Category Archives: Vendor Review

CombineNet X: The Jay Reddy Interview

Those who know me (and those who have taken the time to read the about posts) know I worked at MindFlow where Jay Reddy was CEO for most of its existence and that I had my fair share (ok, more than fair share) of quarrels with Jay Reddy, but these were almost always centered around, or related to, technology development (selection, management, integration, people, etc.). However, on the sourcing side of the equation, especially from a strategic perspective, I have to admit Jay Reddy really knows his stuff – including where and how to best apply existing and emerging technology to solve your sourcing problems and improve your end results. (There is a big difference between knowing how to build technology and knowing how to use technology. I find that many great developers know the first, many great business minds know the second, but that very few people clearly see both sides of the picture.)

Thus, I would strongly encourage you to check out Parts I and II of Paul Martyn’s Jay Reddy Interview over on CombineNotes [WayBackMachine] for Jay’s insights.

Informance: Manufacturing Performance Management in Disguise

Last week I re-introduced you to Aravo, a hidden gem in the supply chain space with their mastery of Supplier Information Management (SIM) that goes so far above and beyond what you get with traditional packaged e-Sourcing suites that even Oracle, one of the few companies that not only eats its own dog food and drinks its own champagne but also tries fervently to have it for every meal, and Google, one of the few powerhouse research labs left in existence thanks to the short-sighted venture craze and short-term return strategies of the last decade that saw the likes of some of the greatest labs (like Xerox Park, Bell Labs, etc) more-or-less disappear from existence, have decided to adopt the solution.

This week I’m going to introduce you to another hidden gem in the supply chain space that you might not notice otherwise – and it goes by the name of Informance (acquired by Epicor). Although I did introduce them to you back in this post in January, I doubt you took much notice as I didn’t go too much beyond the press release and web-site in my introduction as I was still struggling to understand where the true value of their solution lies.

However, thanks to a concerted effort by their new Chief Marketing Officer, the infamous Sudy Bharadwaj (who temporarily replaced Tim “Mr. Perfect” Minahan at Aberdeen before the arrival of Vance Checketts after market-making stints at MindFlow and i2), their messaging (and website) has been considerably cleaned up and clarified and their knowledge center has exploded. (Their recent series of benchmark studies, reminiscent of Sudy’s record-breaking research performance at Aberdeen of 5 studies in 7 months, is particularly enlightening as to the importance of the type of solution they offer.) After reviewing the cleaned up messaging, the new materials, and a few discussions with Sudy, I’ve finally figured out what Informance really does and how it goes beyond traditional manufacturing solutions to allow centralized operations and contract manufacturing customers to improve their distributed and outsourced manufacturing processes.

In a nutshell, even though they are currently advertising their solution as Enterprise Manufacturing Intelligence (EMI, not to be confused with the EMI Group), what they are really doing is Manufacturing Performance Management (MPM) – which could be explained as next generation Supplier Performance Management (SPM). In Supplier Performance Management (as promoted by Ariba (acquired by SAP), Emptoris (acquired by IBM and sunset in 2017), and Ketera (acquired by Deem), among others), you collect, analyze, and disseminate relevant supplier performance metrics to determine where your suppliers are performing well and where they are performing poorly. You then use this information to optimize your supply base, identify your strategic suppliers, and collaborate with them to root out identified performance issues and develop processes for improvement.

Manufacturing Performance Management (MPM) takes supplier performance management to the next level by not only identifying where performance is lacking (relative to best-in-class) at the plant level but also by providing actionable information upon which you can base performance improvements. By tapping into bi-directional information flows, what-if scenario analytic capabilities, six sigma, lean, and TPM knowledge bases, and heuristic improvement strategies, the system can not only tell you that production is down, but it can pinpoint the specific manufacturing line within the specific manufacturing plant that is not producing its fair share of units, determine the reason for the decreased production (breakdown, lack-of-inventory shutdown, labor shortage, etc), and provide you with a solution to fix the problem (increase safety stock, redesign your transportation network to prevent delays, increase staff levels, etc).

The importance of being able to go beyond identifying a problem to identifying one or more potential solutions in your manufacturing and contract manufacturing operations cannot be over-stressed. Just one of the benchmark studies I referenced above serves to highlight the drastic performance gaps between laggards and best-in-class performers. The Food and Beverage benchmark study found that best-in-class performers have 6,800% fewer process failures (0.25% vs 17%), 828% fewer equipment failures (1.69% vs 14%), and 33,333% fewer shutdowns (0.03% vs 10%). In addition, best-in-class have 10,909% fewer changeovers (0.11% vs 12%), 1,145% less operational downtime (0.96% vs 11%), and over 60,000% fewer production adjustments (0.01%, rounded up, vs 6%).

