Category Archives: Vendor Review

i2 – Still Truckin’

You may not have heard much about them since my last post almost a year ago, and I know that I haven’t, but I did get a chance to catch up with them recently to ask them about how the transformation was going, and it seems that they’ve been making some good progress. In one instance, where they took over an electronics manufacturer’s on-line business, sales increased 500% as a result of the inefficiencies they were able to introduce and in another case, where they took over supply network planning for an apparel company, the required lead times were almost quartered and profits rose sharply.

If you remember, last time I told you that they were in the process of re-architecting all of their modules and major sub-modules as Service Oriented Architecture (SOA) enabled components to run on a new AGILE business platform that allowed them to integrate just the components you need. To this end, they’ve re-organized their offerings around ( a ) planning, ( b ) supply (& inbound visibility), ( c ) channel, ( d ) retail, ( e ) inventory, and ( f ) transportation offerings that they can pull together as needed by a customer.

This allows them, unlike the i2 of old where you often had to go for the full implementation up front – an implementation which would often take years and millions, if not tens of millions, of dollars – to a new i2 that can start small – with solutions that they can often deploy in months (or weeks) at starting prices in the six figure range.

They’ve also been working on their service offerings, so that they can manage the systems and implementations on behalf of their clients, and real-time reporting capabilities, so that they can give their clients just the information they need, when they need it. This includes a new i2 intelligence offering that has a large number of pre-defined supply chain KPIs already built in, as well as 200 standard reports. (Future versions will allow the KPI repository to be extended by the user, but I do not know if they have an expected date for this capability yet.)

They’ve also broadened their definition of supply management to include supply availability and physical supply risk management, which is now part of their supply offering. This is part of their definition of, and newfound focus on, revenue enablement – which is about balancing costs with supply availability and risk in your supply chain.

All in all, as supply chain solutions go, I think they’re on the right track. I still wouldn’t consider them a sourcing or procurement solution per se, but supply chain goes beyond that, especially global supply chain management, and once you make the award and approve the order, you need something to manage the logistics process – and you should start by looking at those companies that have been doing it for quite some time and that are trying to bring some innovation to the process, like i2 is now doing.

While I’m writing about them, I should also point out that they have an upcoming free event in New York on Sunday, January 13, 2008 (at the Grand Hyatt New York) on The Value of Fast that is addressing the topic of Speed to Market: Are you setting the pace or following the pack? that is co-sponsored by Kurt Salmon Associates and features representatives of AMR, JC Penney and Citigroup. If you’re in the area, or looking for a supply chain visibility and management solution, it might be worth checking out.

It’s Time To Get Your Trade Data In Order

Did you know that, right now:

  • You could be eligible for VAT rebates?
  • You could be eligible for Import Duty refunds?
    or that …
  • You could be overpaying for freight?
  • You could be saving more if you took advantage of trade agreements or trade zones?
    or that …
  • You could be buying counterfeit goods?
  • You could be weeks away from having your supply chain frozen?
    and more!

Let’s start with the Aberdeen findings, which have been, more-or-less, corroborated by Hackett. There are millions (upon millions) of dollars in working capital languishing in your international supply chain. A $1B company can easily free $10M to $40M in cash by better controlling just its basic global trade processes. Aberdeen found:

  • Large companies’ international supply chains are only 50% as automated as their domestic supply chains.
  • 87% of large enterprises have inadequate staffing to manage global supply chain and global trade compliance processes.
  • Trade compliance is consistently a low priority for IT funding.

Now let’s add the Global Data Mining findings that error rates in global trade processes approach 10 to 20% and that effective control of global trade processes is often 100 to 200 times worse when compared to accounts payable processes in an average company!

