Category Archives: Technology

Intesource – A Strong Sourcing Solution for Mid-Market Supply Management

When we last covered Intesource almost three years ago in 2010 in this post about intelligent sourcing through Intesource, we noted that this full-service offering eSourcing provider had a fully-featured e-Negotiation platform with SIM, document/contract management, and a relatively unique integration with Microsoft Sharepoint for those clients that ran on a Microsoft back-office and wanted to use these solutions to collaborative author documents and track changes.

Besides integration with the Microsoft platform, which is very common in the mid-market that can’t always afford, and often doesn’t need, the massive ERP solutions found in the Fortune 1000/Global 3000, other unique differentiators at the time were their massive template library for e-Negotiation events, integrated feeds from over 160 market exchanges for up-to-date raw material and commodity price information, and hands-on experience running tens of thousands of events. This put them in a restricted group of providers.

Since then, they have continued development work on the platform and added additional functionality that not only enhances the end-to-end strength of the platform, but narrows the group of competitors that can say the same. Three particular enhancements stand out — award analysis, market price centre, and mobile interfaces. We will describe each in turn.

Intesource has added an award optimization component that, while not true strategic sourcing decision optimization, is a very useful analytic component that will allow a buyer to determine a near-optimal, if not optimal, award for non-complex sourcing events. In the new component, buyers can create multiple award scenarios based on pre-defined rules, such as low-quote (which selects, for each item, the supplier with the lowest bid), low-group (which selects, for each group, the supplier with the total lowest cost for a group, or bucket, of item), or low program (which selects the supplier(s) with the lowest cost based upon a program specification, which could be to select suppliers with the highest quality, shortest-lead time, or MWBE specification where possible); or by hand-picking suppliers for each item and/or group. Then, the buyers can compare each scenario side-by-side to see how the different scenarios compare and what is gained for each price sacrifice.

Intesource’s award optimization module is not true optimization in that there is no underlying model, it doesn’t support cross-item / group rebate / discount bids, specification of capacity is currently limited to the event level and the specification of macro-qualitative constraints is limited, and you can’t yet re-run a scenario to see what would change if a supplier increased/decreased prices/quality/etc across the board by 5%, but as SI pointed out five years ago in it’s post on (Spend) Analytics vs. (Decision) Optimization, if your organization had a spend analysis product that allowed you to build a spend cube any time you wanted – on any data you wanted – on any dimensions you wanted – and then throw it away when you’re done then there would be nothing to stop you from building a cube on your RFP or Auction data, building cross tabs and tree maps, and then changing the cube to look at the data a different way. You’d find that you wouldn’t need optimization or a plethora of deterministic reports to find out who the lowest cost supplier was, who the highest quality supplier was, who the lowest cost supplier was relative to your quality metric, or any other query that can easily be answered by rank and cross-tab queries. And, as a result, you’d be able to solve many simple scenarios without optimization — and this is what this tool is attempting to do. Intesource realizes that many supply management organizations, especially in the mid-market, don’t have the advanced sourcing and modelling skills required to build complex optimization models and is endeavoring to build a tool appropriate to its user base. And while it’s not perfect, the reality is that, for an average (smaller) mid-size organization, continued development will allow Intesource to approach an 80% solution as many sourcing events and models of a (smaller) mid-size organization aren’t that complex and this type of solution will get such an organization much further than just e-Negotiation alone.  And on those 80% of events, the results will be near-optimal, if not optimal.

Intesource has centralized all of its raw material and commodity price feeds into a market price centre that integrates the feeds with additional graphing and reporting functionality, monitoring and alerts, and statistical modelling capabilities. In the market price center, users can view historical trends and price fluctuations, focus in on any particular period of time, extend trend projections into the future, monitor prices, cash, and futures contract specifications, set watch lists to monitor key categories, set alerts to immediately inform the user if a price threshold is reached or a price fluctuation exceeds a certain threshold, and even pull up all of the information associated with the exchange(s) a commodity or raw material is associated with.

Finally, like a few other providers, it is tackling mobile, but it is doing it in a smart way. The reality is that, while you might want mobile access because it sounds really cool, in practice it’s typically not very cool because you can’t do really do anything useful on a 3″ to 4″ screen, and what you can do is limited on even a 9″ to 10″ screen. Realizing that all you can really do is retrieve critical pricing and status information, Intesource is building a customized read-only interface that will allow you to determine current event status, bid information, and whether or not there is anything you need to to do or respond to when on the go.  And it’s working with its customer base to develop an appropriate interface that they can use effectively.

