The E-Sourcing Category

North America is a curious market for direct materials-centric procurement software. While many manufacturers currently use indirect materials- and services-centric applications (e.g., procure-to-pay, vendor management systems), few manufacturers have specialized direct materials-centric procurement tools as a part of their solution belt. And to note the elephant in the room, many manufacturing procurement organizations are still not even aware of what these solutions can do.

The exception to this is in Europe (especially Germany and Austria) where direct materials procurement software is generally well adopted, even among middle-market companies. Within this market segment, Allocation is one of a handful of leaders, with tailored capabilities for sourcing and supplier management — and it is expanding globally.

This Spend Matters PRO Vendor Snapshot explores Allocation’s strengths and weaknesses, providing facts and expert analysis to help procurement and finance organizations decide whether they should consider the provider. Part 1 of our analysis provided a company and detailed solution overview and a recommend fit list of criteria for firms considering Allocation. The third part of this series will offer a SWOT analysis, user selection guide, competitive alternatives, and additional evaluation and selection considerations.

When you start a vacuum cleaner, a number of things happen. First, the air pump creates a partial vacuum in the appliance. This results in air rapidly rushing in from the outside, through the attached hose or nozzle, pulling in dust, dirt and small debris with it. But the effects don't end there. The rapid movement of air from immediately outside the vacuum creates another partial vacuum that needs to be filled by the surrounding air, and this causes nearby particulates to also move and change position. And, thanks to the butterfly effect, this can have larger repercussions than one expects, creating unintended consequences. If pollen, mold or certain other once stationary particulates get into the air, people can sneeze, suffer allergic reactions or even get deathly ill.

What does this have to do with sourcing? When big firms buy smaller e-sourcing tools, vacuuming up the major standalone software companies in given niche, this creates a void — and kicks up a dust cloud, of sorts. From a manufacturing-centric sourcing perspective, this last year or so saw the acquisitions of Directworks (by Ivalua) and Pool4Tool (by Jaggaer). These acquisitions — not to mention Jaggaer’s prior acquisition of BravoSolution — took two specialist players in direct materials procurement and supplier management out of the best-of-breed market in North America, creating a new void. The result? The door was opened for new best-of-breed players from Europe to enter, and one of these players is Allocation.

But will Allocation benefit from the vacuum effect? It certainly has the pedigree. Founded in 1998, Allocation has been building its platform for two decades. Today it has one of the broadest and deepest platforms for direct supplier management and direct material sourcing on the market today. With a strong customer base in discrete manufacturing, Allocation can walk into just about any automotive, aerospace, CPG or other manufacturing-based procurement organization and talk the talk, backing up its knowledge with a set of specialized capabilities.

This Spend Matters PRO Vendor Snapshot provides facts and expert analysis to help procurement organizations make informed decisions about Allocation’s e-sourcing and supplier management solutions. Part 1 of our analysis offers a company background and detailed solution overview, as well as a summary recommended fit suggestion for when organizations should consider Allocation. The remaining parts of this research brief will cover product strengths and weaknesses, competitor and SWOT analyses, and insider evaluation and selection considerations.

The e-sourcing software market is crowded and fragmented. In the Q2 2018 SolutionMap alone, Spend Matters featured 16 of the top strategic sourcing solutions. Yet within this supply base for e-sourcing tools, one of the areas few software providers have emphasized is sourcing optimization — a critical capability for unlocking new levels of value from procurement.

Businesses interested in engaging e-sourcing providers with optimization capability have historically faced steep pricing and a high usability bar as the cost of entry. But times are changing. New sourcing optimization solutions are coming into the market that balance capability, usability and price in a package that can augment or even replace other e-sourcing tools.

Keelvar, a relatively new entrant in the e-sourcing sector, is one such company. Within the Q2 2018 Sourcing SolutionMap, Keelvar stands out from the crowd on numerous fronts. It is both a high scorer across a range of technological capabilities and a customer favorite for multiple buying personas. Keelvar’s SolutionMap performance provides compelling evidence that the company is a must-shortlist candidate for every customer considering an e-sourcing solution — especially those considering sourcing optimization software.

“What Makes It Great” is a recurring column that shares insights from each quarterly SolutionMap report for SolutionMap Insider subscribers. Based on both our rigorous evaluation process and customer reference reviews, each brief offers quick facts on the provider, describes where it excels, provides hard data on where it beats the SolutionMap benchmark and concludes with a checklist for ideal customer scenarios in which procurement, finance and supply chain organizations should consider it.

The year 2018 seems to be the beginning of the end of the plastic straw, and sourcing data from Thomasnet.com indicate that procurement professionals are scrambling to identify alternatives. One of the top marine polluters, plastic straws have been banned in various countries, cities and royal estates around the world, including Scotland, Taiwan, Vancouver and Buckingham Palace. Data from supplier discovery platform Thomasnet.com shows that sourcing activity for drinking straws and paper bags has increased significantly compared with the historical average. Spend Matters recently spoke with Tony Uphoff, president and chief executive at Thomas, to learn more about the industries behind this spike, the roles played by regulations and consumer sentiment, and those iconic red-and-yellow straws.

