Category Archives: Vendor Review

The Sourcing Maniacs 2008 Vendor Tour Part III: Apriori

At the end of Part I, the Sourcing Maniacs had just completed their Aravo visit, the first stop on their journey. After Aravo, they took a trip to Massachusetts to visit their old friends Pinky and the Brain, but were unsuccessful as their friends were under lockdown until the annual user conference. However, being in the Boston area, they decided to continue their vendor tour through the sourcing alphabet and decided to pay a visit to Apriori, home of the Wizard of Cost, before moving onto the B’s. We join them on their hearty jaunt up Baker Avenue in Concord, MA.

Yakko, Wakko, & Dot We’re off to see the Wizard, the Wonderful Wizard of Cost
We hope he is a Whiz of a Whiz if ever a Whiz there was
If ever, oh ever, a Wiz there was, we hope the Wizard of Cost is one because
because, because, because, because, because
of the wonderful things a cost wizard does
We’re off to see the wizard, the wonderful Wizard of Cost!
Yakko We’re here!
Dot Where?
Yakko At Apriori, of course!
Wakko Are you sure?
Yakko As sure as a Massachusetts black bear does his thing in the woods.
Wakko But where’s the big neon sign?
Dot And the big corporate headquarters?
Yakko Not all companies own their own buildings, Dot. And not all companies feel the need to throw up flashy 1950’s neon signs to advertise their business. After all, those signs cost money. And I think cost management is supposed to be about not spending money you don’t need to spend. But that’s what we’re here to find out, isn’t it.
Dot I sure hope the Wizard of Cost can see us!
Wakko And that we don’t get shut out again. I mean, we were wako’d by Ariba, but we were almost wak’d yesterday!
Yakko I don’t think we’ll be shut out here. the doctor tells me that Apriori are very friendly and open people.
Wakko But will they welcome us with open arms?
Yakko Well, I never really asked if they’d welcome us. But we’re solo now … and I don’t think they ever competed with Ariba anyway. I’m sure they’ll talk to us.
Dot After all, who can resist pretty lil me.
Dot strikes her cutest pose and starts fluttering her eyebrows shamelessly.
Yakko So who wants to knock on the door?
Wakko I do! I do!
Wakko takes out his mallet and waks on the door.
long pause … door opens
The Wizard of Cost Hello?
Wakko, Yakko, & Dot We’re the sourcing-maniacs
And we’re zany to the max
Dot I am cute …
Yakko  and I like to yak
Wakko while I pack away the snacks
Wakko, Yakko, & Dot We’re the sourcing-maniacs
Dot I’m Dot,
Wakko I’m Wakko,
Yakko  and I’m Yak…
The Wizard of Cost Yes, I know who you are. Can I help you?
Yakko We want to learn about enterprise cost management!
Wakko And beg for food!
Dot And find a job!
The Wizard of Cost Well, I can certainly help you with the first topic. I’ve made it my personal mission to spread the word of enterprise cost management and how it can help direct sourcing organizations, as well as manufacturers, save money in these troubling times.
Wakko, Yakko, & Dot That’s great!
The Wizard of Cost But you have to promise me something first.
Yakko What’s that.
The Wizard of Cost That you’ll sit down …
Wakko No problem!
Wakko plops down on the floor.
The Wizard of Cost listen …
Wakko We’re all ears! Wakko stretches his ears in his best Dumbo impersonation.
The Wizard of Cost and behave. You have a bit of a reputation, and we’re a no-nonsense operation here at Apriori.
Yakko We can behave!
The Wizard of Cost Promise?
Wakko, Yakko, & Dot We promise.
The Wizard of Cost Then take a seat and let’s begin.
The Wizard of Cost Let’s start with the basics. Every business is in business to make a profit. Profit is defined as the difference between revenue and cost, or, the difference between the money you take in from sales and the money you spend on supplies, overhead, and taxes. That says there are fundamentally two ways to increase profit – increase sales, which falls under the purview of Sales and Marketing, and reduce costs, which generally falls under the purview of supply & spend management. We focus on cost.

