Category Archives: Sourcing Innovation

Why Your Standard Sourcing Solution Doesn’t Work For Direct

Too many of you have been there. You sign that seven figure deal for that end-to-end Source-to-Pay suite, spend another seven figures and 18 months integrating with the ERP, PLM, AP, BI and existing Legal CR solutions, and then try to source your first NPI project natively only to … fail. Why is that?

They just weren’t built for direct.

And it’s not just something you can add in later. If the platform wasn’t designed from the ground up for direct sourcing, there’s zero chance it will ever do a decent job at it. (And, FYI, the majority of the S2P suites the big analyst firms are drooling over in their annual quadrants and waves started out as simple indirect Sourcing or Procurement tools.) People who don’t understand the nature of software don’t get this, but software has to be constructed like a building. You might hear vendors and techies throw around MVC model, which stands for Model-View-Controller, when they talk about how new and well architected their solution is, but that just means it’s built in a maintainable web-friendly way for what, and only what, it was initially designed to do.

It all comes down to the data model and the software architecture of the controller, and neither can be a black box. The data model has to be designed from the ground up to support bill of materials and direct sourcing and procurement data requirements. The controller has to provide the infrastructure to support the complexity of the application that is required. For those who don’t understand software, I like to put it this way. If you pour the foundation for a two story house, and buy wooden beams for all of your structure and supports, you can’t build a 10 story apartment building. You need a foundation for an apartment building and steel and concrete supports. (Even though you can theoretically build a 10-story structure on a two-story foundation if you have the right steel and supports, it won’t be stable. The slightest tremor on the Richter scale [which might not even be detectable by a human] or a strong wind will send it crashing down.) You need both. And just like you can’t replace the foundation under a building or replace the entire support structure in real life, you can’t do the same in code. You have to rebuild, usually from scratch.

So why weren’t they built for direct? Well, there are a number of reasons (besides they wanted to get a product to market fast and/or just weren’t smart enough to build a direct sourcing solution). They include:

  1. direct material sourcing is hard
  2. substitution is not guaranteed
  3. demand aggregation is not straight forward
  4. delivery time guarantees and on-time arrival is significantly more important

To understand these, and learn about the rest of the reasons the majority of sourcing solutions were not built for direct, dive into Standard Sourcing Technology Solutions Don’t Work for Direct – Part One and Standard Sourcing Technology Solutions Don’t Work for Direct – Part 2 over on Supply Chain Matters.

Simplify Services Sourcing By NVELOPing Your Bid Packages!

Services sourcing in most organizations is a complex nightmare. It’s not simple like indirect sourcing where you identify a finished product need, send out an RFQ for a standard product spec, get some quotes, do a landed cost calc using your pre-negotiated or market spot-buy freight rates and current tariffs, and select the lowest cost bid. Easy-peasy. It’s not even straightforward like BoM (Bill of Material) or Program management in a direct sourcing application where you send out a quote package with a set of components, detailed drawings and specs on each component, detailed cost breakdown requests, anticipated production schedules, and compliance and regulatory requirement documents. (And yes, while this is a lot of work to put together even with the best platform, including platforms that can suck in the majority of requirements from the ERP and the PLM, it’s still relatively straightforward for an engineer.)

Services sourcing is complex. While services might have categories for the chart of accounts, and services professionals might have standard roles, and any subsequent request for the same service on the chart of account from someone in the same role with the same experience will be similar, they won’t be the same. Installing a cable line is not just installing a cable line. Is it a home line or business line? Do you have to connect to the poll, a junction box, or a rack mount? Do you have to drill through walls? Are they wood or cement? Implementing an ERP is not implementing an ERP is not implementing an ERP even if it is SAP or Oracle in all instances. What version? What cloud platform does it have to run on / integrate with? Which P2P and back office systems have to be connected? And so on.

On top of the basic project requirements, services projects require a lot of terms and conditions, NDAs, professional certifications and insurance requirements, key performance requirements, confidential information on current state and desired state, evaluation criteria, etc. In a typical organization, a bid package will consist of a huge stack of e-documents, hastily assembled (and riddled with errors due to the haste), zipped up, and sent off to bidders who, hopefully, when struggling to fill out the overly convoluted RFPs on a tight deadline, don’t miss any key requirements before sending it back. (When the organization is in a crunch, which it always is, a lot of this work will often be done by third party consultants who will be less familiar with the requirements than the overworked staff who don’t have time to do it, leading to oversights as well as errors.)

Nvelop was founded to solve these woes, namely

  • the time requirement to put together the core of the RFP
  • the need to ensure that RFPs contain all the required bid / information fields
  • the effort to collect all the corresponding documents
  • the need to ensure the terms and conditions satisfy legal
  • the need to ensure suppliers see and respond to all mandatory terms and conditions
  • the need to communicate with vendors in a secure, trustable, method
  • etc.

We’re going to discuss their solution by addressing these points.

The RFP Core

Services RFPs are extensive and time consuming to put together. So Nvelop gets around this by jump-starting the process with LLMs that will create a starting RFP given:

  • project type (RFI, RFP Lite, RFP)
  • domain (Technology, IT Services, Facility Services, Legal Services, Marketing & Advertising, etc.)
  • expected issues (high competition, business criticality, environmental risk, etc.)
  • pricing model (fixed price, target price, time & materials, etc.)
  • engagement type (staff augmentation, system integration, software implementation, consulting & advisory, etc.)
  • business domain (Sales & Marketing, Finance, HR, Supply Chain, etc.)
  • Technology [stack] (AWS, Google Cloud, Oracle, etc.)
  • Enterprise Software (SAP, Oracle, Salesforce, etc.)
  • Business Criticality (1 to 5 scale)
  • Background Material (any documents with relevant information that will not be given to bidders)
  • brief project description
  • meta-data for management and indexing (due dates, owner, team, categorization, etc.)

