Vendor Analysis and Shortlist: “Strategic Sourcing” or E-Sourcing (Part 2)

In Part 2 of our series looking at shortlists of "strategic sourcing" or e-sourcing vendors, we'll tackle specialist optimization providers Trade Extensions and CombineNet. I will caveat this post (as I have and will continue to do with others in the series) with the point that these views represent the opinions of a single person who has not seen the entire market. If Spend Matters readers have an opinion, by all means, post a comment and voice it.

When it comes to optimization, if you want to go straight to the specialist source, CombineNet and Trade Extensions are the only games in town (among the e-sourcing suite vendors we looked at in the first post in this series, Iasta, BravoSolution and Emptoris are also worth considering in this area as well, both in transportation and outside of it -- although they appear to have exposed more of their capabilities from a software vs. solution standpoint). Of the two, Trade Extensions is more self-service friendly. In fact, they've built their business model on teaching others to use the tool rather than doing it for them. In contrast, CombineNet, which also now offers self-service optimization sourcing tools, was initially a largely solution-driven deliver model. Regardless, both offer strong capabilities in transportation and other areas requiring the ability to examine scenarios, tradeoffs and hundreds, thousands, or more line items (or bundled lots / offers).

Moreover, the number of constraints -- and the flexibility to create new constraints -- they can support provides differentiated capabilities as well (though it's worth noting, the more complicated you get in a particular commodity or area from a constraint perspective, the greater the value in having an expert walk you through the process, unless you have strong modeling skills in house). In terms of underlying technology, Trade Extensions has their own solver while CombineNet has migrated from Dash to Cplex over the years, creating some risk in their business model relative to Trade Extensions. From a stability perspective, Trade Extensions is growing while CombineNet is shrinking. CombineNet, however, could very well begin to see growth again as they work through a number of growth-hindering business challenges. Potential users of both should know that CombineNet has been actively shopped on the market to potential buyers for more than a few quarters.

Since I'm not the expert in optimization (although I did work on early prototype optimization tools at FreeMarkets), I asked Michael Lamoureux of Sourcing Innovation, who is a guru on the subject, for his view of both providers and others that companies should consider. I'll share what he said in the next installment of this series, but he first recommended some required reading on the subject from his own writings (some are older, but still relevant).


Trade Extensions

What are Spend Matters readers' experience with optimization? In your view, should the area be looked at as stand-alone or a feature of a broader e-sourcing suite? Also, what is the value of optimization as software vs. optimization as a solution? As a final note, if Spend Matters readers are looking for a truly expert opinion on the subject or to dig very deep on optimization in a software selection in the area, do reach out to Michael. I know enough to be dangerous -- and to use a toolset if I needed to for a sourcing event -- but Michael is the only independent optimization guru in this area outside of specialists who focus on applying optimization exclusively to transportation.

Jason Busch

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