Category Archives: Vendor Review

Lavante Recovery – A Risk-Free Way to Segue Into SIM

Yesterday, I was the first to get a sneak peak into the live-beta of Lavante’s new Recovery Audit solution that is being built on top of the brand-spanking-new Supplier Information Management solution that they released earlier this year (as showcased in this February post). Given it’s unique foundation, and the decade of recovery audit experience that has been baked into it, it is no surprise that Lavante is finding ten (10) times the savings of an average recovery audit, and up to fifty (50) times for select clients — even though the product is still in Private Beta and full (seamless) integration (with SIM) won’t be available until next year.

The great thing about the solution is that the first thing it does is identify omissions, errors, and inconsistencies in your supplier data. Using phone number, fax, address, web site, e-mail, and TIN checks, the software is able to find duplicate, erroneous, or incomplete records that need attention. Once these are fixed — either through automated import of up-to-date data from it’s network of over 2 Million companies, or from a multi-channel reach-out that seamlessly integrates telephone, fax, and snail-mail reach-out as well as e-mail reach-out — the software automatically applies a suite of rules and checks to find duplicate payments, overpayments, and potentially fraudulent payments that you have not yet identified. And once these are verified as accurate, provided you have a decent agreement/contract in place, you can go after the vendor for credits.

The benefits of good supplier data and multi-channel reach-out cannot be underestimated where recovery audits are concerned. For the latter, they have average reach-out response rates of over 50% (and as high as 80% for some customers), which are eight (8) to ten (10) times the response rates of providers who just do e-mail / web-based reach-outs. With respect to the former, cleaner supplier data makes for more complete transaction data, which not only increases the chance of finding a duplicate, incorrect, or fraudulent transaction — but improves your follow-on spend analysis efforts (and results). As a result of its supplier data cleansing effort, Lavante is typically able to process at least 95% of spend through its recovery audit solution, which maximizes the chances that it will find the majority of your recovery opportunities.

The SaaS solution is quite simple to use — consisting of four main components: the dashboard, claims management, invoice management, and reporting. The claims management section allows you to review each claim found by the system, which includes complete information about the claim — type, reason, organization, supplier, status, supporting documentation, etc, and take appropriate actions, which can include additional review, processing, or reassignment. The invoice section lets you manage your invoices from Lavante for recovery services. If you choose the fixed fee option, you will get one invoice on the agreed upon invoicing cycle for access to the software. If you choose the risk-free contingency model, then you will get an invoice for each valid claim made to a supplier that results in a credit or repayment. The reporting section consists of a suite of audit, cash-flow, claims, invoice, non-compliance, OFAC-SDN, and Vendor reports that give you pretty much any piece of information correlated with any other piece of information any way you want to look at it. The dashboard allows you to see your claim and invoice summary data at a glance, and to select the four most important reports to you — which can be viewed in (multiple) chart form(s) or in tabular form, and exported to csv or pdf. And while it’s a basic solution at this point, the only obvious weakness, given that the one goal of the platform at this point is to find all payments eligible for recovery, is that they do not yet have a custom report builder.

I’m sure they’ll get there. They shared with me their 2012+ roadmap for the solution, and it’s quite impressive. They have a vision to build on the solution to extend it first to a contract compliance solution, then to a fraud prevention solution, and finally to a risk management platform that will also integrate with their supplier management platform which will include compliance management. They understand that, done right, recovery is a one-trick pony (because, if you do it right, you also identify the source problem and fix it) and that the real value is not in recovery, but duplicate, overpayment, and fraud prevention — and monitoring transactions in such a way that they can be used to judge supplier, and supply chain, risk. I expect it will take them a few years to get there, but it will also take an average company one to two years to identify the majority of reasons for duplicate and over-payments and fix their processes, so Lavante should be able to grow in lock-step with their customer base. Regardless, Lavante is a company to watch and a solution to investigate for any Fortune 500/Global 3000 (want-to-be) that has never done a recovery audit. At the very least the included supplier data analysis service will add value. And when your data is in order, you can take your transaction analysis to the next level. And given that good data enables good spend analysis, and that a spend analysis will typically uncover 10% savings opportunities, what have you got to lose?