It will use the LLM that is trained on generic project documents that match the request as well as historical projects from the organization to generate a starting RFP that will break the project requirements down into core processes and sub-processes with supporting requirements for the project type for each sub-process. For example, for an ERP Application Maintenance project, it will define the core processes of:

  • application maintenance
  • ERP system management
  • integration services
  • reporting and analytics

and for application maintenance, for example, it will identify the core sub-processes of:

  • issue resolution
  • incident management
  • change management
  • performance monitoring
  • user support

with a detail description of each sub-process and bidder requirements. For example, for issue resolution, it might break down into

  • vendor must allow users to log issues through a portal and issue confirmations and ticket numbers
  • vendor must investigate all issues within one business day, regardless of criticality
  • vendor must respond to critical issues within one hour with a resolution team and estimated timeframe for resolution
  • vendor must maintain a knowledge base updated bi-weekly with common issues and resolutions for self-help
  • etc.

Once the initial RFP has been auto-generated, the buying team can

  • add internal comments during team discussions and/or collectively prioritize requirements
  • manually add, edit, or remove any process, sub-processes, requirement or description
    with status (generated, edited, etc.) tracked
  • approve when happy (and the platform can be configured to prevent issuance until all requirements are approved)

All Requirements Accounted For

Nvelop is not a new-age rapidly developed Chat-GPT wrapper parading as a Procurement solution when it really isn’t. It is a new startup founded by consultants who spent 20 years doing services projects while constantly thinking to themselves that there has to be a better way, who came together and defined what the requirements of such a sourcing platform should be, who built a real platform (that walks buyers through a 7-step process), and who only use LLMs for generating content where it makes sense.

The platform has a fairly extensive administration component where, for a project type, you can define:

  • the starting bid templates
  • core documentation requirements
  • mandatory terms & conditions

and the generation logic will ensure that all of these are included in the starting RFP (and associated package) that is generated, either through custom LLM instructions or forced overrides.

It also has a document library where you can store all of your standard documents on company profile, insurance requirements, compliance requirements, general service requirements for personnel on your site, etc. that can be pulled into all relevant projects.

Effort to Collect Corresponding Documentation

Since the platform, as described above,

  1. has a document library
  2. can, privately, store all related documents relevant in RFP construction on a project basis

It’s very easy to automatically include all of the relevant documents in an RFP, as the majority will already be in the system, and the rest can simply be uploaded and the majority of relevant content auto-extracted by the LLM during the initial generation process.

Terms and Conditions Satisfy Legal

Not only can you include a standard clause library, in the administration section, but you can configure the application to use pre-approved legal clauses verbatim in requirements and draft agreement generation, and the LLM will only be used to generate the parts of the RFQ and draft agreement for which there is not a verbatim clause. In addition, if a clause needs to be adjusted for different geographies, categories, etc., you are able to configure the application to force the LLM to generate its response based on a library clause. In other words, if you already have something acceptable, you can be sure it makes it into the RFQ or draft agreement vs. just rolling the bones.

Forced Supplier Response on Mandatory Ts and Cs

RFIs and RFP packages can be designed to force a supplier to respond to each mandatory and critical requirement, where they can simply select a Yes/No or Yes/Partal/No response with additional commentary, if required. This way a supplier can never say “they didn’t know” something was a requirement in the final stages of a negotiation as they will have seen and responded to it during the initial bid and requirements traceability is a core part of the solution platform.

Secure Communication

Since the RFP process is now going through a platform, where all documents can be securely downloaded and uploaded, all communications securely maintained in their own, auditable, stream, and all required confidential documentation can be accessed at any time once the NDAs have been accepted, the platform solves the security issue that buyers and vendors have with sensitive documents and bids being sent back and forth through email or common FTP portals.

Solution Summary

As we hinted above, the solution will walk a buying team through a seven-step process that consists of:

  1. Planning – enter all the data you have and instruct it to generate a starting RFQ
  2. Requirements – edit and finalize the requirements listing
  3. RFQ – finalize the RFQ (by approving or editing), which will consist of
    • overview information (introduction, your client info, submission and evaluation process, technical landscape, services overview requirements, services timeline, and other relevant information sections)
    • Questions – the requirements you worked on last phase, which can be extended with other questions about the vendor not core to the services requirements
    • Pricing – where the vendor will submit the bid sheets in the appropriate format that is automatically identified based on procurement type and category (including fixed price bids, rate cards, etc.)
    • Evaluation Criteria – where you define the criteria (and weighting)
    • Attachments – automatically pulled in
  4. Tendering – where you can see the RFP Preview (as the vendors will see it), select the vendors, and handle the Q&A; and where you can resend if you have to make an update or do a subsequent round
  5. Responses – which captures the vendor responses
  6. Evaluation – where you evaluate the responses once the RFQ is closed, and can compare them side-by-side at a high level, drill down into the details, and have the system generate overall scores based on the evaluation criteria (and weighting) you define
  7. Deal Room – where you kick off a negotiation process with one or more vendors, assisted by an automatically generated assessment of deviations from specifications or requirements that you will need to address (which will be based not just on clicked boxes but comments, likely intention, degree of deviation, summary of the deviation, assessed negotiation complexity, and likely relative importance)

Moreover, a supplier can easily access, and respond to the RFQ, through the vendor portal that allows them to quickly access the relevant sections, check the boxes, provide their responses, and upload documents. They can also engage in Q&A, and see the status of each project they have been invited to. The Q&A capability includes a LLM-powered chatbot that will search all of the available documentation and provide answers to questions already answered, including pointers to where to find that information in the RFQ package, and that will, when an answer is not found, direct the user to directly message the buyer for the answer.

