Category Archives: Vendor Review

Vendormate: Great Fit, Less Fraud

Those of you following Spend Matters in recent months will remember a post on Vendormate (acquired by GHX, acquired by Thoma Bravo) on “Tackling the Compliance Side of Supplier Risk Management”*, a vendor registration, credentialing, and compliance monitoring solution provider with a large footprint in the healthcare sector.

Not long ago, I too spent some time talking with Andy Monin in an effort to understand the extent of their offering and how they differ from services provided by providers such as Austin Tetra (acquired by Equifax), Open Ratings (acquired by Dun & Bradstreet), Browz (merged with Avetta), and Connect4Growth. It was an illuminating discussion and I believe that they are truly fulfilling a need in the healthcare sector in particular and that the financial sector needs to take a long hard look at their offering.

Jason Busch highlighted some of the benefits of the Vendormate solution, including the capture of supplier information through an online registration portal, the capability to capture supplier credentials and certificates, the built in rating and scoring system that uses 126 data points, user defined thresholds and risk tolerance, and 3rd party data to assign each vendor a risk score, and the ability to manage compliance risk through exception and be alerted when a supplier may have fallen out of compliance.

What Jason did not highlight were the following facts:

  1. most mid-size and larger organizations have no clue how many vendors they are doing business with, even within a single commodity category (a point that the spend visibility vendors spend a lot of time trying to drive home)
  2. many companies go through peaks and troughs with respect to vendor cold-calls; after a major advertisement or in a public standing offer renewal period, a company will be bombarded with more calls than it can handle, while the rest of the year calls will be few and far between; furthermore, it can be difficult to differentiate between vendors that can provide positive productivity and savings opportunities and those that will do nothing more than waste your time and money – a systematic approach, such as that provided by Vendormate, for receiving, screening, and processing these vendors helps you differentiate the gold from the coal and insures that your business operations are never disrupted as a result of vendor cold calls
  3. regulatory compliance, terrorist screening, and fraud are huge problems that need to be addressed not only in your company, but in your supply base
  4. many companies have no means, or no time, to insure that vendors are aware of, sign off on, and agree to policies and procedures
  5. since Vendormate implements a paid subscription service, vendors have an incentive to keep the information current

Vendormate’s solution addresses these problems as follows:

  1. by providing a common registration system, and refusing to deal with any supplier not in the system and approved, you can know precisely how many vendors you are dealing with and precisely how many provide you with a certain category of goods; this can greatly improve the accuracy of your spend visibility and analysis efforts
  2. by providing a self-serve supplier portal, especially one that comes bundled with a registration fee (to offset processing costs and credential review), a buyer can streamline vendor registration, review, approval, and selection
  3. by integrating with third parties that provide terrorist watch lists and companies that have been identified as committing fraudulent activities in the past, companies can insure they remain in compliance with their vendors and mitigate some key risks
  4. by providing you with a centralized process, it can insure that a supplier accesses a policy, and signs off on acceptance before completing registration; this is key to mitigating risk and future litigation

All-in-all, it’s a great way to kick-start your vendor management and compliance initiatives, especially in the verticals they have considerable strength and experience in. In addition, I highly recommend you check out Vendormate’s blog, it is shaping up to be a good resource on vendor management.

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

The Sorcerers of Sorcity

Another stop on my whirlwind tour of North Dallas was
Sorcity. My goal was to find out if they were an on-line auction platform, an e-marketplace, a combination of both, or something entirely different … since their site left me asking as many questions as it answered.

Founded in early 1999, it is possibly the oldest surviving stand-alone on-line reverse auction platform in the sourcing space (as most of the early major players have been acquired). [As a side note, Procuri (acquired by Ariba, acquired by SAP) is probably number two as it was founded in 1999 as well, and Iasta (acquired by Selectica, merged with b-Pack, rebranded Determine, acquired by Corcentric) is probably number three, as it was founded in early 2000]. In addition, it also serves as a marketplace with over 620,000 registered suppliers where you can potentially find hundreds of suppliers that could meet your needs. However, the real differentiator between the other online and on-demand SaaS reverse auction providers and other e-marketplaces is its managed services offering.

