Category Archives: Vendor Review

MarketMaker4: A Great Foundation for Successful Sourcing in the Mid-Market

Our last post in our four-part series that posed the question as to what the key ingredients to a successful e-Sourcing strategy are ended with an introduction to Market Making and MarketMaker4, one of the newest arrivals to the e-Sourcing party. However, unlike a number of vendors that sprung up during the latter half of the last decade, their solution is more than another me-too sourcing platform with modules and features almost indistinguishable from the platform that came before.

MarketMaker4’s new and distinct platform is buit around 4-key solution elements:

  1. State-of-the-Art e-Sourcing Platform,
  2. Integrated Company Intelligence,
  3. Integrated Market Insights, and
  4. Market Making.

This is because MarketMaker4 believes that all of these components are vital to a successful sourcing event, and it is not alone in this belief. Despite the fact that the solution was only launched a few years ago, MarketMaker4 already has over 75 global clients! Not bad for a new e-Sourcing start-up that was bootstrapped by its founders until it was acquired by Xchanging last year, which, realizing its significant potential, intends to keep MarketMaker4 as a standalone holding.

MarketMaker4’s modern e-Sourcing Platform is focussed on e-Negotiation support and the core functionality is e-RFx, e-Auction, and Reporting, with all of the standard features you’d expect from such a platform plus a few enhancements compared to the base platforms of the noughts. The most significant of these are the matrix-style bidding, which allow bids to be placed across three dimensions (such as lot, item, and [ship-to] location) and analyzed across different metrics (best price, best price by lot, best total price, best total price by lot, best weighted price, best weighted price by lot, etc.), and the custom weighting formulas that allow a sourcing manager to create custom rankings that can take all elements of a supplier’s bid into account — base cost, transportation, turn-around times, etc. — and all elements of a buyer’s assessment — quality, reliability, brand value, etc. — into account when calculating a total cost of ownership or bid ranking, by item, lot, or auction.

The platform is easy to use and integrates wizard-like walk-throughs for setting up new events. If a user is setting up a (reverse) auction, it walks the user through general settings, matrix design, uploading file attachments, design of the pre-event RFI, initial supplier identification, bid invite creation, and event launch. Progress indicators are included on each step (so a user knows how much is left to do), and all settings are defaulted whenever possible — allowing small events to be setup in minutes. When designing an auction, users have full control over the time and time extension rules, post negotiation override settings, minimim bid increments, ceilings and floors, bid notifications, the matrix view, displayed graphs, and the amount of competitor information displayed (and whether or not it is masked). Creation time can be streamlined by starting with one of the built in auction topics for common categories or by copying an existing event (for a similar category or the same category the last time the event was run).

The integrated company intelligence, which builds on a D&B license for detailed company intelligence through the MarketMaker4 tool (and which will soon be augmented with additional data from Lexis Nexis), allows a company to search for new suppliers in the MM4 database that could meet their category and product needs and then view detailed data that includes company data, financial data, key employees / managers, and contact information. It’s like a supplier network on steroids, as not only do you have a large list of suppliers, but you have aggregated, researched, third-party data on the suppliers, which even includes corporate citizenship ratings (for the sustainability-focussed). It’s easy to use, and allows you to do competitor searches on any company, which makes it really quick to find potential sources of alternate supply to invite to a sourcing event.

The integrated market intelligence is a combination of market intelligence (like you would get from a Mintec or Denali subscription) augmented with category briefs, a currency heat map (that lets you quickly identify the relative strengths of different currencies and trends, as historical currency data is tracked by MM4), and market indicators. The commodity indices cover North American, South American, Western European, Middle Eastern, and Asian marketplaces and more are being added this year.

And, finally, as introduced in our last post in our four-part series that posed the question as to what the key ingredients to a successful e-Sourcing strategy, Market Making is 24/5 project support from an experienced sourcing professional who is an expert in the platform, and the sourcing process it supports, and who is always a quick chat or call away. These professionals, based in North America, Europe, and Asia, are always there and always able to help you in one of the thirteen*1 (13) languages that MarketMaker4 supports.* Furthermore, since an online negotiation tool is useless if suppliers don’t use it, your suppliers also have access to full MarketMaker4 support — at no charge — in addition to bidder training sessions and monthly seminars.

MarketMaker4, which started with a belief that it’s not just what to source, but who to source from (Company Intelligence), when to source it (Market Intelligence), and how to get it right (Market Making), held on to that belief until they built a solution that realized their vision of what modern e-Sourcing should be. And it works. Their customers’ average savings is north of 10%, even without decision optimization (which demonstrates the power of integrated and properly applied market insight) and their average number of e-Sourcing projects is more than three times what it was before their acquisition of MarketMaker4). MarketMaker4 is another great option in what was becoming a dwindling e-Sourcing marketplace with all of the recent solution provider acquisitions.