Trade Extensions: No Rest for the Wicked-ly Powerful – Part II

As per yesterday’s post, it’s been less than five months since we last checked in with Trade Extensions, who had traded up to a Fact Sheet User Interface and added a slew of new features, including improved RFI support, multi-dimensional rankings in e-Negotiation, Google Earth integration, new incumbent rules, and an OLAP foundation to reporting, including the implementation of a new n-way comparison report. Since then, Trade Extensions has been on a tear to add new functionality as fast as it can to make the platform not only one of the most powerful expressive bidding optimization platforms on the planet, but also one of the easiest to use — listening to its users (which include the Fortune 1000) and adding features and functions that make an average buyer’s life easier, taking usability to a whole new level yet again. And while earth-shattering technology improvements are cool, it is usability that is the ultimate key to to adoption, use, and, ultimately, cost avoidance and reduction in your sourcing organization.

Scenario Creation & Analysis

Not only are there new rules that allow partial awards to be fixed based upon existing scenarios, but the number of constraint categories has doubled. While there were only general and incumbent constraints in the past, there are now an entire category of scenario reference rules and post processing rules. With respect to scenario reference rules, not only can allocations be kept, but bids can be favoured or penalized as well. The post-processing rules are also quite useful. Allocations can automatically be rounded and allocations that don’t meet a minimum number of units can be removed (or re-assigned to the supplier who meets a minimum allocation with the lowest total cost).

Feedback Mechanisms

The buyer now has fine-grained control over what the supplier sees, and can even mix feedback types. For example, if the buyer only wants the top three suppliers to know they are top three, but suppliers four to six to know their exact rank, they can specify that specific rank starts at bidder four, and the top bidders default to “top 3”. In addition, if the supplier does not meet a minimum bid increment, which can be defined in a number of ways (including, minimum dollar or % decrease over last bid), the supplier gets a nice red error that the bid is not acceptable AND a message indicating the minimum increment required. Finally, and this is really cool, the user can define custom color-coded bid feedback fields based on dynamic formulas that now only let the user know where they rank, but how competitive their bid is (against the current bids from the competition) in English using a buyer defined scale such as “Competitive”, “Slightly Competitive”, “Not Competitive”, and “Not Acceptable”.

Plus, the buyer can now chat with users online in an integrated IM client, and immediately see who is online when they log in as it is a widget on their project management dashboard.

Odds and Ends

The “dashboards” for RFX and auction phases have also improved. The summary, bidder summary, and lot summary are now completely customizeable by the user, support custom fields, and user-defined colour codings in the rankings. In addition, there is integrated show/hide, drill-down functionality, and customizeable pop-up (bid, trend, and bidder activity) charts where a user can select one, some, or all of the rows in each report.

They have also added a basic workflow engine that allows buyers to initiate rate requests, lot requests, and allocation publishing requests of project managers / administrators when new needs arise during a project. This allows managers and supervisors to maintain control and a complete project history to be maintained. The workflow is fairly basic at the present time, but I suspect it will mature and fill out quickly given Trade Extensions’ track record of rapid application development over the past two years. (Especially since the feature is being used by a couple of very large companies.)

All and all, it’s a lot of new functionality in a short time frame that makes the tool extremely useable by an average buyer.

Trade Extensions: No Rest for the Wicked-ly Powerful – Part I

It’s been less than five months since we last checked in with Trade Extensions, who had traded up to a Fact Sheet User Interface and added a slew of new features, including improved RFI support, multi-dimensional rankings in e-Negotiation, Google Earth integration, new incumbent rules, and an OLAP foundation to reporting, including the implementation of a new n-way comparison report. Since, then, it would appear that Trade Extensions have been working around the clock to add a host of new features in auctions, reporting, award management, scenario creation and analysis, and feedback mechanisms. They are advancing the platform so fast that only a few companies in the space are currently keeping up with their rate of development. And while nothing added in the last few months is earth shattering, Trade Extensions has again taken usability to a whole new level, which is the key to adoption, use, and, ultimately, cost avoidance and reduction in your sourcing organization.

