We’ve long been fans of sourcing optimization approaches at Spend Matters. A number of years ago, SciQuest acquired the original pioneer in the sector, CombineNet, which had particular expertise in logistics procurement at the time. Since then, SciQuest has invested in two different sourcing product lines: Sourcing Director (which is native to SciQuest’s core platform and integrated on the same stack as supplier management, contract management and P2P) and Advanced Sourcing Optimizer (previously branded as CombineNet) for more complex sourcing and supply chain network design projects. This two-part conference dispatch provides an update to ASO.
The 2 (Primary) Sides of Sourcing Optimization
There are two main components to ASO (and sourcing optimization in general) compared with standard sourcing tools:
- Flexible or expressive bidding collection. SciQuest shared examples of expressive bidding inputs that include collecting information on supplier data, line-item bids, substitutes/alternatives, volume discounts, package offers and contract/payment terms
- Constraints an organization may apply to received bids/offers. Sample constraints can include required spend allocation for diversity or regional suppliers, supply chain components (supplier capacity, continuity, inventory), supplier relationships (e.g., a certain percentage of spend to incumbent or preferred suppliers), preferred allocation based on ratings/rankings (e.g., risk factors, incumbency, etc.), past performance (on-time performance, quality, etc.) and CSR factors (e.g., favoring suppliers that use a certain amount of recycled content)
Despite investment in the product set, recent years have not been as kind to SciQuest in fighting for high-end market share around sourcing optimization as in the past, especially in Europe. Spend Matters discussions with large, global organizations suggest that Trade Extensions has taken the leadership position as the provider to beat within the largest multinationals for new complex sourcing and supply chain network design projects (in certain cases either alongside or replacing ASO/CombineNet).
Trade Extensions has an advantage in these large accounts by either selling directly to end users or working through some of the largest names in the consulting industry that manage projects on a client’s behalf. And Keelvar and BravoSolution, among others, have picked up other clients and segments of the market as well, developing more user-friendly interfaces and capabilities to reach additional procurement users, even in the public sector.
Yet SciQuest appears to be fighting back, as ASO looks ahead and receives investment dollars and builds out capabilities to make the solution more user-friendly and applicable to all types of spend. At Next Level, we’ve also heard some impressive adoption stories from customers using ASO for sub-million-dollar bids across categories far beyond logistics. Based on just a handful of stories we’ve heard, SciQuest clearly is doing far more than it markets today or than ASO is known for across spend types and companies -- and the future for broader adoption looks bright.
Examples by industry where ASO has been applied include:
- Transportation — ground, intermodal/multimodal, LTL, ocean, air and home delivery
- Restaurants — food and goods for resale, paper/packaging, store equipment/supplies, dishware, transportation, exterior equipment and corporate services
- Food and Beverage — ingredients, primary packaging, secondary packaging, transportation, facility services and corporate services
- Retail — facilities services and materials, merchandise displays, transportation, paper/packaging, corporate services
- CPG — transportation, packaging, direct materials, marketing, general services, indirect goods and services
There have also been numerous applications of ASO to manufacturing.
As our update on SciQuest ASO continues, we’ll share the most recent product enhancements, as well as the vision and roadmap for the product line.