Other improvements since 2010 include an improved contract centre with more (user-defined) meta-data, search, and alert functionality; an improved vendor management (SIM) capability with embedded Q&A, enhanced search, attachment management, compliance, and watch-list capabilities; more milestone and scorecard management capabilities; an RFI question library with thousands of questions indexed by category, commodity, and other attributes (built on an analysis of 12 years worth of RFI data) to allow for quick definition of templates and RFIs; and a roles-based public event calendar. Intesource is constantly developing new modules, functions, and features with a roadmap largely driven by its user community as all requests are reviewed quarterly by an advisory committee and prioritized based upon overall demand and usefulness.

Intesource is a solid player in the eSourcing mid-market that should be included in the candidate pool by any company that does most of its business in North America.

DropShip Commerce Brings Drop-Shipping and e-Commerce Enablement to the Distributor and Retailer Masses

On Monday, we announced that BizSlate Just Released its ERP for Mid-Sized Distributors and Retailers that gave the masses a useable, and affordable, ERP solution with exceptional supply chain support — especially where inventory and order management were concerned. With the BizSlate ERP, it’s a breeze for a retailer to order hundreds of variants of dozens of SKUs with a few mouse-clicks and keystrokes and to see inventory requirements at any point in time in the future. And this is great for inventory and storefront management, but what about the e-Store?

As more and more retailers need to turn to online sales to compete in the new marketplace where a consumer can get almost anything she wants online — and do so within two days, as the bigger retailers, following Amazon’s lead, are now packing and shipping same-day if an order is received by the cut-off time — the mid-sized and small retailers have to offer the same convenience or get pushed out of the market. Also, sometimes the only way to survive is to create a unique shopping experience for a niche market and offer all of the products, and only the products, related to that niche through a single, customized storefront. (For example, maybe the way to survive is to cater to the fantasy gaming enthusiast and provide a unified storefront for all of the relevant card games, board games, video games, RPGs, and spin-off/related novels and/or movies when the shopper might normally have to go to a local comic/game shop, book store, and online DVD store to find the items of interest.)

However, this need to both integrate (live) inventory (feeds) from dozens, and sometimes hundreds of suppliers (like Amazon) does, and then parse a customer order into separate orders for each vendor that is supplying an item to you and sending it direct to the consumer through its drop-shipping capabilities poses an integration nightmare for the average e-tailer. The reality is that every supplier will have a different database format / taxonomy and every other supplier will have a different access method. One (group of) suppliers will provide access through an FTP site that will contain inventory exports (in a multitude of raw or compressed file formats), another (group) will provide database access through a secure tunnel, the more technical will provide a web API, and the non-technical will e-mail spreadsheets. Some will use (a variation of) CSV format, some will be on an (old) version of EDI, the more techie will have an XML format, etc. Nightmare!

But this is only a quarter of the challenge. The inventory files need to be processed and the relevant data pushed to the live site, after a human has selected or verified what items need to be pushed. Then, the orders need to be pulled from the live site, parsed, and the proper data pushed back to the suppliers for (drop) shipping in the required time-frame — in the format required by the suppliers.

In other words, today’s small-and-mid-sized e-tailers need a solution that makes it trivial to get inventory manifests (if you will), process those manifest, select (groups of) product(s) for the online store, (create a schedule to) push those products to the store, define rules for parsing orders and pushing them back to the appropriate suppliers (on a schedule), create the requisite e-documention, and push the documents to the vendors and the order management systems.

This is the system that DropShip Commerce provides, and it’s the first solution that the doctor has seen that solves the round-trip mid-market problem in a manner uniquely tailored to the specific needs of retailers and their drop-shipping suppliers. And like the other modern SaaS solutions on the market, it’s slick, quick, and very easy to use. By targeting a specific, relatively unaddressed, problem for a specific vertical (consumer-oriented retail), like BizSlate, they were able to create a unique solution that is just what the average mid-sized e-Tailer needs. The DropShip Commerce solution is definitely something the average mid-size e-Tailer that sources from multiple suppliers needs to check out if they haven’t already.

BizSlate Releases its ERP for Mid-Sized Distributors and Retailers to the Masses

Last fall we introduced you to BizSlate, an ERP for small to mid-size distributors and retailers that is bringing a useable, affordable ERP solution with exceptional supply chain support to the masses. (Basically, it’s doing what Compiere and Made2Manage did for small to mid-size manufacturers.)

