Category Archives: Vendor Review

aPriori, rationi viam ad sumptus! Caput I

When we last covered aPriori in 2007 and 2008 in aPriori and The Sourcing Maniacs 2008 Vendor Tour Part III, they were very focussed on Enterprise Cost Management (ECM) and taking cost out of the design phase. Fast-forward six years later, and nothing has changed, except, of course, the depth, breadth, and usability of their platform — which has grown in leaps and bounds.

Unlike traditional sourcing applications, including advanced spend analysis and decision optimization, that are limited to component cost-based should-cost models, aPriori can also factor in design and production factors to model the full production cycle of the part you are buying (if it’s metal, plastic, or, in some cases, electronics-based) and give you a true understanding of what the part should cost to make. The reality is that the cost of a part is dependent not only on its design, but on the production process employed. As noted in our first post, a supplier that’s always made a certain part a certain way might not realize that new technology or materials would allow them to make that part significantly cheaper if they used a different process. Since the aPriori application instantly and directly interfaces with your CAD program and interrogates the solid model to extract the geometric cost drivers, the aPriori application can automatically determine all the process routings that can be used to make the part, compute the costs associated with each step based upon standard machine, material, and labor costs, and compute the total cost of each part on a per unit basis by factoring non-geometric cost-drivers such as production volumes, the selected supplier or factory set-up selected, and the exact routing and machines used. This is because the aPriori application currently supports over 200 out-of-the-box process models in over 12 major process groups (including, but not limited to, Bar & Tube Fabrication, Casting, Forging, Machining, Plastic Moulding, Powder Metal, Roto & Blow Moulding, Sheet Metal Sheet Plastic, Stock Machining and Rapid Prototyping.

In addition, because the application supports the creation of complete VPEs (Virtual Production Environments) that encapsulate the production processes, a customer can fully model the production and overhead costs associated with each production process supported by a factory in question, including local labour, power, maintenance, and other overhead costs to create a fully accurate should-cost production model, which can be compared to alternate production processes in the factory and other factories modeled with an appropriate VPE. This allows for the true identification of the lowest cost because, as the Sourcing Maniacs documented in their vendor tour post, the COGS is a combination of raw material costs, labor costs, production overhead costs, and margin and these costs not only vary by locale and production process, but in their interaction. For example, just because you identify three ways to make a part and each requires three steps, this doesn’t mean that each process is going to be roughly equal in cost. Not only do different processes require different amounts of manpower or energy (for energy-intensive equipment like lasers, etc.), but reordering the steps can change the manpower or energy required in subsequent steps.

Let’s take, for example, the production of the main Frame sides and door for a piece of heavy machinery construction equipment. An aPriori customer was cutting the entire frame using a laser process. While this seemed efficient, as only one piece of machinery was required, cutting the entire frame and door using a laser cost them 75.54 per frame and door combination, and they required over 14,000 of these combinations a year. That’s over a million dollars on just one part! If, however, as discovered by aPriori who analyzed the geometry and ran it through every possible production process that was available to the manufacturer, they switched to a two-stage production process that involved an initial laser cutting of the frame and door followed by an NC Punch process to punch out the internal cavities, the time required to produce a single frame and door combination decreased by 14 minutes and the cost decreased by 56% to 33.29 (as laser cutting is expensive compared to NC punch).

So what’s new with aPriori? Come back for Part II.

FREIGHTOS: Helping to Bring Freight Into the Modern Era

Freight is often the bane of the Procurement professional, especially when such professional needs a quote in a hurry. It’s not uncommon even in this day and age for a Procurement professional to call up a freight carrier for a spot quote and have to wait two or three days. It’s absurd. Quotes, or at least quotes on standard table rates, should take two or three seconds. The only time you should wait a couple of days for a quote is during a master contract negotiation for hundreds of lanes, as you will want to give the carrier some time to determine their absolute best rate in this situation.