Why SI is Covering and Recommending Nvelop for Shortlist Configuration

Those who follow SI will know that the doctor despises the rampant proliferation of untested Gen-AI and the random application of Gen-AI to every problem, even a problem so obviously far beyond what Gen-AI was suited for that even a complete idiot would abandon the tech once they say how bad it worked, so why does the doctor recommend this Gem-AI powered platform?

  1. it’s not Gen-AI / LLM driven
    the core is a solid workflow app that follows a process that the founders, each of whom have over two decades of services sourcing support, know works
  2. LLMs are being used for what they are good for
    massive document store summarization and document generation off of standard requirements and similar projects
  3. the LLM can be fine tuned
    and you can direct it to (re)generate an entire package, single document, single section, single process, or single line-level requirement description with additional instructions
  4. everything can be overwritten or manually generated in the first place
    Gen-AI was never meant to be the solution, but a starting point that can get you 90% to 95% of the way there when you don’t have an out-of-the-box solution, so it is designed to generate content where it can get “close enough” and where it’s easier to manually edit the generated output than to even generate a starting document from scratch through cut-and-paste
  5. every single line MUST be manually approved
    and while you can click that “approve” button without reading the associated content, if something is issued wrong, then everyone knows who didn’t do their job and who is ultimately responsible

Moreover, it will get you through a complex sourcing project mostly correct and mostly complete in a matter of weeks, with little to know external (consulting) support required, even if you’ve never done that particular complex sourcing project before! And while no solution is perfect, we’d hazard a guess to say even a neophyte would do a better job with this platform than a grizzled veteran who had to do everything manually under a severe time crunch. (While the grizzled veteran likely wouldn’t make any mistakes on anything they touched, they would be likely to miss something important in the virtual stacks of paperwork with more pages than a copy of “War and Peace” [Simon & Schuster edition] given the time crunch they are always under.)

Nvelop might be new, but it’s solid, which is what you get when you realize it is a solution built by veteran complex services sourcing professionals specifically to support the processes that complex services sourcing professionals use. So if you are in an industry with a lot of services sourcing requirements, and your current sourcing solution (designed for indirect and direct) is letting you down (and it is), then we recommend you at least give this solution a look. The responsible use of AI impressed the doctor, so we would fathom a guess that it should impress you too.

Is your Procurement Practice Too Tactical? Maybe you need to Quote STRATegic with QSTRAT!

QSTRAT was founded twenty years ago to help companies get a better understanding of real product and part costs in order to assist those companies with the relentless margin pressure, constantly tightening timelines, and always-on global competition. They do this through a very customizable, and customized, Sourcing and Supplier Management Platform along with a rather unique Distributor Quoting Solution (which we are not covering in detail) to support value-added distributors (VADs) [who go beyond just logistics and fulfillment and might also provide training, technical support, sales demonstrations, and/or bundling with other complementary products for more complete customer solutions in addition to other value-add solutions]. Let it just be said that the Distributor Solution is an extension of the manufacturer solution where the value added distributor can get detailed quotes from the supply base, add its own markups and outbound costs, and provide very detail quotes to a buyer.

The core of their platform is a highly configurable single tenant cloud sourcing and supplier management solution for manufacturers and distributors who need to extend their ERP backbone with solid strategic sourcing capability in a manner that is compatible with their favourite tools — Microsoft Excel, e-Mail, and PDF forms.

Before we go any further we are going to call out one key difference between QSTRAT and most other cloud-based platforms — there is no supplier portal. In certain traditional manufacturing industries populated by old-school manufacturers, they are not very modern technology / SaaS savvy. They don’t want yet another supplier portal to try and figure out, to try and remember the passwords and security configurations for, and to have to log into every day to try and find their orders and communications when for years they ran off of email and spreadsheets and could get all their communications through one source. Also, in defense, it can be very hard to get yet another platform/portal approved, and even if it’s okay for your company, if one of your suppliers is also a defense subcontractor, they may not be able to use your new platform, putting you in a pickle — do you insist on the platform and find a new supplier, or keep the supplier and not get the benefit of the platform you jut bought.

QSTRAT was developed with those customers in mind and ensures all bids, quotes, surveys, and information exchange goes through secure PDF forms (or, should the customer choose, Excel spreadsheets can also be used, especially for simple information requests where there is no need for provably secure audit trails because no award is being made). This is because, with their target market, e-mail, Excel, and PDF forms are already universally accepted by the majority of suppliers. Whenever a quote, survey, request, etc. is issued, a custom secure PDF form is generated by the platform which is sent to the supplier through an email (link) for completion (and button based submission when they are happy with the form, where the state can be saved while it is in process).

