Yesterday’s post discussed how BravoSolution has figured out that a real key to e-Sourcing success is a platform that is usable and efficient. It’s one thing to collect bids through a browser (which can be done by any junior high student these days, literally, especially when you consider 14-year olds and 11-year olds are building top downloaded apps in the app store), but another to actually make such an application usable for a category where thousands of bids need to be collected and compared from dozens of suppliers along with tens of thousands of pieces of non-price information.

In other words, they have hit upon the fact that key to e-Sourcing success is the delivery of a platform with the ability to:

1. define an event of a known (category) type with the click of a mouse,
2. dynamically determine appropriate and minimal data requirements,
3. but still handle as much data as can be thrown at it, while the platform tools
4. make use of and manage existing data.

This is what BravoSolution has done out-of-the-box for nine different categories, what they are doing for more categories as you read this, and what a buying organization can do for any and all categories of their choosing (with a little elbow grease up front). A buyer can view a category specific business centre for Chemicals, Transportation, Packaging, Industrial MRO, Facilities Service, Direct Materials, Contingent Labor, Travel, and Fleet Management which not only lets the buyer see the status of all of her past, present, and upcoming events, but quickly set up, manage, and re-run an event of the given type with a few mouse clicks.

But, more importantly, it is setup to allow a buyer to define and capture all of the relevant pieces of data about a complex category for consideration and analysis with minimal effort. As an example, we’ll consider a rigid packaging RFP through the Packaging Business Centre. In this type of RFX, a buyer will often be looking for plastic bottles and containers. The pre-defined RFX format can capture plant locations; detailed plant information; up-front costs by resin, machining, decoration, and colorant; pricing by group, where groups can be defined by volume, shape, finish, height, overflow capacity, and/or resin; freight; bundle information; plant and machine capacity limits; and additional RFI and RFP details as defined by the buyer.

But more importantly, if all of this information is known for a supplier from a previous event, it can be configured to automatically attach the existing information for a supplier so that all a supplier has to do is define new capabilities, remove old capabilities, and define new pricing. Furthermore, since all of the information is accessible through the business centre, before the buyer even selects the supplier, she can view the supplier information in the business centre to determine whether or not the supplier is even appropriate to invite. (If capacities are too low or if the supplier has not been awarded business in the past three events, it might not even be worth inviting the supplier. On the other hand, if a new supplier has been added to the system and meets the capacity and capability constraints, which can easily be determined by either querying the data or doing a search for suppliers that meet a minimum requirement, then it might be a good idea to invite the new supplier this time around.)

The information that can be collected and maintained about suppliers and capabilities is incredibly detailed. Plant definitions can be multiple screens long and a buying organization can capture location, hours per shift, shifts per day, operating days per year, labour contract information, number of employees, yearly changeover, key contact information, inspection and certification info, and other fields meaningful to the buying organization. Machine capabilities can be captured for each plant and this information can include machine types, models, tonnage, average age of machines, and cost per fully loaded machine hour. Other up front costs that can be captured included detail cost information on resins (for PP, HDPE, PES, PET, etc.) by manufacturer and SKU, bottle decoration (which have one-time set-up costs, waste percentages that affect costs, dec. cost per 1,000, etc.), and colorant costs. Pricing can then be defined for each group and freight can be defined for each lane by truckload (and less than truckload if so desired). Bundles can be defined along with minimum volume rules and discount information. Capacities can be defined by plant and machine type and can include auto-increments for each machine a supplier indicates they are willing to add if such supplier is awarded sufficient business. And no time is required to set all of these templates up, because they are already there.

And once everything is captured, all of the information can be fed into (collaborative) sourcing optimization and rules (and filters) can be defined on any price or non-price factor. All of the standard price adjustment (favor/disfavor, by bid attribute), count (supplier, bid attribute), award allocation (conditional, guaranteed, relationship, revenue, etc.), exclusion, limit, and force rules are available. These rules can be restricted by any or all suppliers and bid types and allow a user to do a very powerful analysis. And once the award has been made, the details can be pushed into the contract centre where a contract can be quickly authored using an existing template, or existing clauses. BravoSolution’s category solution RFXs are very well thought out and much better than many of the first generation e-Sourcing tools still on the market (which were a great start, but leave much to be desired once a Supply Management organization is ready for next generation sourcing).