In addition to the bi-directional information flows, what-if scenario analysis, and actionable insight, Informance also offers real-time performance monitoring, proactive before-the-fact notifications, and multi-level dashboard monitoring that starts at the plant floor manager and goes all the way up to the COO. This is not to downplay their plant solution, which I’d still consider labelling EMI (Enterprise Manufacturing Intelligence), since contract manufacturers can also proactively use this solution to improve their operations and become supplier of choice to their customers, but merely to note the extent to which their enterprise solution goes beyond traditional EMI into the beginnings of true MPM. So be sure to check them out, and their expanding knowledge center in particular.

The Arrival of Aravo?

I was going to wait until Jason posted the follow-up to “Aravo Tackles the Supplier Information Management Challenge Part 1″* on Spend Matters before doing my post (as I did meet with them last month), but Tim’s post on “Do You Know Who Your Suppliers Are?” on Supply Excellence [WayBackMachine] has provided me with perfect timing.

In his post? Tim asks:

  • How clean or accurate is your company’s vendor master?
  • When was the last time it was updated?
  • Does it provide complete and detailed insight into supplier capabilities, health, and performance?
  • And how many vendor masters does your company use?

Tim then stated that if you wavered on any of these questions, you are not alone and that if you didn’t, you’re probably lying to yourself. He ended his post by stating that effectively selecting and managing suppliers in today’s fast-paced and global supply chain, requires a more accurate, current, and holistic view of suppliers – from basic contract information to capabilities and attributes to active contracts and performance data. It also requires a new approach to gathering and maintaining the supplier record … and this new approach can best be described as Supplier Information Management.

Procuri’s [acquired by Ariba, acquired by SAP] Supplier Management solution, and it’s a good start (and you could include Emptoris’ (acquired by IBM, sunset in 2017) Supplier Performance Management in this category, for example), but if you really want a supplier information management solution that will allow you to shout an emphatic yes to the above questions and

  • Let you query how many suppliers you are actively sourcing from at any time.
  • Let you query what parts you’re sourcing from any supplier at any time.
  • Let you query whether or not you have current copies of compliance and insurance certificates for any supplier that requires them at any time.
  • Let you query which suppliers are carbon neutral at any time.

then you want the solution the big guys use, which include Oracle and Google, and that’s Aravo. One of the pioneers of Supplier Information Management (having just released their 4.0 version this year, as noted in my March post), Aravo has been building, extending, and revamping their solution from a simple central supplier information repository that tracks everything you ever needed – and wanted – to know about your supplier to a solution that lets you not only proactively manage your suppliers but proactively manage your supplier initiatives – including your Corporate Social Responsibility initiatives.

Despite having an industry leading solution, Aravo has not really received their fair share of press. This is probably due to the fact that information management is not sexy. E-procurement is sexy – the ability to automatically receive invoices, match to purchase orders and receipts, and automatically make payments when everything in line is sexy – it’s fast, efficient, and saves you money. E-sourcing is sexy – the ability to streamline everything from the initial RFI through the final award in an open format over the web with your suppliers half-way around the world and get it done faster, quicker, better, cheaper is sexy. Managing your virtual file cabinets – that’s not sexy.

However, what the media has overlooked is that in today’s corporate environment, the trend is moving to sustainability and social responsibility – and this is just not something you can keep on top of if your virtual filing cabinets are in general disarray. So even though Aravo’s solution may not sound sexy, what you need to realize is that what Aravo’s solution enables is sexy.

With their new focus on Simplifying Sustainable Supply Chains, Aravo’s goal is to give you an information management platform that you can use to manage your global supply chain for your sustainability initiatives while managing the dizzying array of new industry regulations popping up around the globe. Their solutions is configurable, scalable, and comes with a full set of dashboards that provide visibility at multiple levels of detail. The solution enables on-time completion of initiative programs since visibility is available to executives on a daily basis. It is worth checking out.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Ariba + Orbian = ?

The Ariba (acquired by SAP) – Orbian partnership is something I expected everyone and his dog would be picking up on and writing about, but with the exception of Mickey North Rizza’s (AMR, acquired by Gartner) and Jason Busch‘s (SpendMatters) analyses*, I haven’t really found anything of note, which is surprising given the potential significance of the partnership (if Ariba pulls it off right).

Ken Roche, CEO of Orbian, notes that By providing low-cost receivables financing and certainty of payment timing and amount to suppliers, buyers are able to achieve cost savings or better trade terms. Additionally, suppliers generate incremental free cash flow, improving their [days sales outstanding (DSO)] metrics and capital efficiency, by gaining access to the entire value of the receivable, at a low cost.