However, not all costs are equal. If we look at a balance sheet, we see there are three main types of costs: COGS (Cost of Goods Sold), SG&A (Selling, General, and Administrative Expenses), and D&A (Depreciation and Amortization), and that COGS usually represents 80% of the costs under enterprise control. So, unlike many e-Procurement firms that just try to reduce the cost of the transaction, which only serves to reduce SG&A expenses, we focus on reducing COGS, as every dollar reduction in COGS has five to six times the impact of a dollar reduction in SG&A.

To reduce COGS, we start with the understanding that COGS is a combination of raw material costs, labor costs, production overhead costs, and margin. All of these costs can be reduced with the right insight — and this is where we are different than a standard sourcing application that just tries to get you the lowest price per unit through a volume buy or leverage-based raw material buy. Then we help you identify the right product, produced by the right process, to meet your needs at the lowest possible cost.
Wakko How do you do that?
The Wizard of Cost We have software that implements a virtual production environment that not only allows us to model a part, but an entire production process. This allows us to calculate not only how much a modeled part should cost, but whether or not there are other processes that could be used to create that part. For example, if you have a door hinge, you have a bend, a cut, and some hole punches. And there’s more than one way you can order the steps.
Yakko But you still have to do the steps, so how does reordering save money?
The Wizard of Cost Well, reordering allows you to do three things. First of all, it allows you to plan your production so that you don’t have multiple production runs waiting on the same machine at the same time. This increases your production throughput, which lowers your cost of production per part as you produce more parts in a day. Secondly, if you punch before you cut, and you have a machine capable of doing multiple hole punches simultaneoulsy, you might be able to punch four or eight hinges on a sheet of metal simultaneously, which would increases your productivity eight-fold. Finally, it allows you to consider different machines given the partial state of completion the part is in at any one time. And this is where a lot of the power of the VPE comes into play. Maybe instead of a punch, you can use a laser drill that can drill 10 pieces simultaneously if they are stacked, but only if you have enough extra metal around the edges for the grips to hold the stack in place. If the laser drill costs you half as much to operate as the old punch, then you want to use it — which is something you can do if the hole creation step comes first, but not if the hole creation step comes last.
Dot That sounds really neat!
The Wizard of Cost It is, and it’s quite powerful.
Yakko But how does the buyer know what the costs are? And doesn’t this take the supplier, who’s supposedly an expert in part manufacturing, out of the picture?
The Wizard of Cost Good questions. Fortunatley, we have some good answers.

The platform plugs into market feeds and our database of standard pricing that we have built up for North America and China, and this gives us a first level estimate. Secondly, it allows the buyer to enter their costs, or their supplier’s quoted costs, for each variable and refine that cost model further. Finally, it allows them to use a supplier’s VPE to calculate precise cost or set up a VPE specific to their supplier if their supplier does not already have one.