Yesterday’s post introduced us to BravoSolution’s Next Generation Sourcing paradigm that they call High Definition Sourcing. Built on their Collaborative Sourcing framework, BravoSolution’s High Definition Sourcing paradigm realizes that for collaborative sourcing to be truly effective, the following additional requirements must be met:

• all affected parties have access to the tool and can contribute relevant data,
• data entry must be as simple as possible,
• data that already exists somewhere else on the platform need not be reentered at any time, and
• selected data must be capable of being pushed out with a single click to any tool on the platform that requires it.

In other words, BravoSolution has realized that the ultimate key to long-term e-Sourcing success on an e-Sourcing platform is usability — and usability is more than simply letting people enter data in an Excel spreadsheet and upload it through a browser. It sounds simple, but the sad truth is that it takes an average enterprise software company (at least) ten years to realize what usability really means (and some never figure it out). And even though the more progressive enterprise software companies realize after about five years that usability is important, it still usually takes them a few tries to get it right (if they even try).

The big problems with first generation suites are:

• the monumental effort required to define an event for a high-value or complex category where a considerable amount of price and non-price data elements are required,
• the subsequent monumental effort to collect all the data, and
• the monumental effort to do it all again when the category has to be re-sourced.

If the tool does not allow the buyer to create an event template (and many of the low-end first generation tools still don’t have this ability), then the buyer pretty much has to start from scratch next year. This is one of the biggest limiting factors of wide-spread tool adoption. If it takes weeks (or months) to do an event, then the Supply Management organization can only do a few dozen each year.

The key to e-Sourcing success is a platform with the ability to:

1. define an event of a known (category) type with the click of a mouse,
2. dynamically determine minimal data requirements (and allow a supplier to define as little or as much data as they want, or need, to),
3. but still handle as much data as can be thrown at it, while the platform tools
4. make use of and manage existing data.

While most of the progressive e-Sourcing platform providers recognize the first two requirements, and have some capabilities in that regards (usually by way of templates and conditional RFIs), only a handful can handle massive amounts of data well. Most providers haven’t figured out the right way to use and manage existing data — for which there are a couple of valid approaches.

Supplier masters or MDM (Master Data Management) is not enough because, where events are concerned, there is the need to collect and manage multiple rate sheets, term sheets, and bid sheets and to maintain these over time. A supplier will have standard quotes by region or mile, bid sheets for certain high-volume lanes, and then specific quotes for a buyer if a certain volume is agreed to on lanes the supplier is best capable of servicing. All of these rates are valid depending on the situation — and all should be maintained. Furthermore, each set of bids should be usable in any and all events (and scenarios) where they are valid. And in a well-designed tool, it should be trivial to attach the bid sheet to the event (or scenario in the event). And I mean attach, not import. Most tools import, which creates another copy of the data, which is not automatically updated if the supplier creates a new rate sheet that has to be maintained separately. That’s okay if the buyer wants to create a “what-if” scenario and manually override bids, but if the buyer just wants to use standard rates, it’s not acceptable.

In a well designed tool, a buyer will be able to create and run an event simply by selecting an event category (which will load the workflow that has already been defined), defining a few dates, inviting suppliers (from a known list), and populating the event by selecting all of the appropriate data already in the system (current/standard quotes, KPIs, volumes, etc.). Creation of a simple or low-value category, when everything about the buyer’s procurement and shipping preferences are already known, should be a single click, just like checking out on Amazon.com. And the most complex of categories should only take a few hours to configure. No one has days (or weeks!) to create an event any more, and with the workflows known, standard questionnaires in the system, and standard pricing and last year’s responses already known, all a buyer should have to do to create the event is define any changes (in volume, delivery location, sustainability, etc.) from the last event and all a supplier (who has bid before) should have to do is define any changes since last year. The only effort required should be in the analysis, and even that should be partially automated (as the standard price and change reports should be run automatically as well as the baseline, basic rules, last-year’s allocation, and comparison optimization scenarios). A buyer shouldn’t have to work, only think, because that’s what the organization is paying its top Supply Management professionals for.

BravoSolution has figured this out and created their Business Centre where a user can not only log in to their management console (complete with dashboard) to see what they are doing, what needs to be done, what has been done, etc. but can also manage all of the events and data in the system (and, if they are a power user administrator, customize the workflows as appropriate). When a user wants to create an event, they select a category type with a click. They can then add suppliers with a few more clicks, attach last year’s data or standard bid sheets with a few additional clicks, import supplier performance data with another click, and, if enough data is already in the system, run starting reports and baseline scenarios before a single supplier responds. It’s a simple concept (that many first generation e-Sourcing platform providers continue to overlook) with a powerful implementation. But what is even more impressive is how it’s easily integrated with the custom RFX category workflows and how much value this gives a buyer. Tomorrow we’ll discuss one of BravoSolution’s pre-packaged category RFXs, that they have created by working with leading Supply Management organizations over the years, and discuss how easy it is, with the right platform at the organization’s disposal, to take Sourcing to the next level.