Basically, the following is a reality for your average multi-national, whether it realizes it or not:

  • It’s manufacturing facilities in China are still failing to claim VAT rebates they are eligible for, because it is unaware that some of its goods are now eligible under the recent changes that took place this summer.
  • It’s using outdated HTS codes and some of these codes have a higher tax rate than what it could be paying if it was using the new HTS codes that took effect in January of this year.
  • It’s not keeping track of total freight payments by carrier and cross-referencing its 3PL agreements and not demanding the discounts that were supposed to come into play once a certain threshold was reached – discounts that sourcing spent a lot of time negotiating into the contract in an attempt to save the organization money.
  • It’s not taking advantage of special economic zones in India and China that offer tax exemptions for items simply passing through the country and / or lower tax rates on corporate profits and not taking advantage of US Foreign Trade Zones that allow payment of duties to be deferred until the product leaves the trade zones.
  • It’s going through a distributor to buy its goods from China, and this distributor is actually distributing counterfeit goods!
  • It still hasn’t updated it’s entire fleet to be ACE compliant. Now that ACE has been rolled out at almost every land border port in the US, CBP expects that all truck-based shipments will be supplying ACE-compliant e-manifests BEFORE the truck reaches the border. Send the wrong truck – and it won’t be going anywhere for a while – freezing your supply chain!

So what can you do? Besides better educating yourself on what’s involved in Global Trade, starting with the Introduction to Global Trade wiki-paper, and the Customs and Security Primer, Free Trade Primer, and Regulatory Compliance Primer on the e-Sourcing Wiki [WayBackMachine], you can start by getting an audit of your processes and data and see where you’re weak and where the greatest refund and savings opportunities are.

Make sure to do a complete review of trade agreement management, FTZ/STZ analysis, HTS classifications, VAT payments, supply chain finance strategies, freight, and sourcing opportunities. If you’re a Fortune 500 company, this could easily identify 20M to 100M (or more!) of savings that are instantly attainable, above and beyond what you’re going to find in an average strategic sourcing project (even if it does use strategic sourcing decision optimization as this only optimizes the model provided at the category level – it does not look at your sourcing network holistically from a trade perspective, which should be done once every one to three years, on average).

And we still didn’t talk about the fact that “Gender & Age Discrimination is Costing US Importers Billions of Dollars!” (Global Data Mining, acquired by CUSTOMS Info, acquired by Descartes) Data mining analysis has determined US Importer’s have overpaid more than $1.3 billion in discriminatory duties over the past two years. When it comes to tariffs on clothing, shoes, and other age or gender differentiated products, there is often no apparent pattern which penalize men in some instances, and women in others. Research has identified more than 2,200 pairs of US Harmonized Tariff codes (HS codes) impacted by discriminatory duties, over 300 for Age Discrimination and more than 1,900 for Gender Discrimination. More than 40 importers have already filed a lawsuit to protect their interests. Have you?

That’s why Global Data Mining is Sourcing Innovation’s Vendor of the Week. Not only is it one of the few companies offering these desperately needed audit and data mining services, and doing so at a rate every company can afford (it’s goal is to provide you with a blended cost of under $100 per man hour – compared to the Big Consulting Shops who want to charge you at least three times that), but it’s also one of the few companies making a concerted effort to educate you on what savings opportunities you may be missing in your global trade operations and what issues, such as the gender & age discrimination in HTS duties, you should be aware of, and speaking out against. Check them out.

Algorhythm and the Optimization Rhythm in India

Recently, I had the pleasure to have a couple of conversations with Ajit Singh, the Founder and Director of Algorhythm, a company in Pune, India that has significant expertise in Optimization and Supply Chain Modeling. The have their own optimization engine, a set of front-ends for different types of supply chain models that can be used by anyone with modeling skills, and significant experience in helping large global multi-nationals with significant supply chain network design and optimization problems. Basically, they’re India’s CombineNet, but with a slight distinction – every model they build, including custom models, can be executed and modified completely by the client through an extension of their easy-to-use windows-based front end – you are not tied to their services. In comparison, although CombineNet has done a great job over the past few years of actually building stand-alone products and interfaces, it’s still often the case that custom models are only available through their services model.

Algorhythm has the capabilities to attack both strategic and tactical supply chain problems from an optimization and simulation perspective. They have sophisticated models for strategic planning that include inventory optimization, distribution network design, manufacturing network design and for tactical execution that include production planning, logistics planning, and supply network execution.

They also have specialized solutions for oil, steel, and packaging as well as having a considerable amount of experience in creating models for manufacturers and distributors. Major clients include Unilever (Hindustan Unilever, Unilever Plc. UK, and Unilever China), Thyssen Krupp, Hindustan Petroleum, and Parle Products among dozens of others. Their manufacturing and distribution network design models often save their clients 3-5%. Remember that we’re talking production models here – not sourcing models, so this is actually quite good. In terms of efficiency, their production planning and scheduling models often halve throughput time and inventory carrying requirements – which is also very good. Furthermore, we’re not talking small models here – Parle, for example, ships 50K trucks per year per SKU from hundreds of factories to thousands of wholesalers.