According to the press release, The ASN (Ariba Supplier Network) serves buyers and sellers in 115 countries and has combined transactions exceeding $95B annually. The ASN lets the buyers trading the $95B approve the invoices and notify Orbian. The suppliers view and Orbian provides payment within 48 hours of the decision to the supplier. This slashes the model to 2 days from the previous 30.

Mickey notes that:

  • Ariba is for many others a best-of-breed suite that is wrapped around their ERP system, such as Oracle or SAP. And while the two systems, Ariba and ERP, may work together, this presents an even greater opportunity for ERP-centric companies to tie into the ASN and take advantage of the Ariba partnership for greater working capital.
  • The partnership [also] moves Ariba ahead of its competition by offering three
    opportunities to improve working capital for the buyer and suppliers: earlier payment with electronic invoice presentment and payment (EIPP) and cards, dynamic discounting, and a third-party supply chain financing opportunity.
  • The Orbian strengths are in its diversified pool of investors that provide
    liquidity outside of the traditional bank credit line. With a low cost, plenty of capacity from investors, and a tiered structure, the opportunity is vast for immediate cash flow improvements. This is a huge differentiator for CFOs, treasurers, and CPOs who need additional resources that won’t adversely affect their balance sheet debt.

And Jason Busch notes that:

  • The real advantage for the original parties is that involvement with Orbian does not detract from the commercial paper pricing for suppliers. In other words, it’s a legitimate form of off-balance sheet financing which does not limit the ability to borrow in other ways.
  • I’d speculate that the global supply chain finance market opportunity will top a trillion dollars annually in the next decade (in deal volume).

But Supply Chain Finance goes well beyond just EIPP, early discounting, and third party financing. It also includes, among other aspects, virtual consignment financing, true optimization of working capital, increased analytics capability, and real-time visibility into program activity and the status of each customer. And this partnership could allow customers to take each of these aspects of supply chain finance to the next level as well.

For example, the platform could be used to facilitate greater virtual consignment financing, where the buyer buys the raw materials with added leverage and sells them to the supplier at cost, since buyers could also take advantage of this third party financing and still get the supplier a better rate. If the supplier needs to borrow anyway, when you consider the buyer could negotiate a better rate on both financing and on the raw material cost, this will still save money.

The platform can also be used to better optimize working capital – which goes beyond just early payment discounting. A supplier can calculate how much money it needs in any given week and optimize which payments to take early, which payments to take on schedule, and, which payments to accept late – offering yet another form of financing, but this time to a buyer.

And the platform can be used to give each supplier greater real-time visibility into the financial activity and status of each customer, giving them visibility into the financial side of their supply chain they may not have had before. It also gives the buyer better visibility into not only the financial status of their suppliers, but how much a buyer is willing to accept on an order to get paid quickly. This not only helps buyers manage risk, but could help sourcing teams negotiate better deals if they could turn around payments faster.

In other words, this is a partnership that could significantly advance the supply chain finance side of e-Procurement if done right … but only time will tell.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

CombineNet IX: Interlude – We Can Optimize Anything

CombineNet is on a quest to conquer the Optimization World! Hopefully I’ll be able to post more details soon, but for now, let’s just say that it sounds like their new slogan is “We Can Optimize Anything“. To that end, I hereby proffer* the following for their new theme song (assuming, of course, that they can get the musical rights from the Tragically Hip for Blow at High Dough).

They had a problem once … in my home town
Everybody affected … from miles around
Energy crisis … not enough silver bling
Well we ain’t no day traders, but we can optimize anything

Get it out .. get it all out
We’ll stretch that bling
Make it last, we make it last
To well beyond the market bell rings
Well the stock-car driver likes his rhythm,
never likes the stops
Throes of passion, Throes of passion
When something just throws him off

Sometimes .. the faster it gets
The less you need to know
But you gotta remember
The smarter it gets, the further it’s going to go
When you optimize so
When you optimize so

Whoa baby you’ll feel fine
You can trust that it’s genuine
Dollars and Cents, Saves Dollars and Cents
Yeah, Every time you optimize
Nobody solves it as good as we do
It is one kick-ass tool
‘Cause we solve so fast, solve so fast
Makes everybody drool

Sometimes .. the faster it gets
The less you need to know
But you gotta remember
The smarter it gets, the further it’s going to go
When you optimize so
When you optimize so

Out in the market, same Elvis thing
But they can’t catch us, ’cause we can optimize anything
‘Cause we can optimize anything

Sometimes .. the faster it gets
The less you need to know
But you gotta remember
The smarter it gets, the further it’s going to go
When you optimize so
When you optimize so

Out in the market, same Elvis thing

* Copyright 2007. All rights reserved.