Category Archives: Vendor Review

Arena – Taking PLM Deep Into the Supply Chain Part I

When we last covered The Arena Solution in 2007, we stated that Arena were the providers of an effective, on-demand, PLM solution that could manage the information associated with the entire lifecycle of a product from conception, through design and manufacture, to service and disposal, which, for a low margin manufacturing organization, could be the difference between costly inefficiency and profitable efficiency. One of the unique features of the solution was its support for collaboration between the buying organization and the supplying organization through an online portal.

Since the release of their first on-demand solution in 2007, which was focussed around BOM (Bill-of-Material) Management, Item Management and Change Management, over the last few years they added (better) Document Management, Quality Management, and Compliance Management. The Document Management capability, built on their change management and collaboration tools, streamlines the document management process, manages the revision process, supports privilege-based access for anyone who needs to access the document, be they employee or supplier representative, and supports the meta-data categorization required for advanced search and rapid retrieval.

The Quality Management capability supports your CAPA (Corrective and Preventive Action) process and allows the organization to track progress on quality improvement processes over the long term. The Quality Management capability allows for the creation of issues, corrective action requests, and tasks necessary to resolve the issues identified by the corrective action requests. It also associates the issues to requests, BOMs, and associated documents and allows the process to be managed from beginning to end and the entire history to be archived for the institutionalization of knowledge.

The Compliance Management capability was designed to allow an organization to meet regulatory requirements and track compliance information for products and processes with BOM-level control to allow an organization to comply with medical, environmental, regulatory, safety, and process standards and regulations. From import restrictions to quality standards to safety standards to reporting regulations, a manufacturing organization often has more regulations to adhere to than it has items in its largest BOM (which can be quite large, especially if it’s manufacturing automobiles, airplanes, or automated control systems for nuclear power plants). This is not an easy task when the organization often has to track the materials in every item in its BOM, the insurance certificates for each supplier, and the third party certifications for each product. But with a proper solution that allows the suppliers to upload the relevant documents, and manage them, the process is a lot easier.

And, finally, they added more Enterprise Integration. A PLM solution that doesn’t integrate with your ERP/MRP solution has almost as many disadvantages as it has advantages. And those disadvantages revolve around data, and data entry. At some point, orders have to be placed, and those orders at some point have to flow through the ERP system that manages the payables, the inventory, and the demand tracking. If there is no integration, the BOMs for all of the existing products will have to be manually entered or loaded into the PLM solution and the BOMs for all of the New Product Introductions will have to be manually entered into the ERP. Not a pretty picture. That’s why Arena spent a lot of time integrating with all of the major ERP and MRP systems out there over the last few years. But Arena didn’t stop there. Realizing that, as they progressed up the supply chain capability curve, that demand needs to get into sourcing systems, that regular orders need to get into procurement systems, that compliance information needs to get into reporting systems, etc., they figured out that no matter how many systems you integrate with, it will never be enough so, in their current release that just came out this quarter (which contains a number of new capabilities on top of the capabilities discussed so far), they built a new Open RESTful API that can be used to push data into Arena from any system and pull any and all data out of the Arena solution that needs to be pushed into other organizational systems. We’ll discuss this more in Part II when we talk about the four new capabilities that were just released as part of the new Arena solution.

Bravo Business Center 2.0 – A Complete Category Solution for MRO: Part II.2

In Part II.1, after noting how BravoSolution transformed a solution that was a complete category management solution for nine (9) somewhat disparate categories, to a complete vertical solution for five different verticals (with more coming in the future) that was based on the collective decades of experience of their global sourcing team (working out of ten offices in four continents) in those verticals, we noted how in BravoSolution’s Business Center, the basic templates are loaded and ready to go. All that an organization has to do to get started with a basic event is upload its item list, market baskets, list pricing for each supplier (and current / previous bid discounts), and current contracts; define it’s service level equations and cost-vs-service level trade-offs; and define its bidding guidelines and key milestones, and a basic event is ready to go!