It’s quite easy to build a model in their products, which they call Prorhythm (for production-planning based models), Netrhythm (for network-planning based models), and Logrhythm (for logistics planning models), and which run on top of their Xtra Sensory optimization engine. They’ve thought through what the model is, what the core elements are that make it up are, what the costs are, and what measures you might want to optimize. Building a model is simply defining all the relevant entities (which are factories, lines, outputs, inputs, etc. in production planning), the associated costs (material, labor, overhead, etc.), the measure(s) you want to optimize (cost, throughput, etc.) and their priority / weighting if multiple, and the constraints. It assumes all relationships between related entities are valid unless you specify them as invalid (and permits groupings for easy constraint definition). It also groups constraints in a “constraint file” so you can easily run the same model against different constraint sets. Basically, it’s built to build models the way the doctor would build it.

Since there is no “one” optimal solution when you’re optimizing against multiple objectives, as it’s almost always impossible to precisely normalize each measure to a uniformly distributed 0-1 interval that can then be weighted according to the weights you want, they also support simulation. You can tell the optimizer to construct a set number of models equally distributed around the desired optimization point and it will automatically create and run all of the variants which you can then compare to see how slight changes impact solutions and goals.

It’s a great offering, and the people are quite knowledgeable. If you have a tough optimization problem, be sure to check them out. They might surprise you.

Vinimaya: The Next Wave in Product Catalogue Management (PCM)

A little over a week ago, in Networks are ok. Catalogs are Good. Punch-outs are Better. But Agents are King!, I introduced you to Vinimaya [rebranded Aquiire, acquired by Coupa] – a little known company from Shelton, Connecticut (apparently, it’s not a total wasteland) that may be the only company in the space with a real answer to the Supply Network 2.0 Challenge.

Billing themselves as a Supplier Enablement Solution for e-Procurement with their Catalog Integration System based on distributed search technology, their product truly does allow an e-Procurement system to access supplier web-sites, online catalogs, and internally managed catalogs concurrently from a single user interface.

Unlike today’s supplier networks which only support hosted catalogs and punch-out enabled sites, constitute a large expense for the buyer and the supplier, have a long enablement cycle, and provide the buyer with almost no control over access, Vinimaya’s new Product Catalogue Management (PCM) solution, which they sometimes call a Virtual Punch-out or Virtual Supplier Network (the VSN), supports ANY site (be it a punch-out, catalog, market-place, or plain old web-site), does not cost the supplier anything (as any solution that charges the supplier only adds to the buyer’s cost as the supplier has to raise their prices to compensate for the cost), can be enabled in a day, and gives the buyer total control over access, view, and pricing with their local pricing and audit engine capabilities.

Furthermore, they can easily enable standard and custom terms and pricing to each buyer. Since most suppliers plugged into a supplier network accomplish this through a separate, protected, landing page that contains pricing customized for a particular buyer, all Vinimaya has to do is program that link (and the login) into the agent instances used by that buyer, and, presto, the buyer gets standard terms and conditions and – more importantly – gets those terms and conditions in the standard view which allows them to compare the terms and conditions across all products from all suppliers that meet the identified need. Alternatively, if the supplier cannot do this, the buyer can create discount rules or override SKU prices on a supplier (by supplier) basis in the local pricing and audit engine. No need to have a third party involved, as all the third party does is take a cut of the transaction and significantly raise the transaction cost by performing a service that the buyer can easily do on her own.

And the system works. They already have over 12M skus from over 150 leading suppliers in a single instance (with over 200 suppliers enabled for general use), and the interactive distributed search works in a couple of seconds for a new query, and under a second for a query that is similar to, or a repeat of, a previous query (as the system caches relevant results). It’s also very scalable – in their five largest implementations, they support over 30K users and hundreds of suppliers. (And, as indicated in my last post, they can quickly enable new suppliers by extending and customizing existing agents in their database. On average, they can enable a new supplier in a couple of hours, and have found that over 75% of US suppliers fall into this “quick enable” category. Furthermore, when they encounter a supplier that uses a non-standard web-site design or custom protocol, do to the distributed nature of the technology, they find that, on average they can still enable the supplier in about a day.)

