Michael Lamoureux on the Future of Sourcing Optimization (Part 1)

Michael Lamoureux recently authored a non-technical (it's about as non-technical as you can get given the subject matter) research brief tackling the future of sourcing optimization technology. You can download the whitepaper, which was sponsored by BravoSolution and requires registration, by clicking here. It's important to note the paper in no way endorses any of BravoSolution's capabilities or solution roadmap, as far as I'm aware. Rather Michael, who has architected optimization solutions over the years for Mindflow (Emptoris), Iasta and others, offers up his view about how in the next decade, we'll see a range of new optimization capabilities that help organizations make better total cost decisions than ever before. His key argument is that as optimization, computing and visualization power and capabilities increase, so will the benefits the technology can bring to sourcing.

In the paper, Michael sums up his argument when he notes the specific areas we'll see potential optimization breakthroughs and incremental improvements, including "the emergence of true supply chain modeling; flexible models that support supplier-defined constraints, embedded substitution, make-vs.-buy, and alternate network analysis; automated reasoning and business intelligence; multi-criteria multi-variate optimization; risk analysis; visualization; and living models."

I particularly like his point of how we'll begin to expose cost modeling and scenario building capabilities to suppliers. In Michael's view, this "upgrade in expressiveness will help markets clear more efficiently" by enabling "full constraint-based modeling capability to the supplier who will then be able to offer up sophisticated bid models that capture all of the efficiencies available in the supplier's operation." For example, if a supplier wants to submit an offer based on a cost-model that relies on certain facilities or regions, they'll be able to do it.

Check back for additional analysis of some of Michael's findings. However, if you're more than curious about optimization's application to sourcing and procurement, I'd encourage you to download and read the paper in detail for yourself.

Jason Busch

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