*1 MarketMaker4 currently supports English, Mandarin, Portuguese, Spanish, French, German, Japanese, Vietnamese, Italian, Polish, Russian, Turkish, and Korean. In addition, because the platform is a modern platform that supports the full Unicode character set, new languages can be added quickly.

*2 While MarketMaker is able to offer support in each of the 13 languages it supports in the product, not all languages are supported 24/5. 24/5 support is only available for English and any language specified in your solution contract.

Is MRO Inventory Bogging You Down? Maybe You Need a Bit of Xtivity? Part II

Yesterday, we finished Part I by asking What is Xtivity?

Simply put, Xtivity is a solution for your MRO Inventory Optimization Needs and only your MRO Inventory Optimization Needs. If your organization is regularly managing tens of millions of dollars of inventory, or more, you probably know that MRO Inventory is costing you Millions and your current ERP/MRP/CPG Inventory Management systems aren’t helping you curb these costs while making sure that the part is always there when you need it. (Because, in the MRO world, unlike the CPG world or back-office world, availability always trumps cost savings. If you’re a retailer and you are out of stock on 2% of your catalog, no big deal, especially when the average stockout rate is 8%, and if your supply cabinet runs out of toner when the CFO wants to print out 500 pages of financial reports, you can just send a low-wage employee to the local office supply store to pick up a replacement. It’s annoying, but the most it’s going to cost the organization is an hour of someone’s time and maybe a 20% markup on a $50 cartridge. Big whopping deal, NOT! But if it costs 1 Million a day to run the production line and the company’s entire factory workforce sits idle for three days while your repair technician waits for a part to be express shipped to the Brazil factory from a supplier in China, a single stock-out can be the difference between the organization turning a big profit and suffering a big loss for the quarter.)

Accepting this reality and realizing that traditional ERP/MRP/CPG Inventory Management systems weren’t going to solve this problem (which is typically solved by the average company by significantly overstocking a critical replacement part in multiple locations), ten years ago, Xtivity formed to do something about it and nine years ago launched one of the first SaaS solutions to address the issue.

The xIO Software-as-a-Service platform is a 100% web-based MRO Inventory Optimization Solution that can plug into your current inventory management and procurement solutions, suck in your inventory (related) data, pass it through a number of proprietary and statistical models and algorithms, developed by Dr. Stephen Pearce (formerly of Texas A&M and author of Strategic MRO: A Roadmap for Transforming Assets into Competitive Advantage) and refined over the last decade for optimal performance across all of the major MRO industries (including Pharmaceutical, Oil & Gas, Automotive, Power Generation, Pulp & Paper, Automotive, Food Manufacturing, and Transportation), and output, on a monthly basis (or any other regular interval that makes sense from an operational perspective) the optimal order point, order quantity, and average lead time required for each MRO inventory item (by location) — taking the client’s business rules into account. The net result is increased part and material availability and fill rate, accurate lead time calculations, and cash-flow savings from reduced inventory across the board. Based on this information, the xIO solution then generates reports that recommend the suggested changes to future orders and calculates the expected savings both in inventory carrying costs and year-over-year cash outlays for MRO inventory.

But it doesn’t stop there. For each individual item it creates a detailed inventory report that shows the trend over the last 36 months, the projected trend, the expected savings from the initial change to the order frequency, and the expected MRO inventory savings over time. All of the data that go into the summary reports and report by inventory category (defined by inventory velocity) can be drilled into and all of the data (and reports) can be exported to Excel (if desired). And once the suggested changes are accepted, the Xtivity solution can push the new order points, order quantities, and lead times back into your inventory management solution which will take over the ordering, tracking, and classic inventory management functions.

Xtivity, which is well known in the reliability, maintenance improvement, and big MRO space, if not in the broader supply chain management space as a whole, has become so good in its niche that they are at the point where their average client sees a ROI in 90 days or less and 10x ROI over time. Plus, 99.99% of clients can use their solution out of the box. They support so many inventory systems and data formats (in addition to being SAP and Maximo certified) that they only had to do a custom data conversion project for 2 out of the last 1,000 global companies (of a solution that supports, and supports users in, 6 languages) that have tried their platform.