This is the primary reason BuyTruckload.com was founded. The founders, veterans of the logistics management software industry, got fed up with both having to wait for bids on the spot market and being unable to shop the business to enough carriers to get the best rate.  But this isn’t an article about BuyTruckload.com, even though BuyTruckload.com does a wonderful job in North America. Why?  Because BuyTruckload.com it doesn’t solve the global shipping problem, doesn’t address other modes of transit, and it doesn’t account for the fact that you might have contracts in place (that the buyer might not even be aware of).

In order to address this problem and speed up the freight quote time, on or off contract, in the global market place, Zvi Schreiber and his team built FreightOS (pronounced Freight O.S., or even freigh-toss, as it is a freight operating system and not a brand of breakfast cereals), which is an technology platform that enables an on-line network of global freight carriers to provide instant spot-rate and on-contract quotes when a (potential) customer needs them.

When a carrier, or freight-forwarder / 3PL,  signs up for the FreightOS network and uploads their standard rate tables for ocean, air, and land-based shipping for all of the routes they service, customers can access the carrier’s portal on the FrieghtOS network and get almost instantaneous quotes (which, depending on the number of routing options and shipment goal — be it lowest cost, fastest delivery, etc. — could take a few seconds) for the route(s) of their choice. All the buyer has to specify is the origin, the destination, some basic load characteristics (what is being shipped [boxes, pallets, etc.], dimensions, unit weight, and quantity), the desired pick-up date, the allowable modes (land, ocean, air, or any combination), whether or not the load is hazardous, if insurance is required (and the load value if it is), the applicable HS code(s), and if a customs brokerage is being used and click a get quote button. Within 10 seconds, the buyer will get the quickest delivery quote, the cheapest quote, and, if applicable, some suggestions for nearby delivery locations that are quicker or cheaper (especially in the case of inter-continental shipments where there are multiple options that require a multi-modal delivery network that consists of air or ocean and truck or rail). Each quote returned will include the total cost, the time-in-transit, the modes of transportation required, and whether or not the carrier will work with a customs brokerage or transport hazardous material. Clicking on a quote will break it down into its constituent cost components, which may include, but are not limited to, basic freight cost, (airline) screening fees, (airline) security fees, fuel surcharges, documentation fees, (airline) handling fees, export declarations, advance manifest fees, etc. If the buying organization has a contract with the carrier, even if it only covers some lanes, they can upload the contract and all of their buyers can get on-contract quotes instantaneously and compare them to off-contract quotes. This can help the buyer discover whether a different routing can save them some money.

Also, after the buyer has requested quotes from their (preferred) carriers of choice on the FreightOS network, they can download their entire quote history to an excel spreadsheet to not only do a lowest-cost cross-carrier comparison by lane, but determine where the real (hidden) costs are. For example, it’s possible that (one of) the biggest cost(s) (in air freight in particular) is the fuel surcharge, and if the buyer can identify this and negotiate a better fuel surcharge rate with a carrier of choice, they could potentially lower their shipment costs going forward. Also, in the case of exports and imports, a buyer can see if any of the security or documentation fees imposed by one carrier are (unreasonably) higher than the market average.

Right now, the FreightOS platform has approximately 20 carriers on-board, but considering the huge cost savings this represents to a carrier that spends a considerable number of man-hours every day quoting on business for which it knows it will only see a 20% to 30% success rate at best, it shouldn’t be long before more carriers sign up. With this type of platform, no man-hours are needed to provide market-rate quotes and the carrier will know that when they do get a call based on a quote provided by the platform, the buyer has product she needs to ship, has decided that the carrier may be able to provide the service she needs in an acceptable price range, and has narrowed her pool of carrier choices down to select few. The founders of FreightOS believe that they can increase the success rate of their carriers by 10% with this tool, but SI believes that this tool could increase a carrier’s success rate by as much as 50% as most buyer’s will only call, at most, the 3 lowest quoting carriers and select the first carrier that can meet their delivery requirements at an acceptable price.

If you have global freight and need a better quoting solution than calling up a carrier who will take, on average, a day or three to get back to you, SI recommends checking out FreightOS. It’s definitely a platform to watch.