In addition to being able to capture all of the categories, sub-categories, and items of interest, the platform can also capture all of the buyer locations — organized by region, state, and city — and supplier service locations — also organized by region, state, and city — and the platform allows a buyer to restrict which service locations can service a buyer location and the supplier is still able to define further restrictions still based on the supplier’s capabilities. In addition, a supplier can also suggest alternate items, with alternate pricing, for each item (over those selected by the buyer) and a buyer can accept or reject the alternates that are proposed. These alternates can have their own pricing, discount, and shipping & handling rules as well. For any category, sub-category, or item with a price that is largely driven off of one or more market costs (like steel or energy), the supplier can specify the relevant price index(es) and the percent that the market cost is driven off of the index(es). So, if a steel part is 50% steel, 10% energy, 25% specialized labour, and 15% other, the supplier can indicate that steel, energy, and specialized labour are the primary cost drivers, link them to the buyer recognized indices, and indicate the threshold change at which a price will need to increase or decrease. The buyer can then accept, or reject, the bid and if accepted, do multi-year what-if scenarios and make optimized multi-year awards that take expected cost increases or decreases into account, reducing the number of sourcing events and freeing up its strategic sourcing team for more strategic value-add activities, such as supplier performance improvement.

And the best thing about the solution is that the entire workflow is mapped out and easy to follow by even the most novice buyer on the sourcing team. First, the buyer is walked through setting up the guidelines for the supplier and customizing the workflow. This involves sending out an intent to respond (to avoid wasting time creating RFX sheets for uninterested suppliers), creating the general instructions for the event, identifying the milestones (steps) and target dates for completing each milestone (step), drafting the announcements for the various milestones and tracking their distribution, and selecting/creating the appropriate training materials for download by the suppliers (which can include step-by-step instructional videos for each step of the process).

Then the RFI is initiated to collect basic supplier information, product and service capabilities, service history, and standard pricing practices. Based on this, a basic product and service level evaluation is conducted (which insures that minimum required service levels can be met and that minimum quality levels are achievable), and any suppliers that don’t meet the minimum requirements are eliminated before the RFQ. At this point, the required service areas are defined (based upon the uploaded and/or historical service areas that can be defined at the region, state, and/or city level), the market baskets (and the component categories, sub-categories, and items and their mappings to default, pre-approved, supplier items) are finalized, discount categories are created, and any required shipping & handling rules are created.

The RFQ is then sent out and the suppliers can either enter their bids through the supplier portal, or download an Excel sheet, which can include their historical bids (if they bid in a previous event) that they can complete offline and upload if it’s easier. The suppliers can then define any general or (basket specific) discounts through the portal in a powerful and flexible manner on their list-price bids (which makes bidding for them as easy as cutting and pasting their list-price bid-sheet into the Excel sheet and then defining their discount categories, versus having to create multiple pricing sheets for each type of discount). Finally, the suppliers can fill in their shipping and handling costs and requirements (such as minimum order size, service location restrictions, etc.) and submit their bid. Optionally, the suppliers can also specify the dependence of high-dollar, or variable, categories on price-indices and additional discounts for alternate payment terms.

When all of the suppliers have bid, or the cut-off date is reached, the buyer can then push all of the bids into BravoSolution’s Collaborative Sourcing Solution into a pre-built, ready-to-go, optimization model that, based on the predefined service rules, cost trade-offs, and preferred contract length, will compute the optimal solution. The buyer can then create multiple what-if scenarios to determine the cost dependency on service level (or vice versa) or the potential savings with different contract terms. Once an award scenario is chosen, it can be saved, pushed into the contract management solution, and template contracts generated for each supplier in the award scenario.

It’s a very well thought out solution for MRO optimized to make sourcing, and re-sourcing, as quick, easy, painless, and error-free as possible so that, if needed, it can be driven by a junior buyer (under the guidance of a senior buyer) and free up the senior buyer in the organization for more value-add or strategic activities. And with the decades upon decades of experience in BravoSolution’s Global Team, they can get it up, running, and customized to your specific organizational needs in a matter of weeks. If you are an MRO organization, or an organization with a large MRO spend, BravoSolution’s MRO Business Center is definitely a solution to look at closely.

Bravo Business Center 2.0 – A Complete Category Solution for MRO: Part II.1

In Part I, we discussed how BravoSolution, realizing the limitations in their original, ground-breaking business center solution, enhanced the solution to be a complete solution for certain verticals that have standardized, predictable workflow-driven processes at the heart of their categories. We discussed how they transformed a solution that was a complete category management solution for nine (9) somewhat disparate categories, to a complete vertical solution for five different verticals (with more coming in the future) that was based on the collective decades of experience of their global sourcing team (working out of ten offices in four continents) in those verticals.