As per our our introductory post, the founders, who were with Ezcom software, noticed the (utter) lack of appropriate ERP support for the small and mid-sized retail and distribution space and decided they needed to do something about it. The solution? A new SaaS based ERP system (re) built from the ground up to address the everyday accounting, inventory, catalog management, and order management/e-Procurement requirements of small and mid-sized distributors through a simple web-interface that is as easy to use as most of the new SaaS e-Procurement enterprise systems on the market.

Developed in conjunction with two dozen beta users, as per this VentureBeat article, Version 1 is now launched and is quite slick. As per our last post, the batch create function is incredibly powerful and easy to use. Not only can an administrator batch-create new products by entering all of the base product information, but he or she can select categories, suppliers, locations, terms, etc. from easy-to-use auto-complete pull-downs or from generic saved templates for product type. Extensive profiles can be created in a matter of minutes and hundreds of line items in a matter of seconds.

Order generation is as quick and painless as possible. A user can easily add items to an order through a simple-to-use but powerful search function that allows a user to search by name, code, style, or other attribute values and, as mentioned in the VentureBeat article, order generation can be done on the showroom floor on a mobile (Android or iOS) tablet. As per the batch generation, customer information, (preferred) supplier(s), terms, and other data can be quickly retrieved from pre-populated lists.

And the system even supports a sales order multi-edit capability which allows a user to update information across multiple sales orders (such as ship dates, payment terms, shipment location, etc.) simultaneously and to rationalize orders as need be. For example, if necessary, orders can be combined, split, and individual line items swapped. This is a powerful capability as it negates the need for orders to be cancelled and recreated or items to be deleted from one order and then added to another order, two very error prone processes.

And the rest of the system, which is configured around inventory, logistics, customer, supplier, and accounting management, is quite easy to use as well — and, in some instances, quit powerful. Consider inventory management — searches can include both open stock, pre-packs, and in-transit inventory and be performed with respect to any date. Thus, if a customer doesn’t want an order to be shipped for a week, you can see how many units you will have in a week after all orders scheduled to be received and shipped out over the next week are accounted for. The ability to search open stock and pre-packs together or separately is quite powerful. For example, let’s say a customer wants an order tomorrow, but you don’t have the open stock and if you don’t ship tomorrow, you lose the order. You can search pre-packs, determine that there is enough inventory in pre-packs, send someone into the warehouse to rip the pre-packs open, assemble the inventory and ship — and then replace the pre-packs with an order arriving in two days to be shipped out in the order the pre-packs were intended for that doesn’t have to ship for three days — and get a sale you would likely have missed otherwise.

With regards to inventory, customer, and supplier management — the ability to track the different SKUs used by each customer and supplier for each product and cross-correlate them across the supply chain is quite valuable. This allows you to search inventory and available suppliers off of a customer’s SKU and get complete, accurate information every time.

The document generation functionality was very well thought out — for each customer you can define what should be on the packing slip and invoice in addition to default shipment profiles to facilitate quick order entries. This simplifies the customer’s order verification and invoice processing and can speed up your payments. Similarly, you can specify what information should go on the good’s receipt to the supplier, what information should be associated with the payment, and what information should be matched before payment is issued. This simplifies transaction management for Accounts Payable and minimizes the chances of over-payment or payment for merchandise not received. And the system can even generate customized receiving forms for the warehouse personnel that makes it easy for them to check off items, and easy for whomever is doing data entry to check it off if they don’t have mobile system access.

It’s one slick SaaS solution and if you are a mid-sized retailer or distributor, BizSlate should be on your must-review list.

Maximizing ROI from Technology

Logistics Management recently published a piece on Maximizing ROI from Technology that included some good tips that deserve to be repeated.

The first point to note is that, as stated by Beth Peterson (President of BPE Global), the biggest mistake [companies] make is that they implement a solution without even beginning to measure what they were doing before they implemented it. You can’t maximize ROI if you don’t even know what you’re measuring against!

The second point to note is that expectations have to be realistic. You’ll never achieve your goals if they are unrealistic. Also, as the article suggests, when setting goals, try to be as precise as possible. Is it cost savings? Better customer service? Faster delivery? What are the specific metrics that you are trying to improve and by how much?

In addition, as noted, make sure that the objectives do not benefit one functional area to the detriment of others or to the company as a whole. Otherwise, you’re not going to get much support for your endeavor.