MarketMaker4: The Mid-Market’s Market Making Mezzanine

Some of you might say the e-Sourcing space is too crowded. And that certainly was the case in the mid-zeroes — platforms here, platforms there, platforms platforms everywhere. But then came the acquisition frenzy where mid-sized players swallowed smaller players and start-ups before getting swallowed up in turn by the dominant players who, in the last couple of years, themselves were swallowed up by the massive enterprise software providers. As a result, there is an opportunity, especially in the NA (North American) market for a couple of new players – provided, of course, that such players bring new and innovative solutions to the table (that address the needs of a considerable market segment).

As a result, even though the EU (European Union) vendors are starting to enter the sourcing market in a big(ger) way in NA, there is still an opportunity for someone new if they go about it the right way. So, despite the fact that many thought the market almost dead at the end of the zeroes, it was not completely crazy that a small team of e-Sourcing market veterans, including Mr. Alan Buxton who was the CTO of of Trading Partners back in their heyday, decided in 2011 to start a brand new e-Sourcing software start-up and build a new solution from scratch.

Two years later, MarketMaker4 is a strong offering for the mid-market that needs a new, modern, e-Sourcing solution. In particular, those mid-market companies that are late to the e-Sourcing game, those that are still relying on third parties to manage their sourcing events and are ready to bring those events in house, those that are trying to use ERP sourcing solutions, and those stuck on platforms that, due to acquisition, are stuck in integration limbo and haven’t been upgraded in a while.

So what is MarketMaker4? It’s a four-part sourcing solution that consists of:

  1. A modern e-Negotiation platform
    with a best of breed e-Auction and RFX solution
  2. with a built in supplier discovery engine
    built on the entire D&B database which is augmented with your own supplier database
  3. and market data indices that span commodities and currencies
    that let a buyer know current prices, historical trends, and relative market conditions (when the data is available)
  4. that is augmented with real-time product and sourcing support 24/7/365
    through online chat that connects all of the global support representatives around the world that are currently online.

The MarketMaker4 founders, who were involved in the space for over a decade and who worked for both software providers and services providers learned the following:

  1. While some companies will start with services to get going, these companies will eventually decide that pay per drink is expensive and look for software.
  2. The companies switching from services to software will typically select a best-of-breed software provider with little or no services or support beyond the product. As a result, due to limited sourcing and product knowledge on the in-house buying team, the product typically gets under-utilized and the company fails to achieve the ROI they expected.
  3. When the license expires, the company will typically revert back to a pay-per-drink, but limited to high-value categories, or put its faith in a good e-Procurement system, that will reduce maverick buying and, hopefully, with limited RFX capability, lead to better buying habits.
  4. But even if the company moves to a modern e-Procurement system, the company will typically have little insight into current prices or suppliers that they aren’t already buying from.

As a result, the team decided what was really needed for these types of companies was:

  • An e-Sourcing solution that was easy to use by the average buyer,
  • augmented with real-time support and guidance as new buyers get up to speed,
  • integrated with market index and currency index data (that could be linked into cost models), displayed in easy to understand graphical representations, that the buyer could use to understand current prices and likely trends, and
  • extended with a huge database of potential suppliers.

And that’s what they built. And in each component, they added some innovation to the mix.

  • The e-Auction product, which consumerizes the enterprise capability, is one of the most powerful on the market, with one of the most sophisticated, but yet easy to understand at a glance, interfaces out there.
  • While chat-based, they chose to build a support solution that connects all of their services and support personnel around the world who are currently available rather than use a call-center model. (And as they were just acquired by Xchanging, one of the big players in the Procurement market who are leaving MarketMaker4 as a stand-alone product and company, they now have a large network of support personnel around the world who speak multiple languages and can support their customers in their native language.)
  • Their market index solution is linked into the RFX/Auction module so that the buyer can see current component / raw material prices if there is a market index and can see current currency values as well as trends over the last year for every currency a supplier might bid in.
  • And they were the first e-Sourcing platform to integrate with D&B for the purposes of supplier discovery. Up until they did, most integrations were for risk data or data enrichment. As a result of their partnership and early efforts, they have one of the more powerful integrations and in addition to being able to search on name, location, etc. they can also filter on a variety of dimensions, including risk, size, diversity, etc. that even D&B can not filter on through their API.