When you get right down to it, even with the best tools available, with finite resources, you can only conduct so many sourcing events on your own. The only way to conduct more events is to augment your team, either by hiring consultants or outsourcing part of the process – that’s where managed services comes in. With Sorcity’s platform, you can use Sorcity to assist with as much of the executable sourcing cycle (Preparation / RFX / Auction / Negotiation / Award) as you like … anywhere from just automating all of the time-consuming administration, negotiation, and analysis to having Sorcity conduct the entire event for you end-to-end.

With their tool alone, they claim you can save 1-12 days on the auction component alone, an additional 3-66% on price paid, and get anything you need with their very large supplier network. So they are definitely competitive with the service offerings of the on-demand providers like Iasta and Procuri. But as I just said, the real power is their managed services where you can outsource entire categories and events. Under this model, provided your bid is for 100K or more, you can successfully complete an event with just 1-2 hours over 1-2 weeks! Furthermore, it does not cost you anything – the fees are paid by the vendor who is awarded the business! (I believe they also have a consulting model, where they will help you for fixed fee, but, unlike most vendors, you only have to pay if they save you money. How can they do it? Years of experience has taught them where considerable savings are, and where they aren’t. So if they don’t think you can save enough money on a category / event to make it worth your while, they’ll help you find one where you can save enough to make it worth your while.)

So although I would hesitate to recommend their solution for in-house purchases (and I still believe all high-value and strategic purchases should be managed by a core team in one center of excellence under a center-led purchasing model) as I believe those should be executed under a platform that covers the entire sourcing cycle (and not just the executable sourcing cycle), I would certainly not hesitate to recommend that you consider them for those categories that are not critical to your business (and when you get down to it, the vast majority of your purchases are not, despite what you might think – if ten suppliers can make a part, it’s not strategic – only those components that can only be provided by a handful (< 5) of vendors or those components that can be, and often are, in short supply are critical, and therefore need to be classified as strategic). After all, the best way to do strategic sourcing is to strategically outsource everything you do not have a core competency for and everything you just do not have time to strategic source in house.

So check out Sorcity and check back to see if I am successfully able to convince their white-paper writer to guest author a post on why a managed services platform may also be appropriate for certain high-spend or strategic purchases.

The New and Improved I2

During my whirlwind tour of North Dallas, I was lucky enough to be able to meet with both Sarinder Chhabra (Senior Vice President) and Manish Govil (Program Manager) of i2 Technologies to talk about what i2 has been up to lately and where they are going.

I’m sure many of you still consider i2 to be the gold-ring exclusive services provider to the top ten or top twenty aerospace, automotive, high tech, and chemical providers, with deep service offerings beyond your needs and capabilities, and price tags to match, but that’s the i2 of old. Having conquered best in class, they realized that they only had two options for growth: conquer new verticals or address a larger market-space. New verticals would be a great start, and their generic process solutions could be customized to the needs of just about any vertical, but the real market lies in the mid-market, where most companies reside. Therefore, they decided to entirely re-architect their software and solution offerings to address the needs of small and large alike! And it sounds like they got it right.

The following are seven key points that I took away from my discussions.

  • They’ve re-architected all of their modules and major sub-modules as Service-Oriented Architecture enabled components and developed a new AGILE business platform that allows them to integrate just the components you need.
  • They’ve enhanced their technology architecture to include best of breed third-party products, such as Endeca’s (acquired by Oracle) search technology and Denso’s OEM catalogue.
  • They have embraced Software as a Service principles and will offer hosted solutions or managed services as well as event-based offerings.
  • They have been working hard on a next generation supply management solution that integrates the software and services you need to be successful.
  • They have been actively creating and embracing partnerships, and will happily work with complimentary providers to provide you a full suite of connected and integrated products to give you an end-to-end solution for whatever part of the supply chain you are attacking.
  • They have been working hard to translate their broad in depth knowledge base of industry best practices into generic processes that can be built into your configured software solution.
  • They have been working hard to transform from a software provider to a solution provider – to offer you the services, be it generic software, custom software, consulting services, or managed services, in-house or through partnerships – you need to succeed.

I look forward to diving into some of their new offerings in the near future.

Enterprise Manufacturing Intelligence

Informance (merged with QlickiT, acquired by Catalyst IT) just released their Enterprise Manufacturing Intelligence Solution for manufacturing companies eager to accelerate improvement initiatives, drive operating strategies, and obtain actionable insight for operational performance.