The QSTRAT Sourcing and Supplier Management platform has the following key parts:

  • part database
  • supplier management
  • events (RFPs/Qs and Surveys)
  • reports
  • administration

Part Database

The platform can maintain the organization’s complete part database natively to facilitate rapid (re)sourcing of parts and programs, which can even consist of multiple quote packages that collectively satisfy a bill of materials. Part profiles are extremely extensive and can be configured to track all of the fields you want to track as well as have their own cost breakdown models if desired. They can be associated with risk factors, compliance requirements, insurance requirements, and detailed CAD/CAM drawings / STP files and all of this information will be sucked in by an event that includes the part.

Supplier Management

Supplier management is kicked-off during initial implementation where the cusstomer’s (active) supplier list is loaded from the ERP. Once the suppliers are loaded, additional information can be collected through surveys that can be sent to the suppliers as part of onboarding, data collection, performance reviews, etc. Suppliers can be categorized into organizational hierarchies of choice which can be product based, region based, raw-material based, etc. to allow for easy administration and selection of relevant suppliers for events.

Supplier profiles can be as in-depth as you like and upon system installation QSTRAT will define as many data fields in as many categories (basic profile, financials, contract management, risk factors, Scope 3, scorecard, etc. etc. etc.) as the organization desires. All available data will be imported from the existing supplier master in the ERP, the rest can be collected from surveys or manual entry, and updated data can be pushed back to the ERP on a schedule.

Suppliers can be created and onboarded natively in the QSTRAT application (and then pushed to the ERP when approved), and onboarding can begin with only a supplier name, contact name, and contact e-mail. Onboarding can be multistage and start with a registration questionnaire, continue with specific questionnaires based on the categories you will assign the supplier to (and focussed on its capabilities), and end with a formal evaluation exercise that follows a pre-defined workflow that will end in a supplier approval (or denial). The specific requests can include tooling capabilities, associated capacities, and, if the supplier is an MRO supplier or provides services, it can also include maintenance services and default rate cards.

Events

RFQs, which are the primary events in the system, consist of header information, line information, attachments, suppliers, communications, and returned quotes. The header information is the information that defines the event and goes beyond the simple meta data (id, name, dates, contact) but also defines the RFQ type (and associated workflow), program relationship (is it supporting a program defined by a parent RFQ that has been split into sub-programs to simplify analysis based on similar part types or supply base), prior event history (with the last quotes received, if they exist), and any financial guidance you want to provide (like expected margin % in detailed cost breakdowns, etc).

The attachments consist of global event attachments as well as individual attachments by part. Default attachments will be pulled in according to the RFQ type and the parts included in the RFQ, but additional can be attached at the global or part level before the RFQ is issued. This attachments will typically include NDAs, CAD/CAM drawings, compliance and insurance requirements, etc.

The lines represent the individual parts being quoted, each of which can have their own custom-defined detailed cost breakdown model, notes, and attachments. The quotes, which are filled out through custom PDF forms generated for the suppliers, can be exported in bulk to CSV for users that like to do spreadsheet-based analyses, but can also be compared in the QSTRAT platform in the QuoteMatrix which will show the quotes summarized (and sortable) on two key fields (landed cost, fully burdened cost, country of origin, or any other pre-defined calculation or identifier). The buyer can use this quote matrix to select bids for award, or use the pre-defined auto-select functionality (which, depending on the workflow, will select the lowest cost, the lowest cost that meets a certain requirement, etc.). The quote matrix is not limited to current bids by line, but can include key description fields (unit count, target price) as well as historical quotes for comparison. The matrix has extensive filtering capability so it is really easy to see parts with all or without one or more supplier responses, that are or are not selected for award, and with and without returned attachments. The buyer can also drill in to the cost breakdown matrix by supplier as well to see the relative costs for each component (material, tooling, certification, etc.).

Suppliers can be auto-selected based upon a pre-configured auto-assignment rule (that will select all suppliers that can supply all of the parts or at least one of the parts), assigned en-masse based on associated categories, assigned on a part basis based on manual selection, or selected en-massed based on category and then deselected on a part-by-part basis. Once the supplier is selected, the buyer can select the contacts at the supplier who should receive the RFQ, which, depending on the event flow, will be pre-selected to the first/default contact or all.

Events are single round by default, but can be turned into multi-round events with the re-quote functionality, which can also be used to kick back a quote (with a comment) to the supplier for re-quoting during the event if the buyer believes the supplier made a mistake.

Reporting

Accessible from its own tab or as drill downs off the dashboard, the platform contains a number of built in reports around event activity, customers, suppliers, and parts that breakdown by status, spend, activity, etc. The specific dashboard widgets and reports will depend on the platform configuration on implementation, and if the buyer wants DIY reporting, they can export all of the data to CSV or pull it into an external business intelligence (BI) or spend analysis tool using the Open API.

Administration

The user can do standard organization, user, workflow, and form field administration through the platform, but most of the configuration is done on implementation where the different event workflows are defined for the different event types that the buyer wants the system to support.