Auctions

Probably the biggest improvement is the new wizard-based interface that defines different types of RFX and Auctions, including Quick Quote and Simple Auction, that simplify event creation. In the new wizards, the user only needs to define the critical information necessary to create the event and can, if the user so chooses, define everything necessary to set up straight-forward RFXs and Auctions, including lots, on a single screen. While the workflow-driven wizards provided in many of today’s platforms are good, if you just need a quick quote or are auctioning office supplies, you just need to set it and forget it. The platform’s newfound ability to handle simple events with ease while simultaneously allowing for the creation of the most complex events one can think of is quite powerful for an organization that wants a single tool to handle the whole gamut of sourcing events. Now a user can define how much information is required to define an event and enter just that, whether it be a few pieces of information or a few hundred pieces of information. In addition, the new bidder UI is slick, clean, and quite easy to use.

Reporting

Trade Extensions, which supports the Fortune 1000, has added new multi-project reporting which allows for the creation of (roll-up / drill-down) reports across projects. The user can select any set of projects and any set of scenarios in those projects and create a roll-up or comparison report across those projects on any set of dimensions and facts that they choose, which can be organized in a user-defined row-column format. One of the things that Trade Extensions noticed was that a number of users, even when their new OLAP reporting was rolled out product-wide in January, were still downloading reports to Excel for the sole purpose of reformatting them into a preferred or dictated format. So they built this capability, including pivot table functionality, into the tool. Combined with the ability for a user to create fields defined on just about any formula (macro) the user can imagine, there is now no need for a user to have to export to Excel for analysis or report formatting. It’s a very impressive leap forward in reporting and goes well beyond the reporting capabilities of most of the on-line sourcing and procurement platforms that SI has seen.

Award Management

Trade Extensions has created a new set of rules that allows a user to define a scenario that uses allocations from an existing scenario for any subset of the award that they want to fix. No longer does a user have to copy the scenario and define fixed award rules, which can quickly lead to unsolveable scenarios if the user has 20 rules and messes up one or two to create a conflict that results in an unsolveable scenario. Just point at an existing scenario where part of the award is acceptable, indicate that the award for items X and Y at locations A through M are acceptable, and the tool will fix those allocations and build a smaller model that will solve faster (instead of a bigger model with more constraints that solves slower).

Come back tomorrow for Part II which will address the rest of the cool new features in Trade Extensions’ new release.

Apptio – Helping you with your IT Portfolio

Earlier this week, in reference to an article on the SCRC site on The Supply Chain IT Investment Enigma and Hackett group recommendations, I asked what is the right portfolio view of the Supply Chain IT Investment. Given the laundry list of Supply Chain Technologies — DM, PLM, PP, APS, SCEM, SRM, WMS — that one has to consider; the dizzying array of hardware, software, infrastructure, and support options; and the difficulty in capturing and computing cost metrics and comparing them to industry averages, it’s a good question.

One vendor trying to make sense of the situation is Apptio. A Technology Business Management vendor with a background in system management and automation with capabilities in IT Services Transformation, Infrastructure Optimization, Application Rationalization, Cloud Business Management, Data Center Consolidation, and IT Financial Transparency, this week they released a new IT Service Performance Solution with supplier/vendor relationship management (SRM/VRM) capabilities. Building on their deep expertise of IT systems of record, application stacks, hardware platforms, and on-site and off-site infrastructure solutions, they have created a unique service performance management (SPM) solution that is customized to the unique needs of IT.