In addition, we realize that the best results often come from collaboration and from taking advantage of expertise on both sides of the table, so we have been working hard on improving our supplier interface that allows buyers and suppliers to share designs and data back and forth, through a new CAD-independent viewer that’s coming out in our next release, so that both parties can work together. And, unlike some vendors, who shall go unnamed, that force suppliers to pay a registration fee to be listed in, or gain access to, their system, our basic viewer is totally free to the suppliers of any buyer who licenses our system. This keeps the supplier in the picture, in a non-cost prohibitive fashion, and helps the buyer find the best product at the best price, produced from the best production process, for their needs. In our view, that’s what enterprise cost management is all about.
Dot That’s a really cool take.
Yakko Not at all what we’re used to … coming from a sourcing world that has traditionally focussed on e-RFx, e-Auctions, contract management, and spend visibility to reduce cost.
The Wizard of Cost It is a bit different, and we think it plays very nicely with those traditional approaches. Whereas they primarily reduce SG&A, and in the case of contract management, insure that agreed upon costs are adhered to, we primarily reduce COGS. It’s a big sandbox, we can play nice, and when we do, we think everyone wins. What do you think?
Wakko I think I’d like to see more.
The Wizard of Cost All in good time. Our next release, v6*, is slated for next quarter.
Dot Then I guess it’s time to go!
The Wizard of Cost Thank you for stopping by. And by the way, when you recount this story to the doctor, which I’m sure you will do, try not to leave anything out. Enterprise Cost Management is about a whole, and if you leave out any parts, it doesn’t really make sense.
Wakko We’ll try.
The Wizard of Cost Promise?
Wakko, Yakko, & Dot We promise.
The Wizard of Cost Farewell and safe travels!
Yakko Well that was different!
Dot Not at all what I expected!
Wakko And they didn’t feed us baloney sandwiches. I like baloney sandwiches. I’m hungry!
Dot You’re always hungry!
Yakko Let’s go eat.
Wakko So where are we going next?
Yakko On to the B’s!
Dot Bearing Point?
Yakko They’re a consulting firm. We do products.
Wakko Bravo Solution and their VerticalNet suite?
Yakko We’d have to hike all the way to Pennslyvania, wouldn’t we? There are B companies locally. Let’s go visit BIQ! They’re just a few miles away in Southborough!
Wakko What do they do?
Yakko Spend Analysis.
Dot But we already did that at Ariba. That’s old news.
Yakko the doctor says BIQ is different, and that how we define “spend analysis” is not the right way to define spend analysis.
Wakko Why not?
Yakko I don’t know. Let’s go find out!
Wakko & Dot OK!
Yakko, Wakko, & Dot We’re off to BIQ
To see what they do for you
Wakko And maybe find a clue
Dot To dealing with data times two
Yakko, Wakko, & Dot We’re off to BIQ
…

Tomorrow we recount the Sourcing Maniacs’ tale of their visit with BIQ. Stay tuned!

*Editor’s note. Apriori released v6 in early October.

The Sourcing Maniacs 2008 Vendor Tour Part I: Aravo

[Wakko, Yakko, & Dot] We are the sourcing-maniacs
And we’re zany to the max
So just sit back and relax
You’ll laugh ’til you collapse
We’re sourcing-maniacs!
[Wakko & Yakko] Come join the ‘Riba Brothers
[Dot] And the ‘Riba Sister, Dot
[Wakko, Yakko, & Dot] Just for fun we ran around the corp’rate parking lot
They locked us in the boardroom whenever we got caught
But let us loose from the caboose
And now you know the plot!

When we last heard from the Sourcing Maniacs, shortly after the acquisition of Procuri by Ariba, Chicken Boo had just fired all three of them. Confused and hungry, the ‘Ribas began marching northward from the Ariba corporate headquarters in Sunnyvale, CA, on their grand adventure to find a new job. They vowed to visit every sourcing company from Aravo to Zycus, if necessary, in their quest to find a new company to whom they could provide their maniacal insight. I’m sorry to report that, unlike Pinky and the Brain (who have been quiet for quite some time now), the Sourcing Maniacs are still unemployed, but I’m happy to report that they are willing to share with the readers of this blog some of the insights they acquired in their 2008 Vendor Tour. So sit back, relax, and enjoy!

Yakko We went to see Aravo
The wizards of 2Sustain
Dot We went with lots of gustavo
As far as we could ascertain
Wakko We heard that they were masters of SIM
so we challenged them to a duel
But it turns out SIM’s short for “Supplier Information Management”
Not SIM City …
and again I played the fool!
Yakko So we asked for an explanation
Of why we needed SIM
Wakko And what it could do
That we couldn’t do with Vim
Dot And then sat down to listen
Wakko Which we do so rar-i-ly
Dot As Aravo’s chaps, all dressed in chaps
Spun a tale of data transparency
Yakko This is Yakko’s summary of the Aravo story, edited by the doctor

In the beginning there was the web. It was a wild, wild frontier where data could roam free. A virtual gold-mine, enterprise software companies staked their claim and started to build ranches to corral the data. Some of these companies, like Peoplesoft, Oracle, and SAP were successful in their efforts. Furthermore, not only could they corral the data, but they could send it through pipes from buyers to suppliers. Business-to-Business was born.

