Supply Dynamics — Making Sourcing/Supply Chain More Strategic Through Demand Aggregation (Part 1)

Supply Dynamics is a boutique vendor serving a niche (a not-so-small niche, I might add) extremely well but is anything but a household name in the procurement and supply chain manufacturing community. Focusing on demand aggregation to help OEM and large tier-one suppliers buy more effectively on behalf of their supply base, the solution combines a range of elements focused on the acquisition, analysis and reporting of material demand data down to the unit level (as measured in weight) for raw materials. Access to this information on a multi-tier supply chain basis can enable a range of sourcing and related strategies, helping to reduce costs and supply risk for suppliers purchasing raw materials. To date, Supply Dynamics has focused almost exclusively on the metals area -- it's now owned by O'Neal Steel -- but the demand aggregation model is applicable to a range of categories, including food/CPG ingredients, plastics (e.g., resins), packaging (e.g., corrugated), and electronics (e.g., PCBs), although certain customizations would most likely need to be made in certain cases.

In this multi-part introduction to Supply Dynamics, we'll begin with talking about the business challenge their solution solves to aggregating material demand across the extended supply chain. We'll then talk about the company in more detail, the opportunity that large OEMS and tier-one supplier have in using such an approach, as well as potentially competitive and complementary solutions in the market. In full disclosure (because it is not apparent on Spend Matters), Supply Dynamics' parent company is a sponsor of Spend Matters sister site MetalMiner, and Trevor Stansbury, who is Founder and President of Supply Dynamics, is a personal friend that Jason Busch and Lisa Reisman work and associate closely with together.

Supply Dynamics' solution, Oasis, is a SaaS operating tool that sits between buying and supplying organizations as a central data collection and repository hub. It relies on OEM finished part forecast information and CAD data (including embedded part attribute information) to create baseline information, from which it creates forecasts for aggregate demand for raw materials and related inputs such as fasteners, electronics, etc. With this information, commodity and category managers can view and analyze actual raw material demand that can then help create a range of new strategies. For example, an organization may opt to negotiate a contract on behalf of its supplier's X-number of tons of a specific material based on an actual material forecast.

The secret sauce is that the platform allows the OEM or large buying organization to not only aggregate and view specific raw material demand across their overall purchases, but to actually create and enforce programs based on forecast buying data. This creates an environment where supplier compliance is a natural outgrowth of the actual strategy, as periodical (e.g., monthly, quarterly, etc.) reporting and checks allow buying organizations to enforce programs. Central to the success of the Oasis platform is the embedded notion that bills of material age quickly. For example, as suppliers change, part numbers change, and parts are transitioned from one supplier to another or are made redundant/rationalized out. Because of this, it's critical to rely on only current, as close to real-time information as possible. Supply Dynamics is as focused on maintaining data currency as anything else.

When buying users log-on to their Oasis home page, they are greeted with tools to help manage bills of materials, reporting and price information, contract data and related administrative information. Even though the great majority of Supply Dynamics users are likely to be old-school direct material procurement types, Oasis feels like a modern web app, taking advantage of the latest in reporting and UI advancements to both mask and embrace complexity from a user perspective. For example, mouse-overs on homepage graphics and line items, which provide a snap shot of demand aggregation data (e.g., 1,502,000 pounds of carbon steel, 540,000 of carbon steel, etc.), can provide additional information (e.g., individual price points) about aggregate demand data.

When users drill down into additional data, this type of information can help large buying organizations answer key questions such as what raw materials are required by specific sites and/or sub-tier suppliers, what quantity of materials will be purchased over the next XYZ months/quarters based on current forecast data and what candidates of spend are the best prospects for demand aggregation programs.

Stay tuned as we continue to drill into the Supply Dynamics solution.

Jason Busch

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