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Updated! CORONAVIRUS RESPONSE: Sourcing and Commodity Management — Help with direct materials sourcing and automated supplier discovery

Updated April 23: This post about the Sourcing and Commodity Management category has been updated with profiles of additional solutions for direct material sourcing — Ivalua, SAP Ariba, Synertrade — as well as solutions that help with automated supplier discovery — SAP Ariba and Tealbook. The updated passages are italicized, and the new profiles are toward the end.

In this installment of our “Coronavirus Response” series, Spend Matters will explore sourcing and commodity management, with a focus on direct materials. With the COVID-19 crisis impacting logistics and existing supply bases, in China (even though China seems to be recovering), the rest of Asia and Europe (thus far), there will be numerous emerging needs for companies across manufacturing. This PRO brief will focus on solution providers that we’ll profile in this category: Allocation Network, Coupa, Jaggaer, Ivalua, SAP and Synertrade — which help with direct sourcing. You can also use solutions for automated supplier discovery from SAP Ariba and Tealbook, although other COVID-19 related resource sites for supplier discovery have also popped up from scoutbee, Thomas, and various sector-specific resources (e.g., D&B, govshop, and others in the federal government).

The mission of this series is to examine categories of relevant solutions and example providers that professionals in procurement, finance and supply chain organizations should investigate to reduce, and even mitigate, coronavirus supply risk. And even if the solutions are only addressing a subset of the issues, the ability to respond intelligently in the short term can also help set organizations up for the future when sanity returns to the world.

Today’s brief focuses on the second of the seven solution categories that we’re covering:

1. Supply risk management solutions that include supply chain risk, CSR risk, supplier financial risk, etc. (Read this category’s PRO analysis and solution recommendations here.)
2. Sourcing and commodity management, including advanced sourcing, direct sourcing, automated supplier discovery, and commodity management to help dynamically plan and source.
3. Advanced procurement analytics to enable direct procurement and/or to perform “spend planning” when demand drops out or spikes. (Its profile for this series is here.)
4. Procure to Pay (P2P) that emphasizes working capital, dynamic discounting, payment control and related finance priorities to help inject cash into the P2P process — especially for many cash-starved suppliers. (This category is discussed in-depth here.)
5. Fraud, P2P and vendor management safeguards when new suppliers need to be set up quickly, and also when lowlife fraudsters try to use the pandemic as a way to steal money and IP. (Its profile for this series is here.)
6. Providers with deep contract analytics that can analyze a contract portfolio for affected contracts from suppliers (and customers) for not just force majeure clauses, but other related clauses that tie to the multiple risks popping up at once in the pandemic. (Read in-depth detail on this category here.)
7. Contingent Workforce and Services solutions that are able to, at a minimum, help rapidly ramp up on-demand workers to deal with massive resource shortfalls. We are looking at four categories of solutions: for sourcing remote/online work; solutions for sourcing and managing mobile-first contract workers anywhere you need them; solutions to “direct source” and manage contract workers; and solutions for data management and analytics.

Owing to the magnitude of the crisis, Spend Matters recently made the series introduction available for free to all readers. PRO subscribers can see our follow-up pieces that profile the other categories and their solutions in that market. We will include a lot of information on each category PRO brief that readers can see without hitting a paywall, but since we also draw heavily from our existing deep-dive analysis of the providers from our SolutionMap database, some information will be available only to our PRO subscribers.

For sourcing and commodity management, the emerging needs for companies across manufacturing will include rapidly identifying new sources of supply, conducting complex sourcing events for materials, parts and components (which may be tied to broader bills of material), qualifying suppliers based on targeted requirements (e.g., for a specific line), and managing and tracking suppliers based on custom scorecarding.

After the pause button is lifted on production — in cases where one is put into place — these needs will become especially acute during the recovery phase in specific regions (which may be different from the recovery phase in other geographies).

Each category-specific PRO piece in this series has three sections:

1. Problems and Use Cases. We’ll highlight the problems in force (which will vary through different phases of the crisis) and the various scenarios where solutions can provide deeper insights, intelligence and scalable workflows.
2. Solution Rationale and Value. We’ll outline how various solutions can help solve the problems and the specific questions that they’ll help answer.
3. Example Providers. We’ll highlight the solution providers that can support the problems and deliver value.

Some providers are offering coronavirus-specific programs and “freemium” commercial offers, and we’ll note those whenever we update this piece. We’ll also start the series with providers that we already have deep knowledge on, but we’ve been seeking information from other vendors too.

Let’s jump into how sourcing and commodity management can help.