When Xtivity says xIO is a true SaaS solution with no hardware, software, or integration requirements that plugs the MRO optimization hole with virtually no effort (beyond an inventory manager reviewing the order point, order frequency, and lead time recommendations and approving them for push-back into the inventory management system), Xtivity means it. The entire application has been streamlined to not only optimize MRO inventory management and free up as much cash as possible without increasing operational risk, but to minimize the amount of effort required to get results. This is important because you generally don’t generate business value by wasting time on software support, you generate value by implementing and maintaining better (MRO) inventory management policies. And the Xtivity solution allows you to focus on operations, not software, and thus get a quick return. It fills its niche very well. So if you are looking to improve your MRO inventory management, and potentially free up Millions of dollars in cash-flow, check out the Xtivity xIO solution, it’s easy to try and very easy to use.  (For more information on Xtivity, they can be contacted at optimize@xtivity.com.)

Is MRO Inventory Bogging You Down? Maybe You Need a Bit of Xtivity? Part I

Inventory optimization is tough, but maintenance, repair, and operations inventory management is even tougher because the parts just sit there until they are needed — and sometimes, either due to proper maintenance or just good luck, the critical part you are stockpiling for your production line sits on the shelf three times longer than expected while other times the critical part has to be replaced twice as often as the vendor who sold you the machine told you it would have to be.

The last thing you want to do is get the stock levels wrong because inventory is expensive. In addition to the capital that is tied up in the inventory, there are the facility storage costs (which include rent, overhead expenses for services like security, and property taxes) and the possession costs that include, but are not limited to, clerical costs (to track the inventory), insurance (to insure the inventory as a whole), theft (as the insurance policy will have a deductible and a maximum claim), taxes (when the organization takes possession), deterioration (as some inventory will get damaged or spoil), depreciation (as most components decrease in value over time), and obsolescence (if the inventory cannot be used in time). Having inventory sit idle is very costly.

To make matters worse, many of these parts are very expensive and often have no residual value if unused. Whereas unpopular consumer packaged goods can often be sold at fire-sale prices which will allow you to recover some of their cost, this is not always so with MRO. This is because the parts are typically only useable within a particular machine on your production line and by the time you shut it down, chances are that the supplier is no longer selling the machine and most of the suppliers’ other customers are no longer using the machine as well. In addition, many MRO parts and supplies, especially in the chemical, pharmaceutical, and high-tech industries, have specific storage requirements (cool, dry, etc.) and this makes the storage cost even pricier than for regular (consumer) goods.

With typical inventory carrying cost eating up approximately 25% to 40% of a company’s annual inventory investment, the last thing you want is too much inventory, especially since certain MRO categories with special storage requirements and a high risk of obsolescence can have amortized inventory carrying costs that are close to the total value of the inventory! Unless you like having millions tied up in inventory, you need to make sure that you optimize your MRO inventory to the best of your ability. If you can’t do that, don’t rely on creativity — that won’t be enough because just one wrong JIT (Just in Time) decision can bring your entire production line down for days and cost you Millions of dollars. If you don’t have a suitable platform and the expertise in house, don’t rely on creativity. Apply a little Xtivity instead.

Basware: P2P for the Global “E” Part IV

In today’s post, we continue our introduction to Basware, a Finnish provider of enterprise finance solutions that serves the global e-Commerce, P2P, and AP Automation marketplace with over 2,000 international customers that collectively do business with over 1 Million companies in over 100 countries. In Part II we discussed the AP Automation and Invoice Processing solutions, the full Purchase-to-Pay process coverage from the Procurement and AP perspective, and the full compliance with e-Commerce, Taxation and Digital Signature Requirements that they offer in over 50 countries. Then, in Part III, we discussed the Basware Commerce Network (BCN). An open commerce network that connects almost 1 Million companies in over 100 countries through 170 partner networks, the BCN currently delivers over 60 Million e-invoices per year with a combined value in excess of $420 Billion and Basware expects to be processing over 150 Million e-invoices a year by the end of 2015 with a combined value in excess of $1 Trillion dollars. Part of this increase will be as a result of Basware’s new partnership with Mastercard, which provides suppliers’ a guaranteed payment once the invoice has been approved, and an early payment option as well. In addition, buyers can have extended payment time if they need it. In addition, cross-border payments, which take over a week on average, are simplified and generally executed at a reduced cost to both parties.

Today we are going to focus on their analytics capability, called Basware Analytics. Basware built their analytics platform on top of Tableau Software‘s Data Visualization Engine, a high-performance data engine designed to allow for real-time data analysis, visualization, and reporting. Using this engine as a foundation, they focussed on designing an analytics application that was useable by the average Spend Management professional and that presented that professional with over 80% of the information across the P2P cycle that a Spend Management professional needs immediately upon log-in.