MarketMaker4’s e-Auction product and supplier discovery products in particular are quite innovative, and SI will dive into them in more detail in the new year.

Basware: P2P for the Global “E”

Basware is one of the largest players in the global procurement arena. Founded in 1985 in Espoo, Finland (as Baltic Accounting Systems) to deliver enterprise finance software solutions, the company (which is now public and traded on the NASDAQ OMX Helsinki Ltd. as BAS1V) has grown from a small country player to a global platform with over 2,000 international P2P customers that collectively do business with almost 1 Million companies in over 100 countries. Basware supports its global customer base through its operational footprint that spans over 50 countries on 6 continents and includes over 100 partners and resellers.

It’s solutions span the entire P2P (purchase to pay) process, from requisition through payment and post-transaction analysis and includes the Basware Commerce Network that enables over 425 Billion of e-commerce annually. The network currently lists 1.9 Million suppliers and processes over 60 million e-invoices annually through the 60+ e-invoice formats it currently supports, including XML, EDI, and Virtual Printer formats. The network is growing and transaction growth is currently running at 60% year-over-year, and now that they have partnered with MasterCard to provide their customers access to MasterCard’s suite of payment products, it is likely that network growth will accelerate even more now that customers have even more payment options.

One of the most unique features of the platform is the fact that it spans the full AP and P2P cycles, whereas many of the smaller P2P and e-Procurement platforms are Procurement centric, with little support for AP. However, Basware started as a provider of finance solutions and migrated to the e-Procurement space with the birth of e-Commerce, and, as a result, has a firm command of the order-to-cash cycle from both organizational viewpoints.

From the procurement side, the platform contains modules for analytics, basic sourcing (RFX), contract management, catalog management, e-Procurement, and e-Invoicing. From the AP side, the platform contains modules for e-Invoice Processing, e-Invoice Matching, e-Payment, and Analytics. All modules are integrated with a consistent look-and-feel, and all modules are available on top of Basware’s new cloud-based Alusta platform which supports (multi-)enterprise private cloud instances. In addition, the collaboration capabilities and social integrations span the entire platform and all data in the platform is available to the analytics module.

Another unique feature is that Basware has decided that they are a procurement platform, and not a sourcing platform, and that their sourcing capability will remain basic. Basware recognizes that Procurement experts are not Sourcing experts and vice-versa, and have decided that they are going to partner to delivery an industry leading sourcing solution for those customers that need end-to-end Source-to-Pay functionality. As a result, they recently announced a major partnership with BravoSolution to deliver a comprehensive source-to-pay solution that covers all key steps of the sourcing, procurement, and finance process.

In future posts, SI will dive into key capabilities of the Basware Commerce Network; the e-Invoice processing, matching, and payment capabilities; and the analytics platform.

Vinimaya: Taking Their Procurement Marketplace Global, Part IV

In Part I we noted that since we last covered Vinimaya, the B2B Search Engine that was the next wave in product catalogue management, they have continued building out their base platform, adding (more extensive) auditing capability, workflow-based catalog management, quick-quote (RFX), e-Forms, deep analytics, mobile, and social integration on top of a base platform that supported content management, federated search, powerful connectivity options, personalization and customization, globalization, and an easy to use shopping cart. Then, in Part II and Part III we focussed in on their vTransport technology and their new vQuote, vRank, vCatalog, vAudit, and vAnalytics solution modules. Today, in the final part of this four-part series, we are going to talk about vSocial, vMobile, and their up-coming market indices.

vSocial
vSocial is the social interaction component of the Vinimaya platform. Taking a cue from Amazon, which teaches us that not only do people tend to gravitate to products with reviews but they also want the ability to comment on the products and services they receive and be part of the community, Vinimaya added social interaction capability to their platform. Buyers can post feedback on the goods they procure, suppliers can respond and provide additional details, and procurement can include explanations as to why certain products or services are preferred. In addition, the platform is artificially intelligent, so if there is no feedback for a 14.4 V cordless drill from a given manufacturer, but there is for an 18 V cordless drill from that same manufacturer, the platform will pull the feedback in for the 18 V drill in when a user is viewing the 14.4 V drill to give the user as much information as there is available about the potential purchase. It’s a simple platform, but it works quite well.

