Segmenting and Analyzing the Broader Commodity Management Applications Sector (Part 1)

At Commodity EDGE this week, I facilitated two panel discussions exploring the broader commodity management software and intelligence market. As a sector, commodity management technology and data as consumed/used by procurement and supply chain groups is something new. It's also a sector that isn't well defined or segmented, especially on an end-to-end basis. Given this context, knowing where to get started is not the same as areas like purchase-to-pay (P2P) and strategic sourcing/e-sourcing, which by this point, should be old hat for organizations that can easily refer to Spend Matters, Forrester, Gartner or other reports, rankings and shortlists.

Yet segmenting the commodity management software market is not overly challenging. From our vantage point, we see organizations focusing primarily on six key areas of investment in data and solutions. Below, we have provided a short description of each of these areas plus a quick sampling of the providers in each of the segments:

  • Price indexes and commodity market intelligence that can feed into a range of systems: spend analysis, contract management, commodity management platforms, ERP/MRP (AP), e-invoicing, etc. (e.g., MetalMiner IndX, Smart Cube, Mintec)
  • Broad-based commodity management platforms for hedgeable (and in certain cases, non-hedgeable) commodities that start with up-front spend segmentation by material and value-added components and flow through to contract execution, management, accounting of positions, etc. (e.g., Triple Point Technologies)
  • Demand aggregation and visibility to gather multi-tier supplier information on raw material exposure (e.g., Supply Dynamics, Co-eXprise)
  • Focused spend analysis (aimed at procurement organizations rather than trading organizations/finance) that can break out material from value-added components (BravoSolution, Spend Radar, Zycus, etc.)
  • Sourcing optimization/advanced sourcing technology that encourage supplier flexibility and for exploring different contracting and award scenarios (BravoSolution, CombineNet, Trade Extensions, Emptoris, Iasta, etc.)
  • Contract management for creation, managing and insuring compliance against supplier contracts/agreements (Upside, Emptoris, Ariba, etc.)

In this series of posts on commodity management technology and market intelligence, we will follow up on each of these areas in more detail, exploring them individually as well as how they intersect and integrate with each other.

- Jason Busch

First Voice

  1. Mark Hillman:

    Jason – thanks for this post. Back when I was first looking into the broad supply chain risk management area I started with trying to understand what common characteristics were shared by companies that excelled at hedging their commodity risk (i.e., Southwest Airlines, Cargill, etc.) and what tools they were using to help them. As you and I discussed back then, there wasn’t a lot out there. It’s interesting to see the development of the first two categories you outline above and I’m interested to see what the pace of adoption will be for these tools.

    Sorry for the long absence from this forum – I blame compliance constraints in the financial services world!


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