Over time, Basware has built a suite of package reports that cover 80% of a Spend Management and Finance organization’s need for process and spend visibility to drive process efficiency. In addition, they provide a suite of templates that can be easily altered in such a way that, in most organizations, users are able to build reports that quickly cover most of the reporting needs not covered out-of-the-box within a few hours of deployment, and gradually build reports, possibly with the help of Basware’s services organization, that will let them achieve the remaining 20%.

The solution was designed from an AP and Procurement perspective and in addition to standard procurement reports which include, but are not limited to, total spend, geographical spend by organization or cost centre, top suppliers, top products, invoices received, procurement KPIs, and maverick spend, there are accounts payable reports which include, but are not limited to, invoices received, invoices received with or without a contract or PO, cash flow analysis, spend by supplier analysis, AP KPIs, AP Process and Cycle Times, and AP Financial metrics. Each report allows for real-time drill down and filtering on any dimension. Because the underlying analysis engine has been built to sit on top of all invoiced spend and related P2P data, the platform can address spend visibility, supplier performance, procurement performance, contract compliance, catalog coverage, cash forecasting and management, accounts payable and invoice management. With the visibility provided, you can dive into opportunity identification, process optimization, and rationalization.

Users can access the template behind any report and quickly customize it by adding or removing available dimensions, customizing filters, and tweaking the layout. A user can select which of the available data sources1 (which have been mapped to a common schema) she wants to use, specify the dimensions of interest (to build the cube), define the default ranges and allowable filters, choose the graph types, and modify the layout. The application supports all of the standard graphs and charts, including cloud charts (which is great for looking at search term history or the most common products and/or services being bought) and tree-maps, which give a quick visual representation as to which supplier, cost centre, product, etc. is accounting for the most (maverick) spend. It’s one of few, and most effective, implementations of cloud charts and tree maps that SI has seen to date.

The user does not require any technical skills to modify the templates to adjust or create new reports. This solution is optimal for giving more people within the organization real-time access to spend and process metrics, and allows the Procurement and Finance organizations to begin their spend analysis journey immediately. (In addition, if the user needs help or wants to add custom data sources, Basware has professional services personnel in North America, Europe, and Asia Pacific and offers a broad suite of support services, including supplier activation/onboarding, in 10 languages: English, Finnish, Swedish, Norwegian, Danish, Dutch, German, French, Spanish, and Portuguese.)

1 Even though reports are limited to Basware’s data sources out of the box, the customer has an option to extend the reporting solution to other data sources through the use of other Tableau Software tools leveraged by Basware.

Basware: P2P for the Global “E” Part III

In yesterday’s post, we continued our introduction to Basware, a Finnish provider of enterprise finance solutions that serves the global e-Commerce, P2P, and AP Automation marketplace with over 2,000 international customers that collectively do business with over 1 Million companies in over 100 countries. Yesterday, we focussed on the AP automation and invoice processing capabilities. Today we are going to discuss the e-Invoicing functionality and the Basware Commerce Network.

The Basware Commerce Network (BCN) is an open commerce network that connects to almost 1 Million companies in over 100 countries through over 170 partner networks which include B2BE, Cortex, Crediflow, Crossgate, Danske Bank, Edisoft, Elemica, GHX, GXS, Hubspan, Tradex, Unified Post, Ximantix and over 150 others. Customers on the Basware Commerce Network can send and receive e-Invoices and e-Documents to any company connected to the BCN through one of the partner networks free of charge1. The BCN, which has implemented tax compliance in more than 50 countries, currently delivers over 60 Million e-Invoices per year (with a combined value in excess of $420 Billion) and Basware expects to be processing over 150 Million e-Invoices a year by the end of 2015 (which will have a combined value in excess of 1 Trillion dollars).

A key feature of the BCN is that it was designed to be used by, and equally support, senders and receivers. Note that we are not using the standard terminology of buyers and suppliers because, whereas some networks were designed to be buyer centric and support the buyer who is receiving tens (or hundreds) of thousands of invoices a year, the solution was designed for companies who are receiving tens (or hundreds) of thousands of invoices a year and for companies who are sending out tens (or hundreds) of thousands of invoices a year. Since Basware started out as a enterprise finance platform, and not an e-Procurement platform, they have a unique take on P2P and design their solutions to enable both senders and receivers (and suppliers and buyers) equally. As a result, the solution is just as likely to be acquired by a large (CPG) manufacturer or apparel distributor which only receives a few invoices for raw materials but sends out ten to one hundred times as many to its customer base of all sizes that orders frequently and in small amounts.