The platform supports a large number of event types which include, but are not limited to, supplier registration, supplier information update, supplier evaluation, tooling request, RFI, estimate (only), RFQ, order request, maintenance request, market test, etc. and additional types can be configured on demand. Associated with each event type can be an associated response/quote-flow definition that defines not only the desired header information, attachments, and communication requirements, but also the associated workflow both for event creation and issuance but also review and approval. Note that every field/document submission requirement defined at the header level will cascade down to each individual line, which will also pull in the cost model, fields, and attachment requirements associated with the part/SKU. These templates can also be configured to pull in the cost of an item currently in inventory or the last quote from a supplier (if still valid), to minimize the effort on the part of the supplier to update a quote and respond to an estimate request or RFQ.

Implementation and Integration

Now, with everything customized for each customer, it sounds like it would take a long time to get this system up and running, but the reality is that customers are usually up-and-running on supplier onboarding and core categories within four to six weeks and fully up and running in three to four months. QSTRAT has been delivering their solution in this manner for over 15 years (as the company turns 20 this year) and have a huge library of templates for each event type, each industry, etc. that they can start with for rapid customization to customer needs.

QSTRAT integrates with the major ERPs and has an open API for loading parts/lines/suppliers from your existing systems (ERP, CRM, EDI feeds, etc.), automatically creating events, and pulling information back.

Summary

QSTRAT is very interesting in both its approach to manufacturing and distributor sourcing and the way it implements that approach. Unlike many sourcing platforms,

  • it believes in 100% customization to the client and the way they work, maximizing the value-add on top of the ERP/MRP/WIMS the manufacturer/distributor uses to run their business.
  • it is single tenant cloud both to ensure maximized customization capability and to meet the security requirements of defense contractors that are subject to rigid security requirements
  • it uses secure PDFs for supplier interaction and data capture, forgoing the “yet another portal” approach the majority of vendors take to supplier interaction
  • it was built around Open APIs as most buyers want to work with their existing systems and tools they are comfortable with to the extent possible, and just use a sourcing tool for sourcing

So if you happen to be looking for a direct sourcing solution that meets one or more of these requirements, QSTRAT is definitely a solution you shouldn’t overlook when making your shortlist, and one that is currently serving customers across automotive, aerospace, medical devices, industrial, and high tech manufacturing.

How Many Zumens to Manufacture a Light Bulb? Just One!

Zumen, billing itself as the most comprehensive Source-to-Pay software for product manufacturing companies, purports to be the connect between the Part Life Cycle, Product Life Cycle and the Procurement Life Cycle and offer you one platform to manage your entire Source-to-Pay Process through their Direct Material Life Cycle Management platform.

So how does it stack up?

Well, let’s start with the basics. The Zumen platform offers core functionality in five areas:

New Product Development

To support new product development, they have modules centered around:

  • product, part and material data
  • product & infrastructure planning

The core of any direct sourcing platform is its pats management capability, and the Zumen platform can track all of your parts, all of their versions, all of their associated programs, all associated product and costing plans, all associated sourcing events, all awards, all procurements, and all associated drawings and documents. With respect to part data, you can not only track every related code and cost, but all associated materials. With respect to materials, you can also track estimates, supplier, and market commodity price data as well as associated scrap rates and scrap value. When it comes to building cost models for parts, which can include tooling costs, the platform also allows processes to be tracked in the norms master (with associated machines, norms, and units).

The platform goes beyond just tracking parts, but also tracks inventory, blocks (internal commitments), commitments (from awards/contracts), and production schedules around the parts.

In the Zumen platform, product development is governed by a program that tracks production sourcing, supplier management, strategic sourcing, and procurement. The platform supports the definition of full programs at the final good level, even if that is an automobile or piece of construction equipment with 10,000 parts, assembly level, or part level. Like any good product management platform, it supports versioning and a full history. Programs can be imported from the ERP or engineering systems (like Windchill) or created in the platform from scratch. BOMs are placed inside a product hierarchy of product sectors, product lines, model families, models, and/or other programs, as appropriate. The bill of materials will support as many levels as desired.

Bill of materials are very extensive and go beyond just basic specifications, but will also track all costs and commitments at each phase of the bill of material lifecycle based on the associated program. This can include estimated and actual costs during initial product planing, production sourcing (during initial development), strategic sourcing (for mass production), the current procurement cycle (if the costs are tagged to indices), alternate part costs if there are alternate parts defined, and (alternate) quotations if there are associated quotations from suppliers.

Moreover, from the currently active programs, the platform can automatically extract the current material requirements plan to get a complete overview of the material requirements at the base level across all of the bill of materials, including the current delivery dates, which can be amalgamated and modified in the material requirements plan.

Sourcing

  • product costing and approvals
  • request for purchase
  • RFQ
  • budgeting & spend management

Cost estimates can be as high level or as detailed as the user desires. They can be high level models that simply break down the cost into material costs, production costs, delivery costs, and tariffs, or detailed models that break out the cost associated with each material, production processing step, service, transport leg, and delivery/trade charge. This can include tooling cost breakdowns, assumed minimum order quantities (for economies of scale), packaging, internal rate on credit, and other related costs.

Once a cost plan is complete, often after one or more suppliers have returned a quotation in a (production) sourcing event, a product cost approval can be created for formal costing approval.

At any time, a user of the platform can request a part or program for purchase for production sourcing or full (strategic) sourcing, and it will kick of an RFQ. The request will be pre-populated with all of the part data, and all the user has to do is define the volume required (which could be as low as a single unit during R&D or initial production sourcing or as high as a few million units during strategic sourcing for mass production of the product over the next few years). For production sourcing, the annual volumes are automatcally derived based on the program definition or the annual operating plan. The RFQ will be instantiated from a template that can be linked to the appropriate program classification, and the documents associated with the relevant commodities will be pulled in automatically as well when the RFQ is constructed. The RFQ can be limited to a single supplier, all suppliers who can supply the part, or a chosen set of suppliers. All associated documents, compliance requirements, NDAs, delivery terms and conditions, etc. that have been configured in the platform will automatically be included, as will the default manufacturing locations for delivery and product encodings.