The things to remember are that we don’t need a separate “network”, we have one already, it’s called the internet; we already have all the content we need on supplier websites (the supplier doesn’t have a web-site you say?* that’s okay, the supplier network 1.0 options are still available); and web-services allow a lot more functionality than some of the big dogs (who haven’t innovated in ages) would have you believe.

I applaud Vinimaya for cutting through the noise and offering the direct-connect solution that probably should have been designed in the first place. The reality is that today’s supplier networks are nothing more than bad implementations of what is fundamentally a really good idea. The technology has to use what’s there, bring it all together, and do it quickly in a seamless fashion. Otherwise, your procurement department will be spending too much time on the tactical when they need to be focussing on the strategic.

* If the supplier isn’t on the web, then all of the supplier network 1.0 options are still available: the supplier can upload the catalogue using excel or use an e-form. If the supplier doesn’t have web access, then either Vinimaya or the buyer can load the catalog on behalf of the supplier. (But if the supplier doesn’t even have web access, then I think you have to ask if you’re sure that you’re using the right supplier.)

Sourcing Lifecycle Management II: Enter Co-exprise

In yesterday’s post I introduced you to Sourcing Life-cycle Management (SLM), a new dawn for aerospace, automotive, defense, medical device, and high-tech / electronic manufactures with complex direct sourcing problems. SLM is the integration of the supply chain centric business processes of sourcing, procurement, PIM, and supplier management that were always meant to be together.

In today’s post, I’m going to re-introduce you to Co-exprise [rebranded DirectWorks, acquired by Ivalua], I company I first introduced you to in A Kick-Ass Direct Sourcing Solution for Manufacturers: Part II.

In my last post, I indicated that they were building a new-type of direct sourcing solution that integrates RFx, auctions, project management, collaboration, PIM, dashboards, and tree-based navigation as well as enhanced security, contextual-awareness, supplier qualification, and enhanced meta-data capabilities. But as I’ve come to understand it better, I’ve realized that it is the first solution on the market to make a serious, honest, effort to address the complex direct sourcing problems that other systems cannot handle because these types of problems are unique and require a distinct solution.

However, the real power of the Co-exprise platform is that all of this is built on a number of basic building blocks, including workflow management, business process rules, collaboration technologies, a centralized repository, project management, cBOMs (collaborative Bills of Material), cost models, and analytics, that are inherent to, and invasive across, the platform. This means that all of the technologies are integrated into one collaborative workflow where common data is always accessible and analyzable.

This allows the platform to offer benefits to its target verticals that go beyond standard solutions in the areas of productivity, implemented cost reduction, and compliance. Productivity increases start back in NPI (New Product Introduction) as the engineering team can load and track all designs in the system the minute the project starts and continue through to post-award contract management as delivery, quality, and SCOR (Supplier CORrective Actions) can be tracked against each order against the contract. As the system captures and tracks all of the orders and integrates contract management, the system is able to achieve fully implemented cost reductions. Finally, Co-exprise’s unique Secure Digital Forms Technology, which includes a unique ID in every form and allows the form to be completed and uploaded by suppliers off-line, can be used to create mandatory forms that ensure compliance with environmental regulations such as REACH and RoHS.

Now I’m not saying the platform is perfect. For example, it doesn’t have supplier side EIPP capabilities (a very useful part of e-Procurement which facilitates n-way matching and charge error detection before the supplier even sends the invoice), decision optimization (which would allow what-if scenarios to be created and analyzed on make-vs-buy decisions), or a mature spend analytics 2.0 offering (even though the initial spend analytics 2.0 offering they do have now puts standard analytics 1.0 offerings from traditional vendors to shame, and contains some advanced capabilities that are similar to capabilities only found in BIQ). However, it is the most complete platform I’ve encountered for the problem they’re solving, they can integrate with e-Procurement platforms like Ariba that handle EIPP, and they are still working on their new spend analytics offering, which could likely become one of the best analytics tools on the market for the direct sourcing problems they’re solving next year (and what they have now is nothing to scoff at).

For picking up the SLM gauntlet and bringing to market a solution that addresses the complex direct sourcing projects that have been largely ignored until now, Co-exprise is my vendor of the week. (A SI exclusive until year end or sponsor #2 signs up, whichever comes first.)