Through April 2020, a special PRO Expert Survival Pack is available to procurement practitioners only* at up to 50% off — Learn more

CORONAVIRUS RESPONSE: Allocation Network — industrial sourcing and supplier management for COVID-19

In response to the coronavirus outbreak, this Spend Matters PRO series examines selected technology providers that procurement, finance and supply chain organizations should explore to reduce and mitigate COVID-19 supply risk — and to recover faster on the upswing. The introduction to this series grouped the technology providers that we will cover into five specialty areas, with one vendor shown here as an example:

* Supply risk management (e.g., riskmethods)
* Sourcing and commodity management, including advanced sourcing, direct sourcing and commodity management to help dynamically plan and source (e.g., Allocation)
* Advanced procurement analytics to enable direct procurement and/or to perform “spend planning” when demand drops out or spikes (e.g., Sievo)
* P2P that emphasizes working capital, dynamic discounting, payment control and related finance priorities (e.g., Basware)
* Fraud, P2P and Vendor Management Safeguards (e.g., APEX Analytix)

Today, we profile the third essential COVID-19 procurement technology vendor: Allocation Network (Allocation). It is also one of the most capable solutions for procurement in the diversified manufacturing domain, based on our Q4 2019 SolutionMap ratings for Sourcing and Supplier Management. Allocation provides a direct-materials-centric platform that “grew up” in the automotive industry — arguably the hardest and most demanding for supplier identification, sourcing, first article testing and ongoing quality.

With COVID-19 impacting existing supply bases, especially in China, the rest of Asia and Europe (thus far), there will be numerous emerging needs for companies across manufacturing. These include: rapidly identifying new sources of supply, conducting complex sourcing events for materials, parts and components (which may be tied to broader bills of material), qualifying suppliers based on targeted requirements (e.g., for a specific line), and managing and tracking suppliers based on custom scorecarding.

After the pause button is lifted on production — in cases where one is put into place — these needs will become especially acute during the recovery phase in specific regions (which may be different from the recovery phase in other geographies). For European and North American manufacturers, Allocation is one of only a select few vendors who could become their “go-to” sourcing and supplier management specialist in the wake of COVID-19.

This PRO brief explains why.

Through March 2020, a special PRO Expert Survival Pack is available to procurement practitioners only* at up to 50% off - Learn more

Allocation: What Makes It Great (Sourcing SolutionMap Analysis)

Direct materials procurement technology has always been a bit of a blind spot for North American manufacturers. Many such businesses are already using indirect materials-centric and services-centric applications (e.g., procure-to-pay, vendor management systems), but few also have specialized direct materials-centric procurement tools as a part of their solution belt. A host of factors, however, is starting to change this, to include recent trade volatility, digital transformation of manufacturing alongside business in general, and increasingly complex supply chains that demand a more advanced approach to sourcing and supplier management.

Well-poised to address these drivers is Allocation, a German solution provider that, based on its performance for the past year in our Sourcing SolutionMap vendor rankings, offers 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.

But where does Allocation stand out most and help “set the bar” in sourcing, and why should this matter for procurement and finance organizations? Let’s delve into the SolutionMap benchmark to find out where Allocation is great.

“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.

Customer reviews for Allocation are in the new SolutionMap Customer Insights report

This week’s SolutionMap Customer Insights report focuses on customer reviews for Allocation, a specialist in technology for direct materials sourcing and supplier management for manufacturers and producers who have complex processes.

The applicable SolutionMap categories for this report are Sourcing and Supplier Relationship Management & Risk. SolutionMap Insider members can read about Allocation in our latest report.

In each Customer Insights report, we provide a one-page summary of details from the SolutionMap peer review process. It includes ratings on how well the vendor meets its customers' expectations, three key differentiators for the vendor and a list of quotes from customers about the vendor’s greatest strengths. (The users’ names and companies are kept anonymous.)

Allocation

As part of the SolutionMap RFI process, Spend Matters continuously solicits customer references to determine a procurement technology provider’s placement on the ranking graphics. This is a Spend Matters curated summary of verified customer feedback for Allocation, a SolutionMap-ranked provider.

Allocation: Vendor Analysis (Part 3) — Competitive and Summary Analysis

The Germanic countries in Europe have always been the epicenter of specialized direct materials procurement software. Arguably, this legacy started with the operational procurement side of SAP as a component of ERP. Building on this foundation, Pool4Tool (now Jaggaer Direct) and SynerTrade were the first to export their capabilities across the Atlantic, targeting North American industrial firms. But now Allocation has joined these two vendors in targeting middle-market and Fortune 500 manufacturers in the U.S. and Canada.

This third and final installment of our Vendor Snapshot covering Allocation's sourcing and supplier management capabilities provides a SWOT analysis of the company along with a competitive segmentation analysis and comparison. It also offers recommended shortlist candidates that can serve as alternative vendors to Allocation, complete with solution selection guidance. Finally, this research brief provides summary analysis and recommendations for organizations considering Allocation for sourcing and supplier management.

For background on Allocation, we encourage you to review Part 1 of the series, which provided an in-depth look at the provider, and Part 2, which offered a detailed analysis of product strengths and weaknesses, as well as a review of its user experience.

Allocation: Vendor Analysis (Part 2) — Product Strengths and Weaknesses

FM Global Resilience Index

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.

Allocation: Vendor Analysis (Part 1) — Background and Solution Overview

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.