During a production sourcing event, the buyer can also include details on the program, estimated annual volumes, estimated delivery schedules, current (buyer) (program) cost estimates, any associated (child) part details of relevance, and other relevant data. With proper platform configuration, all of this can be automatically included. When a buyer creates a sourcing event, they can access the entire part history for reference. They can also associate (internal) sourcing criteria with an RFQ, and when a quotation is returned, evaluate each quotation, and see the sourcing evaluations and score side-by-side with the quotations. (They can also see which documents have been returned and access any documents they need to for quotation and criteria evaluation). Note that the quotations have full drill-down capability even in side-by-side mode, allowing you to drill down to components of interest and roll back up for high level (assembly) overviews.

When an RFQ is returned, be it for production sourcing or full strategic (multi-year) sourcing, you can see the full quotation from each supplier, and compare them side by side, as well as comparing them to estimates.

These quotations can be used to create budget items, populate budgets, and update budget cycles (as budgets can be over multiple periods and associated with multi-year production plans). Budgets in the system can be at the part or program level, and, like purchase requests and quotations, be approved before finalized.

Procurement

  • purchase orders
  • accounts payable

Once the quotations have been returned and an approval has been completed, the buyer can create the relevant purchase orders to begin the sourcing process. These will then be sent to the suppliers for acceptance and/or requests for modification (if they want/need to split shipments), and once the suppliers accept the purchase order, they can send advance shipping notifications (ASN) when they are ready to ship.

Once the parts have been shipped, the suppliers can flip the purchase order into an invoice and send it back to the buyer, who will then receive it in the accounts payable module for processing.

Analytics and (Production) Monitoring

The platform contains a number of built-in dashboards for monitoring parts, programs, RFQs, production plans, cost estimates, budgets, inventory, and other platform capabilities. One of the main dashboards is the production dashboard that allows you to track total production over time from global production down to an individual part through drill-downs.

The platform also has some basic spend (analysis) dashboards for total spend and program/product cost analysis which, like the other dashboards, can summarize spend at the highest level across a time period of interest and allow drill down to a single part for a single date, and everything in between. The dashboard can also allow a buyer to drill into changes in product cost breakdowns over time. There is a similar dashboard for direct material spend, which can be global, program level, plant level, across all materials, a category, or a single material. And, of course, a dashboard that lets you drill into spend by supplier.

There are also a number of built in analyses around product costs which include, but are not limited to, landed cost analysis, import cost analysis, currency trend analysis, spend by plant, share of business analysis, and overall product cost analysis.

Supplier Management

Supplier Management is centred around supplier onboarding, information, quality (PPAP/APQP), and performance management. You can onboard a supplier using a customized workflow that collects the corporate, capability, and compliance information that you need to work with a supplier.

The Big Q

The real question is, does the platform fulfill its promise?

Let’s consider a minimal product development, sourcing, and procurement cycle.

  • Design
  • Development Sourcing
  • Design Finalization
  • Sales Projection
  • Demand Planning
  • Production Planning
  • Production Sourcing
  • Procurement & Fulfillment
  • Demand and Production Updates
  • Part Replacements and Supply Base Modifications
  • Service and Support

Through its new product development support, Zumen allows you to maintain product and part designs, including all historical versions, manage bill of materials in programs (and sub-programs), and ensure your sourcing initiatives are tied to design. With its RFQ support, deep cost models, and quotation comparison capability, development (and production) sourcing is well supported. You can import the projections from your ERP and do period based (month-over-month, etc.) demand planning and break that down into projection plans, which can be used to enhance production sourcing by providing potential suppliers with the demand breakdown over time. Once the awards have been made, they are tracked and purchase orders can be automatically or manually kicked off as needed. ASNs can be automatically received and tracked during fulfillment, demands and production plans can be tweaked at any time, part replacements tracked and associated with original parts, and associated services tied to the product/part awards.

Thus, Zumen really does manage the core part life cycle, product lifecycle, and procurement lifecycle in an end-to-end Direct Source-to-Pay platform and limits the number of additional best of breed platforms you will need to support your Source-to-Pay+ and supply chain management activities beyond the ERP/MRP and PLM. Key weaknesses are no scope 3 carbon tracking, which should be done at the part level to not only fully support EU requirements but allow for precise calculations, which is best done in the Source-to-Pay platform (and not a third party system) and supplier risk assessments (critical during qualification, and typically doesn’t live in a supplier discovery platform). While risk data should come from other platforms, the risk analysis should live in the supplier management platform to allow for not only performance tracking, but risk and compliance tracking. However, neither of these capabilities would be that difficult to build on the foundations they already have in place, so our bet would be that core capabilities for risk and carbon management will be added in over the next 12 to 24 months.

And, of course, if you are on the market for a new direct source-to-pay platform for product-development and direct product(ion) sourcing, Zumen is an option that you should add to your shortlist, especially in heavy machinery and manufactured parts industries (where the founder and his team have decades of experience).