Things were good in the beginning, but then the data started to mix, and like Fibonacci’s rabbits, it started to multiply out of control! More and more systems were installed to try and manage the data, but all this did was help the data spread like wildfire until, like the tribbles, it had overtaken every nook and cranny of every enterprise. Although this was a boon for BI systems that needed massive amounts of data to justify their existence, it was a bane to overworked IT administrators who couldn’t swap the backup tapes fast enough. It was an even bigger headache for supply chain professionals who couldn’t get a complete picture of what was being supplied by whom, or when it was coming. This deeply impacted their ability to strategically shape the supply chain.

This wasn’t too bad in the beginning, when oil was cheap, prices were dropping, and the boom look liked it would never end, but then the globalization backlash reared its ugly head. Oil and commodity prices went through the roof, financial markets started crashing, and quality issues became rampant as contaminated toothpaste, salmonella spinach, and lead-paint toys hit stores nationwide. Was your supplier still around? Would it be around tomorrow? Was its quality control adequate? Was it still the right supplier for you? All of these questions became front and center, and couldn’t be answered without insight into all of the relevant data surrounding the supplier … data that, traditionally, was spread across multiple systems inside and outside the enterprise.

Enter SIM. A SIM platform collects all of your data from all of your systems in one place, and lets you view, query, and manage all of your data on a single supplier from a single screen. How much business did you do? What did you buy? Where was it shipped from? Where did it go to? What QA processes were employed? And is the supplier current with their certifications and licenses? All of these questions can quickly and easily be answered with a SIM platform. And more importantly, it can be used as the foundation for supplier improvement and sustainability initiatives, because all of the data needed to launch and track such initiatives is at your fingertips.
Yakko So all your data in one place
Wakko Helps keep the egg off your face
Dot And helps you make a solid plan
Of who to keep and who to can
Yakko It’s pretty cool, but I have to say
Dot Their wordiness gets in the way
Wakko From a thought that should be as simple and pure
As combining your PB&J spend when you procure!
Dot SIM’s just meta-data management
with a flexible UI
Yakko It shouldn’t be that difficult
Wakko or pie in the sky
Dot But you need the right framework
baked in at the core
Yakko Otherwise you’ll never realize
Wakko that it’s not just meta-data, it’s more.

And Aravo was just the first stop on the Sourcing Maniacs’ journey. Stay tuned for more!

Are you an Import Genius?

I recently had the chance to check out Import Genius, which made the top ten list of the most innovative and exciting start-ups on KillerStartups.com, and I must say that it is impressive. Billed as a site that provides timely, detailed shipment data for every ocean container that enters the United States, it appears to live up to its promise. In addition, the search interface is fast and the export to CSV allows search results with up to 40,000 rows to be exported to a CSV, which can be downloaded in an automatically generated zip file for faster transmission.