MRO, short for Maintenance, Repair and Operations, is a vertical that’s almost tailor-made for a business center solution. Even though, as a category, it is one of the broadest categories imaginable as it has to deal with whatever is required to keep any and all electrical, mechanical, hydraulic, telecommunication, or other physical system operating at normal levels — be it a production line, telecommunication backbone, power center, water plant, ventilation system, or office building — from both an (emergency) repair perspective and preventative maintenance perspective. As a result, depending on the company in question, the category could include just about any product or service under the sun. However, unlike CPG categories, the organization is generally not sourcing in volume and not looking for production capabilities, innovation capabilities, partnerships, or other value-adds that are required for success in those CPG categories.

As a result, MRO success often depends not on identifying the supplier who can give you the best price at the best service level on a part, but on identifying the supplier who can give you the best average price at the best average service level over a large market basket of parts, or the supplier who can bundle the services associated with installing a related market basket of parts (as part of preventative maintenance) at a competitive rate (which not only reduces the direct costs of having to deal with two different suppliers for parts and services, but the indirect administration and communication costs).

In addition, MRO suppliers tend to quote differently than volume-based manufacturing production facilities. Manufacturers will often quote based on production tiers, or give flat discounts or rebates based on production volumes for a single product, whereas MRO providers provide list pricing, and then quote discounts based on total dollar commitments across a market basket (as individual volumes for most categories aren’t enough to merit much of a discount).

Other complexities with MRO revolve around the sheer amount of data that needs to be captured, the creation of the right market basets, defining the qualitative metrics to appropriately capture the service levels of interest, defining the equations that appropriately trade off cost vs. quality vs. service level, and defining the cost drivers for the high-priced categories that will define when costs can change in a multi-year contract.

At a large MRO company, there will be thousands of products and services that need to be quoted from dozens, if not hundreds, of suppliers. Just creating all of the required data sheets that need to be distributed to the suppliers will be a challenge, breaking them down into baskets, sub-baskets, or items with alternate specifications for the sub-set of suppliers who will only bid on a sub-set of the RFX a nightmare. For some categories, service metrics are more important than cost. For example, if an automotive production line goes down, that can cost a large automotive manufacturer seven figures a day. In this case, spending an extra $10 an hour for a service provider with a guaranteed on-site service time of 4 hours vs 8 hours is a no-brainer. Even if their cost is substantially lower, service providers who cannot guarantee a required response time can not be considered for an award in some categories. In other categories, service levels, while important, can be traded off against cost. Consider warranty repairs. A five day turnaround vs. a seven day turnaround for a returned consumer item makes very little difference to a consumer that is out of a provided product for almost a week anyway, and trade-offs can be made in cost and service level. However, these trade-offs need to be evaluated in an appropriately defined equation. While a five day vs. seven day turnaround is almost equal, a five day vs. a twenty-one day is not. Unless the twenty-one day repair cost was high double-digit percentage cheaper than the five day, an organization wouldn’t risk the customer animosity that could result. And, in some categories, costs are driven by market conditions. If the service provider is supplying mostly steel parts (of 50% or more purity) that it has to source every year, and the steel index rises 10%, then the supplier will have to raise its prices (by at least 5%) to break even. Such a supplier cannot enter into a multi-year contract and give you it’s absolute best price today unless there is a cost-correction built-into the pricing model (as it would have to eat the loss otherwise).

In other words, the MRO category has some unique peculiarities that can make using a traditional sourcing solution a royal pain in the backside as the huge amount of set-up alone can be daunting. And if the solution doesn’t allow at least some of the work to be templated and re-used, the buyers will soon revert to the classic three-bids-and-a-buy through an auction just to “git-r-done“. But with BravoSolution’s Business Center, the basic templates are ready to go and once an organization uploads its item list, market baskets, list pricing for each supplier (and current / previous bid discounts), and current contracts; defines it’s service level equations and cost-vs-service level trade-offs; and defines its bidding guidelines and key milestones, a basic event is ready to go — and incumbent suppliers don’t even have to provide a price list (if the current price list in the system is still accurate), just their discounts for being awarded certain market baskets or dollar levels. In tomorrow’s post, we will dive into the BravoSolution MRO Business Center.