ProcureForce: Bringing the Power to Manage Direct To You!

ProcureForce, an offering of Advanced Purchasing Dynamics, is a platform that was designed from the ground up to address the unique direct sourcing needs of automotive, aerospace, and other complex manufacturing industries where a product often requires ten thousand (or more) parts and managing the sourcing process in a spreadsheet workbook (because even the ERP can’t handle the Procurement requirements) is a nightmare.

Advanced Purchasing Dynamics grew out of the experience of the founder trying to manage the procurement of a Bill of Materials at a Big 3 US Automotive Company in the 80s, along with subsequent stints as Head of Procurement at other big industrial manufacturers, and his struggles trying to help them succeed when they didn’t have the right systems, and processes, to make them more efficient and successful. He found that a constant commonality was the lack of good systems, that supported good processes, for Procurement and wanted to help big manufacturers identify good systems and put good processes in place to be more efficient and effective at Procurement.

But he, and the team he built, discovered something that those of us who have been in the Source-to-Pay space for 25 years know all too well. He discovered that most of the platforms out there aren’t very well suited to direct, and many of those that do direct okay aren’t that configurable. So they decided to start working on their own, test it extensively with a few beta-customers over multiple years, work out the bugs, fill in the gaps, and do so in the hopes of bringing a product to market that actually works well for its target industries.

And one thing we will say is that it does work quite well, and the customization ability allows it to be fine-tuned to the needs of its clients. It’s the first new solution built on American soil in quite some time that we believe can truly handle the most complex automotive, aerospace, and complex industrial equipment source-to-pay requirements that exist today.

Their platform is sold as three comprehensive “solutions” that can be used standalone or collectively, where each “solution” covers an end-to-end process. (This is different than how most Source-to-Pay vendors that sell modules for specific tasks or functions, but not end-to-end processes.)

They are:

ProcureAlign: their core Source-to-Contract platform that allows for the creation and management of source-to-contract workflows tailored to organizational processes, which also includes embedded part and tool management, price indexing, price prediction, and other enhanced capabilities that go beyond traditional source-to-contract capabilities

SupplierAlign: a configurable supplier portal that allows Procurement to provide an interface to suppliers where they can self-manage updates, get centralized notifications, respond to requests online, and manage all of their buyer interactions through one location; the portal makes it easy to customize documentation and compliance requirements that the suppliers need to meet

AlignAI: their centralized data platform that structures and organizes procurement data to fuel AI-powered insights and transform data into standard formats required by PowerBI, Tableau, and QlikView for self-serve data analytics and decision making

We will mostly be focussed on ProcureAlign and SupplierAlign in this write-up.

The primary parts of the ProcureAlign Platform are:

  • Parts: manages the parts and programs (the Procurement view of the bill of materials)
  • Suppliers: the supplier master
  • RFQs: the organizational RFQs
  • Financial Evaluations: deep supplier quote analytics
  • Reporting: built in reporting
  • Administration: platform configuration and administration

Parts

Parts are the core of direct sourcing and procurement, as they create the programs (bills of material) that need to be sourced, and until they are in the platform, they can’t be sourced. The ProcureForce platform provides three ways to get parts into the platform:

  • Flexible Integration: purchasing signals to quote can be initiated in an Engineering Product Data Management system or the ERP
  • File Upload: ERP files can be pushed to SFTP on a schedule and loaded automatically or standard CSV format can be used to upload part data on demand
  • Manual Creation: a part can manually be created by the user

Part records are extremely detailed, and include description and classification fields, unit of measure, commodity classification(s), various statuses, associated plants, replacements, manufacturer part info, design stage, cost plans, and associated cost requests. They are so detailed that it’s not actually a “part” that is stored, but a “part-design level-cost request type” as this allows them to maintain a full history of the part design and costing in the system.

Suppliers

The platform can be configured for deep supplier profiles and onboarding can be configured to the organization’s liking, as with most modern supplier information management platforms. Onboarding starts with a supplier request, which requires basic details, and a program manager review, which then results in a notification to a supplier to visit the supplier profile and fill out the requested information. The onboarding can be configured to present required forms online or as downloads, require key fields in fixed formats, mandate acceptance of NDAs and provision of contacts, and designation of users who will have system access.

One important element to note is that suppliers are not just linked to parts, and thus the commodities (and overarching categories) that they provide, but also organizational divisions and or the geographic regions that use them, which can allow you to restrict suppliers to certain divisions and regions (through administration settings) if you so desire.

RFQs

It is very easy to create an RFQ in ProcureForce — so easy, in fact, that it can be done with zero clicks if you have ERP integration as you can push a purchase request from some ERPs directly into ProcureForce and kick off an RFQ. Otherwise, it’s just a matter of selecting a Program, selecting any attachments that are required to define specific program requirements, selecting the suppliers (which can be done down to the part level, and if the parts are linked to active suppliers, the system will default this for you), defining the incoterms, and specifying a little bit of meta data. The primary data required is the responsible buyer, name and description, causal code (reason for), dates, bid rounds (if not the default of 1), and currency settings (if not the default organization currency).

The RFQ automatically pulls in the appropriate cost breakdowns for each part for the RFQ, any associated part specifications, default (compliance) document requests, and default settings (based on templates and past projects). If desired, the user can specify alternate cost breakdown templates (if they are just looking for a quick quote for an emergency re-sourcing project, a potential packaging replacement, etc.) Also, the user can customize attachments or requests on a supplier level if they so choose (which they might if a new supplier is being invited to their first event, etc.). (This goes beyond typical indirect sourcing platforms where only messages can be targeted to an individual supplier.)

