The Role of Optimization in Strategic Sourcing - A Brief Introduction
As hinted at in Supercalifragilisticexpialidocious this summer, in this series that I will be starting next week, I will be digging into the recent report on the role of optimization in strategic sourcing from CAPS Research. This report, which is the most extensive effort I've seen by anyone [other than myself and my efforts here on this blog, in the wiki-paper, in the e-Sourcing Handbook, and the NLP sponsored podcast (part I, part II, and transcript)] to define the role of strategic sourcing decision optimization, provides a great introduction to someone just getting started with this very valuable, but still under-utilized, technology.
That being said, there are some statements in the report that need to be highlighted, some important points that were missing, some statements that were misleading (at least in my view), and some statements that were, frankly, just plain wrong. In this series, which will focus on some of the finer points of this report, I, as an expert in strategic sourcing decision optimization and a practitioner who has (single-handledly, in the first case) designed two of the leading systems on the market this decade, will focus primarily on those statements that need to be stressed, added, clarified, or corrected. The hope is that upon reading the report and this "editorial", those of you who have not yet tried strategic sourcing decision optimization will understand, at least at a basic level, what decision optimization is, what it does, the value it can bring, and why you should be using it as part of your sourcing process to save an average of 12% above and beyond what you'll save if you are still relying on e-RFX and (reverse) auctions alone.
Finally, before we begin, while the report thanked Ariba, CombineNet, Emptoris, and Iasta, you should be aware that Trade Extensions and Algorhythm are major players and that, as far as the doctor is concerned, Ariba does not have a true strategic sourcing decision optimization solution that meets the basic requirements outlined in the wiki-paper.
Next, Part I: Optimization in the Strategic Sourcing Process.
Categories: Miscellaneous,Decision Optimization
Tags: Strategic Sourcing Optimization
You overlooked BravoSolution's Collaborative Sourcing solution.
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No, I did not.
I chose not to include it as I am not able to verify that it meets all of the requirements for strategic sourcing decision optimization, which are:
* solid mathematical foundations
* true cost modeling
* sophisticated constraint analysis, including
- capacity
- basic allocation
- risk mitigation allocation
- qualitative
* what if? capability
In reviewing their documentation, I have concerns about the sophistication of the constraint analysis supported, the solution's true cost modeling capabilities (which need to go beyond just the ability to capture tiered bids and discounts and allow for the accurate modeling of the buyer and supplier sides of the supply chain, not just the supplier side), and precisely what "expressive bidding" means. But most importantly, I'm concerned about the fact that I have not seen the solution, whereas I have, at one point in time, seen the other solutions and have a good idea with respect to what their capabilities are.
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In case you're wondering, I used to work there but left in April of this year. Their Collaborative Sourcing solution does everything you list. It is built on a discrete platform of its own and is not part of either the Verticalnet XE suite or indeed the BravoSolution suite. Back in the day, Emptoris chose to try and build all this sophistication into a single platform whereas Verticalnet chose to offer two platforms - a general suite (with light optimization) which is called XE and a platform dedicated to large, complex sourcing decisions which is now called Collaborative Solutions. You should contact Chandler Hall who runs this practice on c.hall@bravosolution.com and understand what this platform has to offer. It's streets ahead of Ariba and Emptoris and is on a par with CombineNet's as far as I can understand. I'll let you be the final arbiter of that!
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Mike:
I have reached out to BravoSolution, and, previously, VerticalNet, multiple times over the years offering them the opportunity to give me a demo and receive a review -- as I have done for dozens and dozens (and offered to hundreds) of solution providers. This is on top of the fact that I have stated multiple times in this blog, and in the FAQ , that I will gladly review any supply chain software platform in exchange for a demo -- at no cost to the solution provider.
If they want to demonstrate to me that they belong in the same class as CombineNet, as you believe, they know where to find me. If not, there's nothing I can do about it. I don't chase solution providers anymore. It's not worth my time or the aggravation.
Despite the best efforts of myself and other bloggers, some solution providers still don't understand the prominence of the supply chain blogs as a whole or the value of a review [which might get viewed tens of thousands of times over the course of a year or two]. Others think all blogs are all the same and a focus on one blog is enough. Either way, as I have learned, you don't change these perceptions overnight.
My advice to you is if you think BravoSolution should be understood by and featured on SI, you should tell them. Sometimes companies need their customers and (ex) employees to tell them that.
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