BravoSolution’s Business Center 2.0 – A Complete Category Solution for Transportation, MRO, Temporary Labour, GPO Category Management, and Retail: Part I

Two years ago, we reviewed BravoSolution’s Business Center Category Sourcing Solution that took e-Sourcing to a new level for nine common categories that provided the average Supply Management organization with a considerable sourcing challenge. In order to maximize savings in each of these categories, the organization needed to construct category-specific RFQs/RFBs for the category, collect extensive amounts of detailed data, build a tailored model, and/or analyze the impact of each possible sourcing decision. And if the RFXs were designed wrong, the data was incomplete, or the model missed key trade offs, the solutions were sub-optimal at best, and not even as good as the current supply management situation in the worst case.

That’s why BravoSolution built a solution that, capturing the years of experience and knowledge built-up by their global sourcing and solutions teams (who work out of offices in ten different countries on four different continents), that would allow a buyer to:

  • define an event of the supported type with the click of a mouse,
  • dynamically determine appropriate, and minimal, data requirements,
  • send the appropriate RFXs to the chosen suppliers with just a few clicks of the mouse,
  • push the data into the optimization engine,
  • add or remove (default and pre-defined) constraints with a few mouse clicks, and
  • select the award scenario and generate a contract template with a click of the mouse.

It was a great leap forward in e-Sourcing technology for the average buyer who was not an expert in e-Sourcing, and definitely not an expert in the chosen categories. But it had limits — specifically, out-of-the-box, it was limited to the categories that it supported or to categories for which repeatable methodologies could be identified and for which appropriate workflows could be implemented (as long as the buying organization was willing to work with the BravoSolution team to build a new category solution).

Knowing this, and knowing that certain industries had needs that were different than other industries, BravoSolution decided that what was needed was an equally simple solution that could be applied company wide (to all significant categories) for buyers in industries that needed extra support (either due to the complex nature of the problems, the time intensiveness of the categories, or the average level of e-Sourcing sophistication of the buyer in an industry where the average organization is arriving late to the advanced sourcing party). This is because BravoSolution realized that the reality of the situation is that if e-Sourcing is easy to use for some categories, but hard to use for other categories, the organization will continually favour the easy categories in their sourcing efforts, to the detriment of the organization’s cost savings or value generation goals. If a sourcing event is appropriately designed and effectively executed, and the organization has Procurement policies and systems in place to insure that the identified and negotiated savings are appropriately captured, most of the savings are going to be identified in the first event and the incremental return on subsequent events, especially in an economy where costs are going up and the supplier has more bargaining power, will be minimal. Meanwhile, more and more dollars will flow down the drain as savings-rich categories get continually ignored.

But if the sourcing team is presented with a solution where every souring event is as easy as every other sourcing event, intelligence is built in for all of the common categories, and existing data (such as supplier locations, contract transportation pricing, production constraints, etc.) can be re-used and propagated from one event to the next, then every category is going to be given equal consideration for the strategic sourcing treatment. And BravoSolution’s new and improved business center solution makes this a reality for the Transportation (3PL), MRO, Temporary Labour, GPO Category Management, and Retail industries.

In the remainder of this series, we will discuss BravoSolution’s new business center solution, built on collaborative sourcing capabilities (that were covered in these posts on Collaborative Sourcing, High Definition Sourcing, and Category Excellence) for MRO, GPO Category Management, and Retail. Stay tuned. (We’ll be back at the same KaT time on the same KaT channel.)

Vinimaya: Taking Their Procurement Marketplace Global, Part II

In Part I we noted that Vinimaya, despite scaling back on their marketing efforts for about two years, has been hard at work extending their core Procurement Marketplace platform to be a fully-featured Procurement Marketplace platform that fills the gap that ERP e-Procurement solutions leave wide open. Specifically, while the average ERP e-Procurement solution does great when it comes to master data management; workflow, approval, and PO management; and financial system integration; it doesn’t do so hot when it comes to content management, search, ordering, and invoice management. (Just ask vendors like Wallmedien that became the number one e-Procurement provider in Germany by filling in the holes in the SAP e-Procurement solution and Nipendo that is growing fast here in North America by offering an e-Invoice management and automation solution that most e-Procurement solutions are missing.)