With an ability to search by product, consignee, consignee address, shipper, shipper address, notify name, US port, foreign port, bill of lading, carrier code, and vessel name for any date range, it’s quite powerful for a new offering. Testing it out, I found that Apple Computer Inc. received 42 shipments between June 1, 2008 and August 18, 2008, 30 from Amtran Electronic Co. Ltd. and 12 from Quanta Computer Inc No. 68. The Amtran Electron Co. Ltd shipments were for “LCD Monitor For PC” and the Quanta Computer Inc No. 68 shipments, all on June 1, were for “GENERAL APPLE ACCOUNT PAYABLE BY”. Take a guess as to what those shipments were for. In addition, 37 were from Shanghai and 5 were from Tokyo, 24 went to Long Beach, and the remaining 18 went to LA. The average number of LCD monitors per shipment was 539 CTNS (containers) while the average number of mystery products per shipment was 501 CTN (cartons). The country of origin varied between the Bahamas, Greece, China, Liberia, Singapore, Japan, Liberia, and the Marshall Islands for the monitors while the mystery product was sole sourced from China. Eight different vessels were used: the Hanjin Praha, Concord Bridge, Xin Yan Tai, CSCL Seattle, Dong Hai Bridge, Clifton Bridge, CSCL Hong Kong, and the Long Beach Bridge. Additional information available for export includes the shipper address, consignee address, party to notify, party to notify address, bill of lading, arrival date, weight, container, and other marks and numbers. If I’d been watching carefully, as Import Genius was between mid-March, 2008 and mid-May, 2008, I’d have noticed that Apple Computer Inc. and its logistics partners imported 188 ocean containers of a product type never before declared on its shipping manifests.

As partially highlighted in this Washington Post article, which calls Import Genius The Disruptive Shipping Database, there are numerous uses for Import Genius’ service, which include:

  • Penetrating your competition’s business strategy
    Analyze your competitor’s import activity, identify their suppliers, and discover new endeavors before it hits the news.
  • Keeping your suppliers honest
    Watch the inbound shipments of your suppliers, identify threats and opportunities, and catch cheating factories who are counterfeiting your goods or stealing your IP in the act!
  • Identify new competitors before they emerge
    Find out who else your suppliers are supplying to – if they are supplying similar products to companies you don’t know, there may be new competitors on the horizon.
  • Identify new suppliers
    Find out who your competitors are using before their new products hit the stores!
  • Find out your leverage with your suppliers
    You can figure out what percentage of US business you represent by tracking all shipments against what percentage of shipments are yours.
  • Find new customers.
    Find out who your competitors are shipping to.
  • Identify new customs brokers, importers of records, and similar third party services.
    All of this information is available in the import records.
  • Make your patent infringement suit bullet-proof.
    Upon discovering a patent violation, use Import Genius to trace the goods back to their source overseas.
  • Perform due diligence on privately held companies in emerging markets
    By examining detailed records of a company’s US exports, you can reduce the risk for investors in markets where available data is scarce.
  • Stock Market Predictions
    A detailed snapshot of a company’s imports can serve as a leading indicator for new product releases, revenues, and key performance indicators.

So check out the company that, according to Freakonomics blogger Justin Wolfers, offers Amazing New Trade Data that may enable bright economists to fine tune our understanding of the dynamics of international trade. It’s certainly worth a few minutes of your time, especially when enterprise access (which permits up to 300 searches per day across the entire trade database) is less than $5,000 per year!

MFGX.com – Exploding onto the Scene

MFGX.com, the first open global community for manufacturers, which came out of beta three short months ago, is poised to take the manufacturing world by storm. It already has 12 active communities with over 80 discussions, 40 documents, and 30 blog posts — which is quite a lot considering how traditionally silent the manufacturing and procurement communities are with respect to the on-line world.

MFGX.com, which was originally conceived as a companion site to MFG.com, is important because it’s the first offering in the space that’s open to all manufacturers, regardless of the marketplaces they belong to or the products they offer. This allows producers, distributors, and retailers to find the best manufacturer to fill their needs and manufacturers to find the producers, distributors, and retailers that they can have the best relationships with – creating a win-win for everyone.

Furthermore, it’s simple — composed primarily of plain old forums (discussions), wikis (documents), and blogs, it eschews all of the new social networking nonsense that plagues many other sites. Considering that most social networking sites are, at least in the doctor‘s view, a big waste of time, I believe that this is a good thing. The internet is one of the best tools for knowledge sharing that we have, and the best sites are those that promote the sharing of knowledge, not your latest anti-ephiphany. (After all, does it really matter that you think Britney should be boycotting her current fashion line because of sweat-shop utilization? And do you really want the world to know you read BritneyZone daily? [Hat Tip: Google Search] So next time you use Twitter, remember the definition of the word.)