If a user is happy with the default settings pulled in from the templates and the parts when an RFQ is created from an ERP Push or the selection of a Program for sourcing, it can be launched in a single click. The entire platform is built to minimize the effort required by the user by taking advantage of all data present in the system and actions taken in the ERP. And the workflow can be customized to the preferences of the buying organization, although we must admit that it is quite standard and efficient out of the box.

Once the quotes are returned, the buyer can see the quotes side by side by part at the RFQ level, and then drill into each part so see the cost breakdowns side by side by supplier. They can add variance columns, prior quotes, variances against prior quotes, and even quotes in alternate cost models for comparisons (but will only get comparisons at the lowest level breakdown the models can be compared at).

One of the most unique features is that the platform supports multiple workflows for RFQs, which can be managed in the Administration section, and each RFQ can follow a workflow custom defined for that program (type). For example, if you’re just looking to get a price on an updated part design from your primary, you just want to (1) upload the part, (2) send the RFQ, get the quote back, (3) approve or reject it, and be done in a simple 3-step process. But if you’re looking to source a program for a new drive train, once you (1) upload the program, you want to (2) first define the sourcing plan (which may restrict certain suppliers to bidding on certain parts), (3) send the RFQ to the potential (pre-vetted) supply base, get the quotes, (4) do a financial evaluation over a three year period, (5) select an award scenario, (6) go through a multi-stage approval process, (7) make the award, (8) revise the program as appropriate (in case re-sourcing needs to be done later) and complete a set of organizational defined mandatory actions, and then (9) push it (back) to the ERP (if you have an integration) in a much more sophisticated 9-step process. The platform can support both (and any other process you want) and pull up the right process simply by linking it to the causal code or division.

Just in case it’s not obvious, they also support multiple approval workflows as well based on delegation of authority and sourcing type/causal code.

One unique aspect of the platform that may not be obvious in a demo is that you can include the country and city of manufacture for each part in the program and then use this data with public import/export data to build a detailed map of the tier 2 supply chain based upon their quotes and not third party or AI-guessing (based on generic import/export statistics).

Financial Evaluations

If the buyer needs to dive deeper into quote analysis before making a decision on an RFQ, the financial evaluation component allows them to create potential award scenarios as splits across multiple suppliers and analyze the full costing over the expected demand cycle based on full cost breakdowns (which are defined by commodity, not a high level category), expected changes in price indexes (which would trigger cost increases or decreases) over time, logistics from individual plants, and expected supplier performance. (As long as enough cost detail was included in the cost template used for the RFQ.) The buyer can create multiple scenarios, and then use the cost comparison capability to analyze them side by side. (It’s not optimization, but it allows a buyer to get pretty close as they can always identify the lowest cost awards for any part or program, but also modify that to ensure they are comfortable with the risks, delivery times, expected Scope3 emissions in the supply chain — which is critical if they are in, or have, EU customers, and so on.)

Reporting

The platform comes with a number of built-in reports, but doesn’t have extensive DIY analytics and/or reporting support (beyond the AlignAI platform that normalizes the data for integration with a leading BI platform so you can do DIY data analysis in the platform of your choice). These include:

  • Cost Breakdown: cost breakdown of a part by demand/utilization for a time period
  • Part Sourcing and Pricing: tracking of part sourcing and tracking can be done by receiving plant, program, commodity, supplier, and buyer
  • Program Management: for a given program, what parts have been sourced/awarded and approved and which parts have not
  • Program Waterfall: summary of how the program has been fulfilled by sourcing events over time

In addition, if you have PowerBI, PowerBI reports can be embedded in the platform, and a few are templated for you, including a Program Dashboard, Supplier Map, and Costing Breakdown.

And, of course, all data can be exported to every buyer’s favourite tool — Microsoft Excel (as most buyers in direct organizations still live in this tool, and even if everything can be done in ProcureForce with PowerBI or a spend analysis tool, some buyers will still want to use Excel).

Administration

The administration is one of the deepest sections of the platform. It supports the definition and management of the:

  • company : profile, business units, and users
  • financial evaluations : templates, models, variance calculations, etc.
  • custom fields : universal, platform wide
  • notifications : for every event that needs to trigger an action or approval
  • communication engine: triggers for internal messaging and external notice delivery, active notification management, etc.
  • parts : fields, unit of measure, commodity classification(s), statuses, associated plants, replacements, manufacturer part into, etc.
  • programs : the (Procurement view of) the Bills of Material, program history, status information, audit log
  • RFQs : default fields, other fields, default attachments, etc.

Moreover, in addition to being able to define arbitrary fields and data elements on every object in the system, the organization can also define elements limited to certain divisions or geo-regions, since different regions will have different requirements.
And, most importantly, it allows the organization to turn off anything they don’t use or disable the view on anything their users don’t need to see (and the users won’t see any fields or data elements tagged to a division or region they are not in), making the platform easy and efficient for the average user.

ProcureForce is an extremely well thought out, and very well executed, direct sourcing platform for automotive, aerospace, and similar complex manufacturing industries that is ready to take its place in the big leagues. If you’re a mid-size or larger manufacturer looking for such a platform, it is one that we would not hesitate to recommend for a short-list.