Designed to give an organization a holistic view of internal and external suppliers, and apply supply chain best practices to IT, the purpose-built vendor relationship management solution, which can import data from over 40 major systems-of-record (SAP, Oracle, JD Edwards, Peoplesoft, Ariba, etc.) out-of-the-box, allows an organization to define and manage vendors and contracts, understand spend by vendor and category, monitor and benchmark performance against pre-defined and custom KPIs, and hold vendors accountable to performance. In addition, due to their ability to also integrate with multiple major accounting systems out of the box, spend can be tracked against contracts at a category level by unit of time and IT managers can see how spend is trending relative to projections.

The Apptio VRM solution supports the full IT supply chain from IT planning and vendor identification, to Bill of IT creation, service costing, service performance, and IT benchmarking and allows IT sourcing personnel to effectively manage negotiations, contracts, costs, relationships, performance, and spending over the life-cycle of the relationship. In addition, a custom scorecard can be created for each vendor which can not only track custom metrics and KPIs, but also overall customer satisfaction.

Purpose built for IT, the solution allows the IT relationship managers to define a custom dashboard that displays, for each vendor, the current financial, quality, performance, and satisfaction ratings (which can be defined against pre-defined or custom KPIs) and whether the vendor scores good (green), satisfactory (yellow), or below contract requirements (red) on each rating — allowing problem vendors to be quickly identified. The user can then drill into the vendor and see the basic supplier info, contact info, contracts, debits/credits, and scorecard details summarized for each vendor (and whether each contract, balance, and scorecard is good, satisfactory, or below contractual requirements).

In addition, the top-n vendor and contract summaries allow the IT sourcing managers to quickly see which vendors and contracts are consuming the most spend and how these particular vendors and contracts are trending over time. In addition, the IT sourcing manager can just as quickly get breakdowns by internal vs. external spend, contract type, and vendor relationship. Given that most of the leakage will occur in the biggest contracts, this is a useful capability for IT sourcing managers. Especially since the metrics can be defined against activity based costing (ABC), which is not a feature common among many service or performance management platforms.

And while it’s true that most of the analytics can be easily computed with a good spend analysis tool that allows for the definition custom metrics in the hands of a spend analysis pro, if data needs to be pulled from mutliple systems, the reality is that performance will only be analyzed against most contracts one or two times a year, and by then it might be too late to insure real savings (as the organization is not likely going to get 1 Million in support overpayments back). Plus, most spend analysis tools or platforms are not going to be integrated with a benchmark database that allow an organization to quickly identify what the usual service/software/hardware costs are for its usage levels and save an average of 20% to 30% in its negotiations. (In fact, some beta testers saved 50% on some hardware, software and/or support categories due to a better understanding of usage, industry standard pricing, and past performance and the ability to do what-if analysis in conjunction with activity-based costing.) While it will be a while before we know ROI of the solution for an average organization, I agree that it is likely that an average organization with significant IT spend will begin to see payback within 90 days and that a 20% savings on major contracts will be common the first time around as only those organizations that have, or bring in, IT sourcing expertise tend to get best pricing in the IT category. It’s definitely worth a look for those organizations with a large IT spend as there are very few solutions out there that understand the unique nature of IT categories.

TradeCard: Transaction Management for the Global Supply Chain Part II

In yesterday’s post we introduced you to TradeCard, a supply chain management services and trade finance company that provides an end-to-end SaaS transaction management solution that connects over 4,000 buyer and supplier companies across the world with local support in over 50 countries. This solution, which implements end-to-end transaction management from the cutting of the Purchase Order to final settlement (including chargebacks) with support for financing, document management, 3rd party freight forwarders, and factory floor shipment packaging, is one of the most extensive SI has seen with respect to visibility into the three critical supply chain flows — financial, physical, and information.

We discussed the financial flow, which supports pre- and post- export financing, payment protection, invoice discounting, and settlement with their Procure-to-Pay solution; the physical flow, that is supported by their collaboration, Factory Xpress, and document management solutions; and the information flow, which is supported by the aforementioned solutions along with the TradeCard Advantage and Custom Objects Toolkit solution. Today we are going to dive into the physical flow and the solutions that support it.