Another key feature is that when the BCN is working flawlessly, it’s invisible. The entire point of the network is automatic delivery and automation of e-Invoice and other e-Document processing, which will either be done through a module in Basware’s application suite or your existing ERP, MRP, or AP solution. As per our last post, Basware has already integrated with over 250 ERP, MRP, AP, and other back-office systems and, if you already have a system for processing the e-Invoices, purchase orders, and other e-Documents sent over the network, it will push the documents into (and pull the appropriate documents and confirmations from) those systems. If your existing system is “plugged in” to the network, you’ll never have to use the portal2. Typically, a person in the receiving party will only log into the portal to verify that an invoice has been received when he gets a call from an individual in the sending party3 (and does not have access to the processing system — for example, the supplier might call up the account rep to ask if the invoice was received instead of someone in Accounts Payable). And typically the only senders who will sign into the portal are small suppliers who haven’t integrated the BCN into their Accounts Receivable / Back Office invoice management software and want to send an invoice over the BCN (to insure prompt receipt, processing, and payment capability).

With the BCN, it’s possible for an organization to achieve 100% e-Invoice penetration. Because the BCN supports receipt of invoices by EDI, XML, inter-operator networks, direct connect, virtual printer, Scan-and-Capture, Cloud-scan, e-mail (Lite)4 and even keyed-in by the supplier, which covers every methodology a supplier may use to send an invoice, customers of the BCN can achieve 100% paper-free invoice processing (and have in countries with strict e-Invoicing requirements, such as Brazil, Finland, Sweden and Norway). Note that they have multiple scan solutions — you can scan it and key it in locally through the BCN portal, and attach the scan; you can have it sent to your OCR provider that is plugged into the BCN; or use Basware’s Cloudscan which will take the scan, process it, and push it into your e-Invoice solution, flagging any exceptions or scanning issues that need to be manually addressed.

The supplier portal is designed to be quick and easy to use, and is divided into four main sections, current work-view, inbox, sent and purchase orders. In the current-workflow, the supplier sees all of the incoming events that need to be processed; in the inbox, the supplier sees the incoming purchasing orders, associated messages, and status updates from the buyer; in the sent tab, the supplier sees the invoices they sent through the network, associated messages and status updates they provided; and in the purchase order tab they can search purchase orders and dive into the details of the purchase order, view line items, retrieve attached files, view the processing history, and pull up associated invoices that they sent to the buyer.

Since the network is designed to integrate with the buyer’s current ERP, MRP, AP and back-office systems and Basware P2P modules, the buyer portal is equally minimal and easy to use. The buyer can log in to search and view incoming invoices, send messages or queries to the supplier about those invoices, and run reports on the invoices in the system to query the number, and ids, of open invoices, invoices by supplier, invoices unpaid, etc. Since there was no need to duplicate the functionality in the other Basware modules and/or the other back-office systems currently in place in most customer organizations, Basware designed the portal to support quick and simple confirmational queries and messaging between the buyer and supplier, and it does this quite well. In addition, all discussions are included in the audit trail and can be retrieved at any time.

And the proof of the value is in the e-Invoice pudding it supports. A Major Engineering firm in the Netherlands that was receiving over 150,000 (paper) invoices a year was able to replace over 50% of these paper invoices with e-Invoices in less than six months and automatically match more than 80% of them, which translated into a 60% reduction in manpower required for invoice processing (which had an associated cost of 6.5 FTEs). A leading energy company in Europe which received over 700,000 (paper) invoices a year was able to convert over 50% of its suppliers to e-Invoices in six months by partnering with Basware to help it with a global supplier activation (on-boarding) program. A leading mining, construction, oil & gas, and pulp and paper company in Brazil was able to achieve 100% e-Invoice penetration with the help of Basware which, with its Cloudscan solution, was able to help the company help its suppliers push 100% of its 200,000 plus annual invoice volume through the BCN. And it’s not just buyers who have invested heavily in the BCN. One of the largest CPG companies (with a market cap in excess of 30 Billion) uses the platform to send over 400,000 invoices electronically in Scandinavia and nearby countries in the EU. No matter how big your e-Invoicing need, Basware and its BCN can handle the volume.

1 Free of charge is conditional on delivery mechanism used. Portal (invoice key-in and PO flip) and sending e-invoices via email are free for the supplier and a buyer can receive e-Invoices through the portal free of charge from a sender.

2 However, you still may want to use the value added services of the portal which include, but are not limited to, tracking invoice status and collaborating with your business partners.

3 Who could log into the supplier portal to get the same information, but, due to technical issues on the supplier side, is unable to do so at that particular point in time.

4 Scan-and-capture refers to in-house scanning and OCR (optical character recognition), cloud-scan refers to outsourced scan-and-capture, and e-mail Lite is Basware’s solution for receiving invoices via e-mail.