore, not only can everyone in your organization use the same supplier information system, but each individual can choose to retrieve just the data that they need when they need it.

Aravo also has a few other advantages compared to other supplier enablement solutions. Recognizing that every supplier has different levels of e-competency and that every buyer has differing levels of supplier information needs, Aravo has invested time in developing multiple supplier views, each with different levels of detail. Furthermore, recognizing that some buyers might prefer to have third parties manage their supplier on-boarding and data maintenance issues, the system also permits definition of third parties with different levels of data management permissions. Finally, they support role-based dashboards that allow each user to keep track of their enablement projects and determine how many suppliers are in the system, how many suppliers have their information up-to-date, and how many more suppliers need to be enabled.

Rapt up in Revenue

When I was in sunny California last, I had a chance to sit down with Rapt (acquired by Microsoft) and talk about their rather unique solutions that revolve around pricing strategy, decision analytics, and price optimization that, when combined, can help a company maximize their revenue opportunities.

Rapt’s sophisticated software platform, that integrates more statistical, analytical, and optimization algorithms than you can shake a stick at, was designed to uncover the many complex supply, demand and price relationships that, when harnessed, predictably improve profit and market share. Unlike simpler modeling tools and platform, Rapt can break down products, or SKUS, into features and analyze the impact of each feature on demand. This is one of the reasons why their solution is becoming popular in high-tech.

Let’s say you have three laptops, the Pinta, the Nina, and the Santa Maria, and each are selling quite well. However, like all electronics today, their life-cylce is limited and you need to design your next generation laptop. Each has a different processor, CPU, hard drive, display, and battery life. How do you determine the best configuration for your new laptop? Rapt’s forecasting engine can integrate your historical sales data with marketplace data, analyze the sales patterns and trends at the feature level, determine which features (CPU, hard drive, etc.) are the most popular, determine how much each feature influences the overall sale, and tell you which combination of features would sell the best in a laptop. You can then use it’s Price Director solution to determine the optimal price-point for your product. This product contains advanced algorithms that work on order, inventory, and market data to extract the elastic and cross-elastic effects among products, their attributes, and consumer demands which it can use to determine the optimal price points for revenue or market-share optimization.

However, one of the most interesting facets of our discussion centered around the fact that the largest uptake in their rather unique solution offering was not in consumer goods industries, but in media, and new media in particular. MSN, Yahoo!, CNET Networks, NBC Universal, The Weather Channel, and MTV Networks, among others, all use Rapt’s solution to determine how to price their advertising, which is defined by high variability in demand, uncertain availability of supply, and the rapid innovation and evolution of medium capabilities. If they can tackle one of the most challenging pricing problems out there, surely they can be helpful in more traditional industries. But then again, many companies in these traditional industries most likely have not yet adopted decision optimization in their award process, should-cost modeling in their product design process, or advanced spend visibility solutions in their strategic sourcing process. All I can say is that … the technology’s finally here, let’s start to use it!

Veni, Vidi, Wiki

In case you missed it, the eSourcing Wiki [WayBackMachine] launched today. Sponsored and launched by Iasta (acquired by Selectica, merged with b-Pack, rebranded Determine, acquired by Corcentric), the goal of the site is to publish information of best practices on topics within supply management. The wiki is devoted to building a knowledge/resource center for both Iasta clients and global purchasing professionals.

In the words of the spend evangelist Jason Busch, Wikis like eSourcingWiki allow readers to actually contribute to a collective body of knowledge and research. Imagine, for example, if a whitepaper on sourcing decision support was not written by a single vendor or analyst firm, but a collective body of the best minds in the market. And think about how that whitepaper could become a living document that was continuously evolving based on reader input and criticism. That’s a Wiki. And that’s the framework that David has created which allows others to come in and modify and contribute content as they see fit (with a few restrictions, at least in some areas of the site).

Although only three mini-wikis are live now, the site is set to explode over the next few months. Not only have Wikis been drafted for each major stage of the strategic e-sourcing process (as the reader will see on the main Wiki Series page), but wiki drafts on a significant number of related topics are already under development. (Look for a wiki on Cost Reduction and Avoidance, inspired by the original weekend series (I, II, and III) on e-Sourcing Forum [WayBackMachine] last summer, next month.) Iasta’s goal is to pump them out as fast as the editor-in-chief can get to them (and once their User Conference is over in May, I’m sure a few more will hit the wire in rapid succession).

Finally, you can read the full launch announcements over on Spend Matters and eSourcing Forum.

Pros To Know (in the Supply and Demand Chain)

Supply & Demand Chain Executive recently published their annual Pros to Know for 2007, honoring supply chain leaders driving strategic transformation in the industry. In addition to Jason Busch, founder of Azul Partners and blogger extraordinaire of SpendMatters, whom I voted for in A Public Nomination, I’m happy to report that the two other bloggers I nominated were also named Pros to Know: Dave Stephens, founder of Coupa and author of Procurement Central [WayBackMachine], and David Bush, co-founder of Iasta and editor of eSourcing Forum [WayBackMachine]. In addition, two other prominent bloggers in the sourcing and procurement space also made the cut: Tim Minahan, marketing guru of Procuri (acquired by Ariba, acquired by SAP), and Charles Dominick, founder of Next Level Purchasing (now the Certitrek NLPA) and author of the Purchasing Certification Blog (now the Certitrek NLPA blog).

Furthermore, Supply & Demand Chain Executive also selected three other bloggers to their hall of fame: John F. Martin, author of the Building SaaS blog for his tireless promotion of On-Demand; Annrai O’Toole, CEO of Cape Clear Software (acquired by WorkDay) and author of the Clear Thinking blog for his efforts to cut through the clutter of the SOA (Service Oriented Architecture) space; and John Radko, strategist for B2B connectivity provider GXS and author of the On Demand B2B blog for his commitment to spreading the word about the power of connectivity On-Demand brings to B2B.

According to the article, “New media” are playing an important role in raising both the expertise of supply chain professionals and awareness of the increasingly strategic nature of Supply Chain in the enterprise. In the “blogosphere,” a network of Web logs, or “blogs,” authored by a growing number of industry veterans is playing its part by offering analysis of current events and trends, as well as a healthy dose of best practices. The blogs are sometimes serious, sometimes tongue-in-cheek, occasionally self-serving — the bloggers often are executives at solution providers, and other blogs are sponsored by solution providers — but almost always insightful and frequently entertaining. Supply & Demand Chain Executive recognizes the 2007 “Blogger” Pros to Know for their contribution to spreading the supply chain gospel.

It looks like Supply & Demand Chain Executive is finally catching on to the fact that it’s not the traditional media, but the new media that is driving the space. Maybe that’s why the publication has improved significantly over the past few months.