However, the real beauty of the concept, is the fact that it serves as the foundation for Open Source Manufacturing, which, as Jason Busch also points out over on Spend Matters, is quite cool and forward looking. After all, some of the best innovations in IT have come from open source, and some of the best successes in R&D have come from open innovation networks like NineSigma, InnoCentive, and YourEncore, and crowd-sourcing has been used to successfully streamline process. Just think what open source could do for manufacturing. It could improve processes and products. Even more importantly, it could open manufacturing design up so that, if you’re an engineer, inventor, or just a tinkerer, you could build your own products and not have to worry about a manufacturer going out of business if there’s a product you really want to keep using. For example, imagine an open source car that anyone could build parts for and that anyone could maintain. You wouldn’t have to worry about manufacturer bankruptcies, or, better yet, unnecessarily high prices or poor quality. And this could be just the beginning.

Claro’s Crystal Customs

Our last post on Claro re-introduced you to Claro and their successful sourcing practice. Today’s post is going to cover the other parts of their consulting practice and their particular areas of specialty.

Claro now has four primary areas of specialization:

  • Sourcing & Procurement
    From Spend Analysis through Contract Management to Procure-to-Pay, Claro has capabilities across the sourcing and procurement spectrum and their partnership with Ketera (acquired by Deem) allows them to not only utilize modern e-Sourcing tools on a client’s behalf, but leave them behind as well. (Of course, a client should do its own analysis of marketing leading and best-of-breed sourcing and procurement solutions, including Ariba (acquired by SAP), BIQ (acquired by Opera Solutions, rebranded ElectrifAI), Emptoris (acquired by IBM, sunset in 2017), Enporion (acquired by GEP), and Iasta, among others, before blindly choosing the Ketera solution, because, even though Ketera might be the right fit, it might not.)
  • Insurance and Claims Management
    First party and third party claims management on behalf of insurance companies and organizations that need to make a large number of insurance related claims
  • Healthcare
    Revenue Cycle Management, DRG/Clinical Documentation Support, Healthcare Process Improvement, Self-Pay Management, Drug Discount Programs, and other healthcare services. Claro has worked with over 450 hospitals across the US both individually and in health systems of up to 25 hospitals. They’ve also worked with large academic medical centers.
  • Bankruptcy
    Claro has just started a new bankruptcy practice out of their New York office to help those clients that are being hit hardest by a market that has given us the double whammy of stagflation.

Their background gives them particular strength in insurance and healthcare. For example, they recently helped one of the largest insurance providers in the country optimize their benefit plans to save themselves, and their clients, millions of dollars. They’re also one of the few consultancies that has leave-behind software for hospitals that helps those hospitals improve their service offerings while capturing more insurance payments.

Furthermore, in healthcare, they can help a hospital save money and increase revenue by helping them improve their DRG/Clinical Documentation. In the US, there are now approximately 700 Diagnosis-Related Groups and the proper classification of a diagnosis is critical as the benefit paid to a hospital for a given illness is often fixed based on the original DRG classification. Misclassifying a complex pneumonia as a simple pneumonia can cost a hospital hundreds, if not thousands, of dollars. Claro’s expert group, which includes medical doctors, can help a hospital improve it’s processes to insure that the diagnosis is correctly captured every time and that the hospital is able to claim all of the insurance premiums that it is due.

When you combine their insurance expertise with their healthcare process expertise and their sourcing expertise, one quickly sees that they often do their best work in hospitals and health care systems as they can improve efficiency, save money, and increase insurance billings in a single project. They’re definitely one of the few small jewel consulting firms to look at if you’re a health care provider.