According to their press release, their EMI solution delivers the top-three critical capabilities required to drive better business decisions:

  • multi-site performance analysis
  • enterprise visibility of production financial performance
  • data aggregation from multiple plant facilities

The solution consists of two modules:

  • Informance Manufacturing Strategist
    • What if Scenario AnalysisEvaluate strategies and the impact on KPIs based on real time data.
    • Bi-Directional Information FlowAllows for the development of strategies and day-to-day operating tactics.
    • Real-Time Performance MonitoringA solid foundation for closed-loop process improvement.
  • Informance Enterprise Alerts
    • Proactive NotificationsAutomatic warnings if the enterprise is in danger of missing a metric at any level – facility, asset, or resource.
    • Dashboard MonitoringManage issues globally from a single access point.

According to Informance, this allows your enterprise to:

  • Unlock Capacity
  • Increase Productivity without additional Capital Investment
  • Reduce Inventory and Labor Costs
  • Decrease Working Capital

since it can now

  • accelerate, sustain, and benchmark operational performance initiatives such as lean manufacturing, Six Sigma, and TPM,
  • drive operating strategies at the executive level into execution tactics at the plant level, and
  • provide intelligence in the form of actionable insight from actual data.

So what is Enterprise Manufacturing Intelligence? According to Informance, it is a strategic decision support system providing real-time visibility and a consolidated view into your entire manufacturing operations with powerful analytics, exception-based alerting capabilities, and integration to enterprise systems to give corporate decision makers control over all aspects of your manufacturing operations.

Whether or not you choose to define Enterprise Manufacturing Intelligence, or EMI, this way is up to you. What I can tell you is that these capabilities are important, since inefficient operations can cost you a lot of money. That’s why I’ve invited Sudy Bharadwaj, CMO & VP of Solutions Consulting, formerly of Aberdeen, to explain to us precisely what Informance EMI is and how it can help your manufacturing organization, or your contract manufacturer, increase productivity and save money.

aPriori

Last week, in his Spend Management Goes Upstream series, Jason presented the basics of the “aPriori Philosophy”* on Spend Matters [WayBackMachine]. About the same time, I was lucky enough to meet with them in their Concord, MA headquarters when I was in the Boston area.

I must say that I am very impressed with aPriori‘s solution and definitely convinced that their solution is unique. The reality is that if you’re a best-in-class company that has already implemented technology to support the full strategic sourcing cycle, including spend analysis, decision optimization, and compliance (in addition to the old standards of e-RFX and e-Auction), then your only chance for significant cost savings is to attack the design phase – where the majority of your costs are baked in!

This is precisely where the aPriori solution comes into play. If you’re buying direct materials from a contract manufacturer, now you have a solution for understanding precisely what you should be paying based upon precisely computable geometric (physical) cost drivers and related non-geometric (part-related) costs. The reality is that current market value for a part is not always anywhere close to what you should be paying. For example, a sales representative from a new supplier is not incentivized to give you the best deal, he’s incentivized to get the best deal he can for his company. A supplier that’s always made a certain part a certain way might not realize that new technology or materials would allow them to make that part significantly cheaper if they used a different process. In this case, this is primarily due to a lack of insight.

This lack of insight is precisely what aPriori’s tool was designed to address. The application instantly and directly interfaces with your CAD program and interrogates the solid model to construct the geometric cost drivers that aPriori uses to automatically determine all the process routings that can be used to make the part, compute the costs associated with each step based upon standard machine, material, and labor costs, and compute the total cost of each part on a per unit basis by factoring non-geometric cost-drivers such as production volumes, the selected supplier or internal factory selected, and the exact routing and machines used.

This application allows design and manufacturing engineers to understand the cost of a part before they finalize a specification, evaluate different options, and make the best price-performance decision. But this is not the coolest feature. The coolest feature is that the application is based on factories built on mechanistic process models that allow you to configure the application to understand any physical part or factory/supplier you want to analyze and produce an accurate costing model. Once you produce the mechanistic process model, the solution then applies its built in computational geometric algorithms to determine the most cost-effective construction methodology guaranteed to produce the exact part you need.

The aPriori solution is truly a significant advancement in cost-based design technology. As such, not only will I be blogging about it again in the future, but I’ve also invited aPriori to submit a few guest posts detailing some of the advancements in their platform, complementing their forthcoming posts on Spend Matters, and how these advancements will help your organization save a significant amount of money without sacrificing quality or unnecessarily stressing your supplier relations.