In last week’s post on Next Generation Sourcing, we discussed the need for a modern Supply Management Organization to either take its Sourcing to the next level or suffer decreasing returns. We then said that the starting point for most organizations was the acquisition, and utilization, of a modern e-Sourcing (2.0, if you will) platform that will enable an average Supply Management organization to “knock it up a notch” (even without the aid of a spice weasel).

One solution that can be used to take a Supply Management organization’s e-Sourcing to the next level is the new version of BravoSolution’s Collaborative Sourcing suite, which was first reviewed here on Sourcing Innovation last year when it collaboratively optimized its way onto the doctor‘s short list (and again in a post that described how its analysis and supplier performance management enabled contract compliance). BravoSolution was one of the provider’s that didn’t stand still last year (which was a quiet year from a market perspective).

BravoSolution has realized for a while now that Supply Management cannot meet the strategic objectives of the business if:

• the requirements of stakeholders across the business are not met,
• key stakeholders and suppliers are not actively engaged, and
• non-price factors aren’t considered in the decision.

That’s why they built their RFX and Auction platform to easily capture price and non-price factors and their collaborative strategic sourcing decision optimization engine to handle scenarios that have rules and filters that can be just as easily defined on non-price factors as price factors. (For example, “At least 10% of supply must come from WMOB”, “waste must not exceed 2%, or “providers must use hybrid vehicles or biodiesel”.)

Moreover, they also realize that a generic one-size-fits-all RFX is not appropriate for many categories, especially those that are complex or that require the collection of a considerable amount of price and non-price data. They have learned that trying to force-fit “expressive” proposal requests into a simple “spreadsheet-based” RFX solution doesn’t always work. Buyers need more than the ability to define RFIs and price tables, they also need the ability do define workflows. It’s not always as simple as “fill out this questionnaire” and “fill out this price table”, especially when quality, capability, or capacity is an issue.

Consider a transportation bid for North America and Europe. If North America has nine regions and Europe has four, there are thirty-six regional pairings in North America and six in Europe. Depending on the division, there could be over fifty different state/province pairings within each regional pairing. Within each state/province pairing, there could be over a hundred lanes from a starting city/town to an ending city/town. All in all, there could be tens of thousands of lanes. Not all carriers will be able to service North America and Europe. Some North American Carriers will only be able to service Canada, the US, or Mexico. Some US Carriers will only do a region. A regional carrier may not do all lanes. If a carrier only does a few hundred lanes within a handful of regions in Canada or the US, you don’t want to ask them about every lane in Mexico and Europe as well.

In order to be truly useful to the buyer, the RFX not only needs to be workflow driven, but driven by supplier responses. If a supplier does not provide the service, they should not be asked about it. Not only does a supplier not want to click “No” or enter “0” or “NA” for every individual lane the supplier does not service, but the buyer doesn’t want to be overloaded with meaningless data. A screen full of “No”s or “NA”s doesn’t convey any useful information. Furthermore, if a supplier indicates they provide a service, such as Hazardous Material Transport, the buyer might need to collect additional details such as certifications and standards followed. But the supplier shouldn’t be asked about something they can’t deliver.

Not only does BravoSolution allow the buying organization to define their own RFX workflows, but they allow the buying organization to create their own category-specific RFX workflows (which can be thought of as dynamic templates) for specific categories or to select one of their pre-packaged ready-made category-specific RFX tools that are ready to go for common categories like transportation and packaging. Not only do these category specific RFX workflows allow a buying organization to quickly collect complex category-specific dynamic pricing and related information, but it allows for quicker analysis as only relevant information is collected. And the events go faster, since a supplier only has to provide details on what they plan to provide or service. Furthermore, for categories like transportation or packaging where pricing is often defined by mile or volume, the supplier can provide generic pricing (formulas) and then override the pricing on specific lanes or box sizes that they are optimized for. When a supplier can provide a response in a few hours online, and doesn’t need to spend a few days offline slaving over a spreadsheet, they are much more responsive.

But BravoSolution didn’t stop with a better RFX (that can pull data in from their SPM platform or last year’s projects and push data out to their auction and collaborative optimization platform, which is the level of integration required in the foundations of a “Next Generation” e-Sourcing platform), they also tackled the biggest problem in many of the first generation e-Sourcing platforms. But that’s the subject of tomorrow’s post.