CombineNet: Optimization & Advanced Sourcing Adoption Trending Beyond Transportation

Those on the outside of the advanced sourcing market – and customers still stuck in the “apples to apples” sourcing paradigm – often suggest that more expressive approaches to sourcing, which allows suppliers greater flexibility in bidding and gives procurement organizations the ability to take a more analytical and quantitative approach to scenario and award analysis, are best suited to sub-categories within logistics. Indeed, the business case for using optimization in truckload and LTL events (as well as intermodal, ocean, and air – and to a much lesser degree small parcel) is strong, given the significant diversity of suppliers, constantly shifting requirements, and complicated and often huge lane structures.

Add to this more recent complexity stemming from the rise of intermodal, new fuel strategies (and options), and the emergence of make/buy options (e.g., dedicated)—and the tailor-made aspect of logistics for advanced sourcing makes sense. Yet, in his opening keynote this morning, Rich Wilson (CEO Emeritus of CombineNet, a SciQuest company), shared how customers are increasingly using CombineNet in a broader set of categories beyond logistics.

Part of this growth has no doubt come from the greater usage of the tool in general, as well as the fact that many companies still start with logistics before moving onto other categories (and have gotten more familiar with CombineNet). Rich shared that there was a 64% growth in sourcing events between 1H 2013 and 2H 2012, as well as a 101% growth in sourcing events between 2011 and 2012. These customers are increasingly using CombineNet to source categories such as services, packaging, indirect materials, and direct materials – in addition to logistics sub-categories. See the chart below (provided at the event)

Beyond Logistics: CombineNet Event Distribution by Quarter

Combine Net graphic

Based on discussions with a range of providers and practitioners, I think that we’ll increasingly see advanced sourcing adoption beyond logistics in the years to come, with the highest growth areas potentially coming from direct materials and services– including looking, especially in manufacturing, at the intersection of supply chain design and sourcing strategies in global environments (factoring into account supply chain localization and re-shoring, among other strategies).

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