Then select the right vendor. One can start with the vendor evaluation and selection criteria evaluated in the article, but as pointed out in SI’s recent series’ on Technology Trials (Part I, Part II, Part III, Part IV.1, Part IV.2, and Part V, Part VI) and Best Practice Vendor Selection for True Multi-Nationals (Part I, Part II, Part III, Part IV, Part V), selecting the right technology vendor just isn’t that easy. Remember, in the end, it doesn’t matter how strategic the IT Vendor is, it only matters how strategic the solution they offer is.

And get the implementation right. As per the article, Key factors that need to be in place include the flowing: effective user training; management support of and commitment to the initiative; sufficient allocation of resources; and, perhaps most importantly, buy-in from the users. All of these pieces (which have been discussed in the SI Archives) are essential. Forget one, and it crumbles since you’re building a cube, not a pyramid.

Is The Air Force’s Billion Dollar Flop the Biggest Supply Chain Failure in History?

Six years ago, Supply Chain Digest published a piece on “The 11 Greatest Supply Chain Disasters” in history, which was updated in a blog post on The Top Supply Chain Disasters of All Time by Editor-in-Chief Dan Gilmore back in 2009 which added five new ones to the list, bringing the total to 16.

The top three were:

  • the failure of Foxmeyer’s “Lights Out” Warehouse,
    which was the top disaster in the original report and wiped out the 5 Billion dollar company almost over night;
  • the Boeing outsourcing fiasco,
    which led to massive 2-year plus delays in the production and delivery of the long-awaited 787 Dreamliner and some 2 Billion in charges to fix supplier problems; and
  • GM’s Robot Mania,
    in the 1980s when CEO Robert Smith pent 40 Billion on robots that didn’t work for the most part

But SI thinks the Recent Air Force Modernization Effort should top the list. As per this great article over on the New York Times Site on the Billion-Dollar Flop, the six-year old effort that had already eaten up more than 1 Billion didn’t even achieve a quarter of the planned capabilities — with another Billion required to achieve that minimal target. This says that the effort, supposed to cost $628 Million, would require over 8 Billion to complete! This easily dwarfs the 2 Billion in charges plus losses due to delayed sales suffered by Boing and the 5 Million Foxmeyer failure.

Does it dwarf the GM failure? The failed gamble cost GM a lot, but they are still in business, and posted almost 1.5 Billion in profit last year. And they were able to fix their processes and technology and improve over time.

In comparison, the Air Force is stuck relying on legacy logistics systems, some of which have been in use since the 1970s. And it turns out that this failure is just the tip of the iceberg, with the Institute for Defense Analyses noting that modernization of the department’s software systems, which has been a priority for 15 years, has cost over 5.8 Billion as of 2009 and most large operational software system efforts are still behind schedule. So now we’re up to six billion.

And the losses mount for every year a legacy system (way) past it’s prime has to remain in production. With today’s rapid pace of software, and hardware, refresh cycles, it’s often difficult to find a replacement part for a piece of hardware that is only 3-years old, and if you do find it, it’s costly. The Air Force has to find replacement parts for systems that are 13 and 30 years old! And lets not forget energy and support costs! Older systems often consume way more power and require more support hours than newer systems. Plus, over time, the expertise in supporting such systems goes from relatively common to extremely rare as more and more people retire or move to different systems and technologies and no new people learn the antiquated systems. As a result, the expertise that remains becomes very costly as the few people left demand a premium and expenses mount when they have to be flown in from halfway across the country.

Plus, the failure has instilled a fear of future technology fiascos, causing them to impose an across-the-board deadline of 18 to 24 months for future upgrade projects. While this sounds good in theory, and an upgrade project for most systems generally shouldn’t take longer, there are some systems where the requirements analysis is going to take 6-12 months and the migration plan, which will involve a lot of data mappings, development, and testing, will take just as long. Add a staged implementation plan, quality assurance, and user testing, as well as time for any customizations the COTS (Commercial Off The Shelf) Vendor has to make to the core system, and the project could take longer. So, this is going to prevent some upgrades from happening until COTS technology in certain area improves or a vendor is willing to bite the bullet and create the mapping middleware without a contract in the hopes it will get one. In the mean time, losses mount.

While SI does not have the data to calculate, it would bet that if you did a total loss analysis over all delayed and failed projects leading up to, revolving around, and including the modernization initiative, over the last decade, the number would be 5 times higher, just like the license cost of an on-premise software solution amortized over five years turns out to often be 1/10th of the total cost of ownership.

It might not add up to a 40 Billion loss yet, but by the time the Air Force recovers and modernizes all of the systems that need modernizing, it will likely get there.