The proof that Vinimaya fills the gap is, as they say, in the pudding that a large number of large organizations are eating. The Vinimaya solution, which has had great success in the private and public sectors, and which supports 37 different currencies, is utilized by buyers and suppliers in 13 languages across 80 countries on 6 different continents. That’s pretty damn good for a small company with less than 75 employees headquartered in Cincinnati, Ohio. Vinimaya’s success is due to the uniqueness it brings to the table. A unique federated search capability, a pure focus on the features other platforms lack, and a rapid implementation timeline (as a customer can go live on already supported supplier [platforms] immediately and most suppliers can be added within 24 hours) are just some of the reasons for their success. Other reasons include the platform’s ability to validate pricing in real time, force compliance if required, track pricing discrepancies, and get an organization’s spend under management.

And then there’s Vinimaya’s new vTransport solution that runs on top of their marketplace. One of the big inefficiencies in most Procurement organizations is invoice management and automation. With no standard means of invoice receipt and management, most large organizations require teams of tactical AP personnel who spend the vast majority of their time simply entering invoices into the payment system and validating basic information. In addition, due to limited manpower, only one in ten invoices gets fully validated and the result is a large number of overpayments, duplicate payments, and fraudulent payments. (There’s a reason that the recovery industry is still thriving and vendors like Lavante are building automated recovery solutions.) Like Nipendo, Vinimaya also recognized this issue and also recognized that many of the invoices are for goods and services requisitioned by organization personnel — most of which, if the solution is fully deployed and effectively utilized, should be bought through the Vinimaya platform.

So they acquired a leading PO and invoice management solution, improved it, and integrated it into their solution. With their new vTransport solution, POs can be delivered to the supplier through their mechanism of choice – XML, EDI, e-Document, supplier network, PDF scan attached to an e-mail, or old-fashioned fax, and then the invoice can be returned to the buyer through their mechanism of choice. And everything can be pulled direct from the central ERP data store and pushed back into the ERP workflow when received. In addition, the POs and invoices can pass through the Vinimaya audit engines which can verify prices and totals and limits to make sure no overcharges or fraudulent invoices get through. While the solution isn’t as extensive as you’ll get from a provider like Nipendo (which also has a print-to-cloud solution and [third-party] I-OCR integration), it’s considerably more extensive than the vast majority of e-Procurement solutions (and definitely way more extensive than what ERP offers) and will give most organizations an 80%+ solution. (The only POs and invoices missing will be for goods and servies not put through the platform – but such requisitions and invoices should be few and far between if the platform is fully deployed.) And the fact that it works with all of the big ERP and AP Systems (including Oracle, PeopleSoft, JDE, SAP, Lawson, Ariba, iValua, Microsoft, etc) out of the box is a big plus for organizations that want a good e-Procurement solution that is going to rapidly get their Spend Under Management (SUM).

Also, as indicated in our last post, the core platform has been extended, the UI has been revamped, and the performance has been accelerated greatly. Like many of the other e-Procurement players (like Coupa and b-Pack), Vinimaya has kept a close eye on consumer search and shopping (cart) technology and has incorporated the best features you’ll find on the web into their platform. Not only can you search all of the catalogs, punch-outs, and marketplaces relevant to your procurement needs in one federated search and dynamically validate the pricing and availability in real time, but you can filter on suppliers, price, and other relevant attributes dynamically, compare items in detailed comparison views, filter preferred items (based on simple or complex rankings) to the top, and track the price (and purchase) history of each item in real-time. Plus, the interface can be configured to each buyer and by each buyer to meet their particular needs.

Vinimaya has also added new quick-order and e-Forms functionality to support regular (re-orders) of products and services from suppliers based on standard catalog numbers (which a buyer probably has memorized) and standard organizational needs. The forms can be used for both simple and complex services, and templates can be pre-configured to meet all different types of service and manpower needs, including janitorial, (simple) advertising, and internal full-time and contingent workforce positions. In addition, buyers can also use them to make free-form requests and send them to the appropriate suppliers using the new quick-quote functionality. While not as extensive as what you will find in the Contingent Workforce or Agency Management solutions, it’s more than enough for most goods-based industries.

And extensive improvements have been made to auditing and analytics, but that, as well as other new development, will be the subject of a future post in this series on Vinimaya’s Global Procurement Marketplace.