vMobile
vMobile is the mobile instantiation of their platform, and one of the most unique offerings on the marketplace. Not only was the Vinimaya platform the first to do real-time federated search across punch-outs, catalogs, and databases and present the results to a user through a single buying platform, but it’s now the first platform to do the same on a mobile device. Designed for a smart-phone, a corporate buyer now has access to all of the goods and services available through the Vinimaya platform on their corporate smartphone, and despite the small amount of real-estate, it is very useable. Vinimaya put a lot of thought into their solution and made search and product retrieval very easy. In addition to the standard keyword search, the mobile solution also supports artificially intelligent barcode based retrieval. If the buyer happens to have the packaging for an item of interest in close proximity (such as the box for the last printer cartridge that requires an immediate reorder when used), she just has to scan the barcode and the solution will find all instances of the product. And if an exact match is unavailable, because the solution is intelligent and retrieves the manufacturer and product description, the search application will find all related products. Maybe the Brother cartridge is currently unavailable from your current suppliers, but a third party Staples replacement cartridge is. The platform will find that option and present it to you. The results are returned in a list and choosing an option brings up a summary of the product details which has an option to add the product to the cart. The cart can be accessed at any time from the app menu bar, which also allows quick access to search, favorites, and history functionality, and checkout can be as easy as one-click as your data is pre-populated. It’s a very slick catalog-based Procurement solution.

Market Indices

Sometimes, not a week goes by where a Procurement doesn’t hear “your contracts suck — I can get the same printer cartridge 5-pack on Amazon today for 5% less” from an office manager or “prove to me that our prices are as good as you say they are and that we are beating the market average because I don’t believe you” from the CFO who only seems to notice Procurement when, a year after a contract has been cut, market prices for a given commodity drop or when the CIO complains that the organization is spending too much on hardware as it’s forced to buy from an overpriced supplier at last year’s prices that are no longer the best price.

In order to get the monkeys off its back, Procurement really needs to be able to demonstrate how good it’s doing — how the majority of it’s contracts are at, or better than, market price, how paying slightly more for that printer cartridge gives it a discount on a range of electronic products from the same provider at 5% below market average pricing, and how IT isn’t factoring in the huge end-of-year rebate the organization is expecting once it meets the million-dollar spend threshold. But to do this, Procurement needs three things:

  1. index data, to know what market prices are,
  2. pricing data, to know what it’s really paying, and
  3. deep analytics, to put two and two together and map reality to potential.

Vinimaya has the pricing data. Not only does Vinimaya manage all of an organization’s punch-outs, catalogs, and pricing databases — but they save every search result to maintain historical pricing data for all products in the database. And, with the recent release of vAudit and vAnalytics, they have the audit trails and the analytics to analyze purchases in detail. That just leave one element to go — the pricing indexes.

The Vinimaya platform crawls a large number of consumer sites (including Amazon, Alibaba, and other online storefronts) and has a huge database of commercial pricing in its archives. This provides the foundation for a consumer price index that will allow an organization to compare its pricing for a product in many consumer categories with the average price charged to a consumer. Vinimaya serves a large number of public sector clients and since public sector pricing is public, this provides the foundation for a market index that will allow an organization to compare its pricing for a product with the average price charged in the public sector for products for which Vinimaya has a lot of data. If you’re beating the public index, you’re doing good but not great. If you’re beating the consumer index, you’re doing okay but not that good. Better shape up. And if you’re not even beating the consumer index, better get your house in order before trying to enforce your contracts on the rest of the organization!

In conclusion, since we last covered Vinimaya, they have made many advancements to their base platform in the last 5 years, but the best may be yet to come. The market indexes are just the tip of the iceberg! More to come in 2014!