We’ll start with the collaboration solution. Designed with forecasting and supply planning in mind, the solution allows for forecast and purchase order data to be pulled from your ERP / forecasting system / system of record of choice and pushed back when the production plan and/or purchase order is complete. Forecasting revolves around (rolling) supply plans, that can be completed from a material, supplier, forecast, inventory, (material) commitment, or demand view. Buyers and suppliers, who are given permission, can edit the forecast, and the revised forecast can be maintained along side the original forecast. The forecast can be at the product level, or the component material level, as the platform has equal support for component and 2nd tier raw material suppliers, who can also be given (read or edit) access if relevant or key. The system also allows the scheduled production runs to be collaboratively decided upon (and updates the projected inventory automatically). There are no built-in forecasting models at this time, but that may change in a future release. (In the interim, Tradecard can integrate any forecasting system that can provide data in a standard format such as EDI, XML, or CSV.)

The UI is similar to many web-based supply management platforms, and includes a “taskboard” that keeps track of all of the current tasks for the current user, which can be ordered by action type, transaction, or assignment date. With respect to transactions, which the suite is designed around, a user can query and track transactions by purchase order, invoices, payments, packing & shipping, financing, (goods) receipts, contracts, adjustments, events, and customs filings in addition to supply plans. Purchase orders are extremely detailed and can contain all of the information required by the supplier, freight forwarders, and any customs authorites (including order terms, parties, freight terms, destinations, items, components, additional terms, and required documents). This allows for the easy generation and submission of appropriate trade and customs documents (with over 10 import and export document formats supported out-of-the-box). The system maintains complete document history and allows an authorized buyer to query exactly who did what when. Events allow the buyer to track the transaction after the PO is issued and record actual production, shipments, receipt, distribution to warehouses, returns, chargebacks, and other relevant events.

Factory Xpress is the “shop floor” solution that is designed for the personnel who are actually packing and shipping the orders. The users can access, and (if they have permission) edit the packing plans, create and print packing slips and/or shipping labels, and even scan appropriately barcoded labels to indicate when an order has been packaged and shipped. In addition, orders for packing labels and materials can be sent directly to Avery Dennison, whom the solution was developed in conjunction with. The system supports bulk packing, multi-packing, and free-packing plans and can automatically regenerate packing plans based upon changes in order quantity, delivery location, carton sizes, or item mix. Once the shipment has been packed, packing manifests can automatically generated from the packing plan and purchase order.

One very neat feature of the platform is the “discrepancy preview” that a supplier can run before finalizing the invoice. When the discrepancy preview is run on a draft invoice, it compares invoice data to shipment/packing manifest data and PO data and reports all discrepancies in pricing, order quantities, factories, origins, destinations, and other comparable data and checks that all terms and/or documents have been completed. This allows the supplier to correct any data that can be corrected before the invoice is sent, minimizing the chance of the buyer rejecting it or sending it back for correction. It also allows the buyer to verify that the invoice they received is consistent with what they expected, or if its not, immediately determine what the discrepancy is and whether or not it was approved (due to a change in forecast or demand).

With respect to reporting, there are dozens of built in report types and the user can select the attributes and value ranges for each report, but TradeCard does not yet possess a generic report builder tool, although custom reports can be created by way of their Common Objects toolkit if required. However, complete export of all in XML and CSV format is supported and the buyer can use a third party data analysis and reporting tool to construct whatever report they want for more detailed analysis.

Finally, the TradeCard platform currently supports English, Traditional, and Simplified Chinese with Spanish coming later this year, and most implmentations, which includes integration to your ERP and forecasting systems, and onboarding of 80% of your relevant supply base, and user training, are accomplished in 90 days. It’s a solid solution and one worth looking into if you need to manage end-to-end transactions across the global supply chain.