If there is a glue that binds together different areas of procurement workflow, it is the overall program management of both individual tasks and collective activities across the source-to-pay continuum. This Spend Matters PRO series is designed to provide insight into what effective program management technology capabilities encapsulate from a design, platform and functional perspective.

In the last part of the series, we focused on sourcing and the types of sourcing programs that must be enabled by a modern sourcing or source-to-pay platform a modern user experience. In this fourth installment, we explore specific program management solution components that are required to enable the sourcing programs discussed in Part 3. In particular, we describe the specific overlay capabilities on top of sourcing technology to enable category strategy and realignment, re-sourcing, tail spend management, supply base rationalization and supply base expansion.

If there is a glue that binds together different areas of procurement workflow it is the overall program management of both individual tasks and collective activities across the source-to-pay (S2P) continuum. And nowhere in S2P is this more pronounced than in strategic sourcing.

This Spend Matters PRO series provides insight into what effective program management technology capabilities encapsulate from a design, platform and functional perspective. We explore both what represents best-in-class program management components today and what users might expect tomorrow.

Part 1 of the series explored effective program management overall from a strategy and process standpoint — and then from a technology standpoint. Part 2 provided a framework and insights into some of the functional (technology product) building blocks of effective program management, with a focus on project and portfolio management.

Today in Part 3 of this series, we examine sourcing and the types of sourcing programs that must be enabled by a modern sourcing or source to pay platform, with a focus on how they fit into broader program management.

Can reverse auctions — and e-procurement in general — sour a good supplier relationship? One of our readers wrote in with this question, worrying that reverse auctions may put pressure on supplier margins to such an extent that it is detrimental to the buyer-supplier relationship. In a reverse auction, suppliers compete for the buyer’s business by underbidding one another. This increased competition among the supply base ought to lead to lower prices for buyers, although it also runs the risk of undermining a supplier relationship that has taken time and effort to build. What’s the point of developing a strategic supplier relationship if you’re going to use an automated auctioning process anyway?

In a perfectly logical world, sourcing optimization would become the default means of the majority of strategic negotiations with suppliers. At Spend Matters, we believe its superiority to other sourcing techniques — especially in its ability to extend procurement’s influence to supply chain, finance and other areas of the business by incorporating multiple elements of data collection and analysis — is unmatched. But even though the benefits of sourcing optimization are real and core sourcing optimization technology requirements are well established, the capability today is more of an outlier than standard practice.

Might SAP Ariba be able with its recently enhanced sourcing optimization capability to bring optimization to the masses, and accomplish, at this point, what other more established solutions have not yet been able to achieve? Perhaps. But it will take more than the right capabilities to drive universal sourcing optimization adoption, as SAP Ariba’s competitors in the area have found. For the purposes of this Spend Matters PRO research brief, we’ll “constrain” our dataset to a much easier scenario to solve for: providing a perspective on how SAP Ariba’s current sourcing optimization capability stacks up against our core SolutionMap requirements for the area.

SAP Ariba has opened a new front on the strategic sourcing optimization software battlefield. We recently received a detailed product demonstration of the next evolution of SAP Ariba’s decision optimization capability, as well as a glimpse of what’s on the roadmap. Our take is positive. SAP Ariba’s foundation and future plans represent a solid start in this area. And while other established providers of sourcing optimization tools have a decade-long head start, we expect SAP Ariba to progress faster in its optimization journey than many of its peers.

In this two-part Spend Matters PRO analysis, we begin with an introduction to the required solution components of sourcing decision optimization and an explanation of the benefits they can bring to procurement organizations. In Part 2, we offer an overview of SAP Ariba’s new decision optimization capability, exploring its strengths and weaknesses. 

The sourcing technology market would seem to be won more on two of the three “M”s  (marketing and momentum) than the third (merit), which we usually lump together in the same list of characteristics that separate fast growing tech companies from the rest. This is a shame, because sometimes the best vendors for the task don’t get invited to bid.

EC Sourcing is one such example. The vendor functionally outperforms many other sourcing providers in the Q2 2018 Sourcing SolutionMap benchmark, yet it is seen in fewer deals than direct peers, creating an information asymmetry in the market that is limiting customer choice — a triumph of marketing and momentum without balancing merit.

EC Sourcing’s Q2 2018 SolutionMap performance provides compelling evidence, based on both analyst ratings and customer reference scoring, that the provider is a must-shortlist candidate for most standalone sourcing scenarios, especially those situations in which a Nimble provider is desired. Join us in exploring what make EC Sourcing great, based on the latest functional and customer SolutionMap benchmarks from Q2 2018.

“What Makes It Great” is a recurring column that shares insights from each quarterly SolutionMap report for SolutionMap Insider Subscribers. Based on both our rigorous evaluation process and customer reference reviews, each brief explains how the provider excels and where it beats the SolutionMap benchmark, concluding with a checklist for ideal customer scenarios in which procurement, finance and supply chain organizations should consider the vendor.